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A Hand Book On Statutory Bank Branch Audit - Rajkumar S. Adukia

CHECKLISTS
 

  1. CHECKLIST ON LFAR

S.No

Aspects to be seen

Checked by

Supervised by

I

Cash

 

 

 

1

Verify that cash balance is with in limits fixed by controlling authorities

 

 

2

Check the adequacy of insurance cover of cash-on-hand and cash in transit

 

 

3

See that cash is maintained in custody of two or more officials

 

 

4

See documents relating to checking of cash balance by bank officials during the year

 

 

II

Balances with Reserve Bank of India, State Bank of India and Other   Banks

 

 

 

1

See the confirmation certificate obtained from RBI ,SBI and other banks

 

 

2

In bank reconciliation verify the cash transaction remaining un responded, revenue items requiring adjustments/write off and old outstanding entries

 

 

III

Investments

 

 

1

Physically verify the investments held by branch on behalf of head office

 

 

2

See that income received on investments reported to head office

 

 

 

3

See that income on investments is recognized in the branch is not in contrary to instructions issued by controlling authorities

 

 

4

Obtain the list of matured or overdue investments which have not been verified

 

 

5

Verify that guidelines of RBI regarding securities have been compiled with

 

 

6

Verify that guidelines of RBI regarding valuation of investments have been complied with

 

 

IV

Advances

 

 

1

See that branch has complied with procedures/ instructions issued by controlling authorities  regarding loan applications enhancements of limits etc

 

 

2

Verify that credit facilities have been sanctioned with in limits fixed by branch or controlling authorities

 

 

3

Verify that advances have been disbursed after complying terms and conditions of the sanction

 

 

4

Examine that credit facilities have been released by branch after execution of all necessary documents

 

 

5

List out the cases of deficiency in documentation, non-registration of charge, non obtaining of guarantees

 

 

6

Examine that advances  against lien of deposits have  been         granted  by marking a lien on the deposit

 

 

7

Check  that register has been  maintained noting the due date for renewal of limits

 

 

8

Do analysis of accounts overdue for review/renewal

 

 

9

Examine that stock/book debt statements and other periodic operational   data and financial statements, etc., received regularly from  the  borrowers and duly scrutinized

 

 

10

Examine the system of obtaining reports on stock  audits periodically

 

 

11

Obtain the cases of advances to non-corporate  entities with limits beyond Rs. 10 lakhs where the Branch has not obtained  the  audited accounts of borrowers

 

 

12

Obtain the report on inspection or physical verification of securities charged to the Bank

 

 

13

List out the cases of deficiencies in value of securities and inspection thereof or any other adverse features such as frequent/unauthorized overdrawing  beyond  limits,   inadequate   insurance coverage, etc

 

 

14

Verify that in  respect  of  leasing  finance  activities, branch has complied   with   the guidelines  issued  by   the   controlling authorities  of  the bank relating to  security  creation, asset inspection,  insurance, etc

 

 

15

Check the recovery of credit card dues

 

 

16

Verify that branch has identified and classified   advances into standard/substandard/doubtful/loss assets in line with the norms prescribed by the Reserve Bank of India

 

 

17

Issue Memorandum of change where disagrees with the branch classification of    advances into standard  / substandard/ doubtful/ loss  assets

 

 

18

List out cases where the relevant Controlling authority of the bank has authorised legal action for recovery of advances or recalling of advances but no such action was taken by the branch

 

 

19

Confirm that all non-performing advances been promptly reported to the controlling Authority of the bank

 

 

20

Confirm that appropriate   claims   for  DICGC   and   Export   Credit Guarantee/Insurance  and subsidies, if any, been duly lodged  and  settled. Obtain the year wise status of pending claims both in number and amounts

 

 

21

Confirm that branch has obtained valuation  reports  from approved valuers for  the  fixed  assets charged   to   the  bank,  once  in  three  years

 

 

22

Confirm that branch complied  with  the recovery Policy prescribed by the controlling authorities of  the  bank with respect to compromise/settlement and write-off cases 

 

 

23

List out the cases of compromise/settlement and write-off cases involving write-offs/waivers in excess of Rs. 50.00 lakhs.

 

 

24

List out  the  major deficiencies in credit  review ,monitoring  and  supervision

 

 

25

Take the details of outstanding amounts of guarantees invoked and funded by the Branch at the end of the year

 

 

26

Take the details of the outstanding amounts of letters of credit and  co-acceptances  funded by the Branch at the end of the yea

 

 

V

Other assets

 

 

1

Check the internal control over issue  and custody of stationery comprising security items 

 

 

2

List out the details of  missing/lost  items  of  stationery ?

 

 

 

3

Confirm that system of the Bank ensure expeditious clearance of items debited to Suspense account?

 

 

4

List out details of old outstanding entries in suspense account along with reasons

 

 

VI

Liabilities

 

 

1

List out the cases where guidelines with respect to conduct and operations of inoperative accounts are not being followed

 

 

2

List out details of the cases where any unusual large movements (whether increase  or  decrease) in the aggregate deposits held at the year-end after the balance sheet date and till the date of audit

 

 

3

List out overdue/matured term deposits at the end of the year

 

 

4

Scrutinize the bills payable, Sundry Deposits accounts with special attention for old outstanding items or unusual items etc

 

 

5

List out major items of contingent liabilities

 

 

VII

Profit and loss account

 

 

1

Test check discrepancies in interest/discount and for timely adjustment thereof

 

 

2

Test check that branch has complied with  the  Income  Recognition  norms prescribed by RBI

 

 

3

Examine the system of estimating and providing  interest accrued on overdue/matured term deposits

 

 

4

Examine any divergent trends in major items  of  income  and expenditure, which are not satisfactorily explained by the branch

 

 

VIII

General

 

 

1

Confirm that in case books of account  are  maintained  manually, they  have   been properly   maintained,   with  balances  duly   inked   out   and authenticated by the authorized signatories

 

 

2

In case of computerized branch confirm that hard copies of accounts are printed regularly

 

 

3

Check the adequacy of access and data security measures

 

 

4

Check that user time out  is prescribed and followed

 

 

5

Confirm  that regular backup of accounts are taken

 

 

6

Check the contingency and disaster recovery plans for loss/encryption of data

 

 

7

Check the reconciliation status of control and subsidiary records

 

 

8

Confirm that branch   forward   on a   daily   basis   to  a  designated cell/Head  Office,  a statement of debit/credit  transactions  in  relation to other branches

 

 

9

Confirm that   branch   expeditiously   comply  with/respond  to   the communications  from the designated cell/Head Office  as  regards unmatched  transactions  

 

 

10

Check out major adverse  comments  arising  out  of the  latest  reports  of  the previous   auditors,  concurrent  auditors,  stock  auditors   or internal  auditors,  or  in the special audit report  or  in  the inspection  Report  of  the Reserve Bank of  India 

 

 

11

See the details of frauds discovered during the year