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

LETTERS SEEKING INFORMATION

                                                           

 

  1. Example of a letter seeking information from branch manager before commencement of audit

(Letter head of Chartered accountant)

April 3, 2006

Branch Manager

______Bank

______Branch

Mumbai

 

Dear Sir

Sub: Information required before commencement of statutory audit

This letter is provided in connection with your audit of financial statements of _____________branch of _____ bank for the year ended 31.03.2006 for the purpose of expressing an opinion as to whether the financial statement give a true and fair view of the financial position and of results of operations for the year. Please be informed that audit of your branch will be started by our audit team headed by ______ on________. You are requested to provide the following information to us before commencement of audit

  1. List of books of accounts maintained by the branch along with responsible for the same

  2. Organizational chart of bank and bank branch

  3. List of departments in the bank branch along with name of head of department.

  4. Major goals achieved during the year by the branch

  5. Authority and responsibility of each officer in the bank

  6. Types of banking products offered by the bank along with customer base number and business of each product during the year ending 31/03/2006

  7. A specimen Copy of all the forms used by the branch during its business for example Account opening form, Application for loan, credit appraisal form, form for Bank Guarantees etc

  8. Special feature of each banking product

  9. Details of various charges on various banking products

  10. Details of various incentives to the staff for increasing bank business

  11. Areas where work has been outsourced to outsiders

  12. Profile of each outsourced agency

  13. Trial balance as on 31/03/2006

  14. Financial statements prepared by the branch as on 31/03/2006

  15. Copies of last year annual accounts and current year quarterly/half yearly accounts

  16. Capital adequacy ratio of the branch along with benchmark ratio

  17. Accounting policy followed by the bank

  18. Accounting standard applicable to the branch

  19. Write up on general internal control adopted by bank

  20. Information of top 10 borrower

  21. Information of top 10 saving account holder and Fixed deposit holder 

  22. List of applicable laws applicable to the bank

  23. Details of any fraud discovered during the year

  24. Copies of report of concurrent auditors, RBI inspectors, Revenue auditors etc and compliance report on action taken by bank on these report

  25. Detailed write up on the software used by the branch and its limitations along with list of reports generated by the software

  26. Instructions issued by Head office for closing of accounts

  27. Details of RBI circulars applicable to bank branch

  28. Name and designation of the person who will be coordinating in audit

  29. Provide copy of schedule of prepaid and outstanding expenses and income as on 31/03/2006

  30. Details of various charges on various banking products

  31. Details of property in which bank is operating

  32. Timings of the bank

  33. Details of various insurance policy taken by the bank

  34. Procedures followed by the bank for recovery of money from defaulters 

  35. Details of fixed assets owned by the bank

  36. Details of investments undertaken by bank on behalf of Head office

  37. Details of investments undertaken by bank on its own behalf 

  38. Foreign exchange services offered by the bank

  39. Details of pending claims for DICGC AND ECGC

  40. Details of inoperative accounts

  41. Details of software used by bank

  42. Website of the bank

We look forward to full cooperation from your staff and we trust that you will make available to us above information in connection with our audit as soon as possible .

Thanking you,

XYZ & Co.
Chartered Accountant

(Signature)

 

Date :                                                                                                                (Name of the Member)

Place :                                                                                                                               Designation

 

Acknowledged on behalf of
Bank by..

(Signature)
Name and Designation
Date

 

 

  1. Example of a letter to branch manager for information required on LFAR

(Letter head of Chartered accountant)

April 3, 2006

Branch Manager

______Bank

______Branch

Mumbai

 

Dear Sir,

 

Sub: Information required before commencement of statutory audit for LFAR

This letter is provided in connection with our audit of financial statements of _____________branch of _____ bank for the year ended 31.03.2006 for the purpose of expressing an opinion as to whether the financial statement give a true and fair view of the financial position and of results of operations for the year.  These financial statements are the responsibility of the Bank’s management.  Our responsibility is to express an opinion on these financial statements based on our audit. We are also required to give Long form audit report. For issuing  LFAR please provide the information  

  1. Cash

  1.      Limits fixed by controlling authorities for cash balance

  2.     Details of cases where cash balance exceeded limits fixed by controlling authority in the following format 
     

    S. No

    Date

    Cash Balance

    Limits fixed by controlling authorities

    Reporting date to controlling authorities

    Reason

     

     

     

     

     

     

     

  3.      Details of the insurance policy of cash
    Insured value

    Name of insurance company

    policy expiring date

    Policy number

     

  4.     Name of the persons along with their designation who are maintaining cash
     

  5.    Cash balance on daily basis checked by _______. Details of latest cash checking in the following format 

S.No

Date of checking of cash balance

Cash balance

Currency wise denominations

Balance in books of accounts

Checked by

 

 

 

 

 

 

 

1)                               2.     Balance with RBI, SBI and other bank

 

a)  Details of bank reconciliation  in the following format
 

S.No

Name of the bank

Balance in our books of other bank account

Balance in other bank of our bank account

Periodicity of reconciliation

Reason for difference(if ,any)

 

 

 

 

 

 

 

                  b)  Details of old outstanding items remaining unadjusted 
 

S.No

Name of the bank

Date of entry

Amount

Nature of transaction

Reason for non-adjustment

 

 

 

 

 

 

  1. Money at call and short notice

Details of   money-at-call and short notice in the following format

S.No

Date of Certificate of borrower

Amount as per certificate

Amount as per branch

Number of days lend for

Subsequent payment received on

Responsibility

 

 

 

 

 

 

 

  1. Investments

For branches in India

a.       Details of Investments held by the branch on behalf of Head office

b.       Details of  income from investments and their reporting  to head office

c.       Details of  matured  investments in the following format

 

S.No

Nature

Certificate number

Amount

Maturity date

Reason for non–encashment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. Advances

a.   Procedure followed in the branch regarding powers of officers in the following format

Nature of work

Responsibility

Approved by

 Limits

Total amount of business undertaken during the year

Checking of loan application

 

 

 

 

Enhancement of limit

 

 

 

 

Renewal of advances

 

 

 

 

b.   Details of advances again lien of deposits in the following format

S.No

Nature of advance

Account number

Outstanding balance

Nature of deposits

Lien date

Amount of deposits

 

 

 

 

 

 

 

c.   Details of reports of stock audit reports received in the following format

S.No

Name of the borrower

Outstanding balance

Sanctioned limit

Value of stock

Breakup of stock

Date of audit

 

 

 

 

 

 

 

d.  In cases of advances to non-corporate entities with limits beyond 10 lakhs details of  audited accounts received from  borrowers as per RBI guidelines in the following format

S.No

Name of the non-corporate entity

Limit of the borrower

Outstanding balance

Audited financial statement received on

Responsibility  

 

 

 

 

 

 

e.  Details of inspection of physical verification of securities charged to bank in the following format

S.No

Name of the borrower

Outstanding balance

Sanctioned limit

Value of security

Breakup of securities

Date of physical verification

 

 

 

 

 

 

 

f.   Details of pending claims for  DICGC AND ECGC

 

  Particulars Number      Amount  
 

Claims as at the beginning of the year       (Year wise details)   

   
  Further claims lodged during the year    
Total A   ______         ______ ______         ______
 

Amount representing   Claims accepted/settled (year wise details)

   
  Claims rejected 
(year wise details)    
   
Total B      
  Balance as at the year-end
(year wise details)
_____         _______  ______       ______    

                          A-B 

                                                          

g.  Details of guarantees invoked and funded by the branch

Sr No

Date of invocation

Name of Party

Name of beneficiary

Amount

Date of recovery

Remarks

 

 

 

 

 

 

 

h.  Details of outstanding amount of Letter of credit and co-acceptances funded by the branch

Sr No

Date of funding

Name of party

Nature(LC/ Co acceptance)

Amount

Date of recovery

Remarks

 

 

 

 

 

 

 

  1. Other assets

a.  Details of stationery in the following format 

Nature of stationery

Opening stock as on 01/04/2005

Receipts during the year

Issue during the year

Lost during the year

Closing balance as on 31/03/2006

Responsibility

Term deposit receipts

 

 

 

 

 

 

Drafts

 

 

 

 

 

 

Pay orders

 

 

 

 

 

 

Cheque books

 

 

 

 

 

 

Traveller’s cheques

 

 

 

 

 

 

Gift cheques

 

 

 

 

 

 

b.  Details of old outstanding in suspense accounts in the following format 

Year

Amount

Remarks

 

 

 

  1. Liabilities

a.  Details of inoperative accounts

S.No

Name of inoperative accounts holder

A/c number

Last transaction done in inoperative account

Action taken with respect to inoperative account

 

 

 

 

 

b.  Details of the overdue and matured term deposits

S.No

Term deposits Number

Period over which overdue

Interest provided

 

 

 

 

c. The number of items of bills payable, sundry deposits etc and aggregate amount of old outstanding items pending for three years  or more

Year

No. of items

Amount (Rs.)

Remarks

 

 

 

 

d.  Details of contingent liabilities 

Nature of contingent liability

Amount

Remarks

Guarantees

 

 

Letter of credit

 

 

Claims against the branch not acknowledged as debts

 

 

  1. Profit and loss account

a.  Details of matured term deposits

Term deposit certificate number

Amount of deposit

Maturity date

Interest after maturity date till 31/03/2006

Remarks

 

 

 

 

 

  1. General

a.  List of Books of accounts maintained by branch manually

 

b.  Report on Controls and subsidiary records in the following format

Account

Date

General ledger balance

Subsidiary balance

Last date upto which balance d

 

 

 

 

 

  1. For branches dealing in foreign exchange transactions

Details of Nostro accounts and their reconciliation

Nostro accounts branch address

Nostro accounts balance (in foreign exchange)

Nostro accounts balance (in Rs.)

Balance reconciled on

Nature of differences

 

 

 

 

 

  1. For branches dealing in very large advances

Details of accounts with outstanding in excess of Rs 1 crore which have been downgraded or  upgraded with regard to their classification as NPA or standard assets during the year

Name of the borrower

Limit

Outstanding

Old classification

New Classification

Reason

                

  1. For branches dealing in recovery of NPA

Details of accounts with outstanding in excess of Rs 1 crore has been downgraded or upgraded with regard to their classification as NPA or standard assets during the year

Name of the borrower

Limit

Outstanding

Old classification

New Classification

Reason

 

 

 

 

 

 

Details of new borrowers transferred to the branch in the following format 

Name of new borrower

Limit of the borrower

Transferring  branch name

Transferred on

Documents and records transferred

Reason for transfer

 

 

 

 

 

 

  1. For branches dealing in clearing house operations

Year wise break up old /large /unusual outstanding entries

 

Inward clearings

Number

Value

Normal clearings

 

 

High Value clearings

 

 

Inter-branch clearings

 

 

National clearings

 

 

Returned/dishonored clearings

 

 

 

Outward clearings

Number

Value

Normal clearings

 

 

High Value clearings

 

 

Inter-branch clearings

 

 

National clearings

 

 

Returned/dishonored clearings

 

 

 

Thanking you,

XYZ & Co.
Chartered Accountants
 

(Signature)

Date :                                                                                                                (Name of the Member)

Place :                                                                                                                            Designation


Acknowledged on behalf of
Bank by …………..

(Signature)
Name and Designation
Date

Other Pages from This e-book

HISTORY OF BANKING | TYPES OF BANKS AND BANKING ACTIVITIES | GLOSSARY OF TERMS USED IN BANKS | Bank audit process  | PROVISIONS RELATING TO AUDITOR | LETTERS SEEKING INFORMATION | LAWS APPLICABLE TO BANK | ACCOUNTING SYSTEM IN BANKS | Banking Softwares | GENERAL INTERNAL CONTROL IN BANKS | INTERNAL CONTROLS IN AN EDP ENVIRONMENT | Asset Classification Income Recognition and Provisioning | FOREIGN EXCHANGE TRANSACTIONS | SALIENT FEATURES OF JILANI, GHOSH |  COMMITTEES AND LFAR | Audit Planning  | Audit Procedures in bank | CHECKLISTS | DOCUMENTS TO BE TAKEN FROM MANAGEMENT | MANAGEMENT REPRESENTATION LETTERS | BANK BRANCH AUDIT REPORTS | DISCLOSURES MANDATED BY RBI IN NOTES TO ACCOUNTS | ANNEXURE A | ANNEXURE B | ANNEXURE C | ANNEXURE D | ANNEXURE E | About the Author