Audit Programme of Small Bank Branches

Friends the bank audit time is nearing. Banks have started allotting their branches to various auditors. As you are aware that banks give only a few days time to complete the bank audit in which all aspects of a branch is to be seen by an auditor. Majority of Chartered Accountant firms are proprietorship firms and they are allotted very small braches with advances ranging from 5 crores to 15 crores. As an auditor has to complete audit of may be two or three branches in 7 to 8 days it is very important to have an audit program prepared beforehand. Based on my experience I give hereunder an audit program of a very small branch which can be completed in 2/3 days by a Chartered Accountant along with the help of an audit assistant. The program given below is applicable to a very small branch of a bank and is definitely not exhaustive. He will have to make his own judgment as to which other areas of the operations of the branch need to be checked.

WORK TO BE DONE BY AUDIT ASSISTANT

1. Cash and other important stationery verification
2. To check cash retention limit and whether branch exceeds the same
3. Check BS and PL with computer generated Trial & previous year’s accounts
4. Check whether provisions made for expenditures like salary, rent etc.
5. Check whether any prior period expenses debited to PL
6. Check whether proper TDS deducted on expenses and Interest paid on Term Deposits
7. Check whether TDS paid in time and o/s at the date of audit
8. Check whether service tax provided till year end and when paid
9. Expenses above 20000 in cash
10. Payment of PF etc
11. Check movements in inoperative accounts and their authorization
12. Check Fixed Assets Register
13. Check depreciation and additions to Furniture & Fixtures
14. Check suspense account if any and details thereof
15. To obtain stay certificate from Branch Manager

WORK TO BE DONE BY CHARTERED ACCOUNTANT

1. Discussion with Branch Manager
2. Examination of last year’s Accounts and all types of Audit reports
3. Enquire about the lending power of the manager
4. Examining of advances schedule
5. Review of all advances which are more than 5% of total advances of Branch
6. Review of loans sanctioned during the year
7. Review of advances restructured during the year
8. Review of loans classified as NPA during the year with regard to income recognition
9. Preparation of LFAR
10. Preparation of Tax Audit Report
11. Comparative study of accounts with previous years accounts
12. Checking of Closing Returns and certificates
13. Signing

CA Krishna Kumar Daruka