Mega Offer Avail 65% Off in CA IPCC and 50% Off in all CA CS CMA subjects.Coupon- IPCEXAM65 & EXAM50. Call: 088803-20003

CA Final Online Classes
CA Classes

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

RBI set parameters for appointing Bank Auditor for FY 2021-22 and onwards

CA Manish Mehra 
on 02 May 2021

LinkedIn


RBI on 27.04.2021 vide notification RBI/2021-22/25 Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 has issued guidelines for appointment of Statutory Central Auditors (SCA)/ Statutory Auditor (SA) of commercial banks (excluding RRB), Urban cooperative banks (UCBs) and Non-Banking Financial Companies(NBFCs) including Housing Finance Companies. Notification clarifies applicability, approval, number of auditors (i.e. maximum and minimum), eligibility, independence, tenure and rotation of SCA/SA.

I. Applicability of notification

Applicability

  • Non deposit taking NBFC having assets size below Rs. 1,000 crore may follow earlier policy.

II. RBI’s Prior approval of RBI is required for appointing SCAs/SAs as follows :-

  • Commercial Banks (excluding RRB) and UCBs – before 31st July of reference year.
  • Public Sector Bank – approach RBI within 1 month of receipt of list of eligible audit firms.
  • NBFC – don’t need approval rather they need to inform RBI within one month of appointment.
RBI set parameters for appointing Bank Auditor for FY 2021-22 and onwards

III. Number of SCAs/SAs

Asset Size

  • Joint auditors should not have common partners and they are not under same network of audit firms.
  • Aside Board/Local Management Committee (LMC) may increase no. of SCA/SA depending upon asset size of entity. Following are limits for appointment of maximum no. of SCAs/SAs
  • PSB shall allot Top 20 branches to SCAs as to cover a minimum of 15% of total gross advances.
  • For other entities SCAs/SAs shall visit and audit at least Top 20 branches or Top 20% branches so as to cover a minimum of 15% of total gross advances.
 

IV. Eligibility criteria of Auditors

Basic Eligibility

Asset Size of Entity as on 31st March of Previous Year

Minimum No. of Full-Time partners (FTPs) associated with the firm for a period of at least three (3) years

Out of total FTPs, Minimum No. of Fellow Chartered Accountant (FCA) Partners associated with the firm for a period of at least three (3) years

Minimum No. of Full Time Partners/ Paid CAs with CISA/ISA Qualification

Minimum No. of years of Audit Experience of the firm

Minimum No. of Professional staff

Note 1

Note 2

Note 3

Note 4

Above Rs 15,000 crore

5

4

2

15

18

Above Rs 1,000 crore and Up to Rs 15,000 crore

3

2

1

8

12

Upto Rs 1,000 crore

2

1

1*

6

8

* Not mandatory for UCBs/NBFCs with asset size of upto Rs 1,000 crore.

(* Notes are attached for detail reference)

 

V. Independence of Auditors

  • For Commercial Banks (exclu. RRB) and NBFC – Audit Committee/LMC shall monitor and access independence of auditor.
  • For UCB/remaining NBFC - Board shall monitor and access independence of auditor.
  • Any concern regarding independence shall be reported to RBI.
  • Any concern with management of the entity regarding non availability of information or non-cooperation shall be intimated to RBI.
  • Concurrent auditor of Entity shall be ineligible to appoint as SCA/SA of same entity.
  • Time gap between non audit work and acceptance of audit should be of one year.

VI. Professional Standard

  • SCA/SA should follow relevant professional standard.
  • Board/Audit committee/LMC of entity shall annually review performance of SCA/SA. Any lapses in audit responsibilities by SCA/SA shall be reported within 2 months of completion of annual audit.

VII. Tenure and Rotation

  • SCA/SA shall be appointed for continuous period of 3 years unless they not satisfy any eligibility criteria.
  • Cooling period of 6 years applied after completing one term of 3 year (in full or part)
  • One audit firm can take statutory audit of maximum 4 commercial bank (including not more than 1 PSB)
Attached File : 2286454_44591_notes.pdf

Tags :



Category Audit
Other Articles by -
CA Manish Mehra 

Report Abuse

LinkedIn



Comments


update