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Bank branch audit

15 February 2016

DUE TO NON AUDIT OF BRANCH SINCE LAST FEW YEARS NOW SEE BANKS NPA GONE UP LIKE ANYTHING ALL BANK BRANCH MUST BE SUBJECT TO AUDIT EVERY YEAR

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5 Replies

Sathish M (Management Accountant) (40581 Points)
Replied 15 February 2016

It is a policy decision which the Government has to take a call in order to strengthen the banking sector. One of the main reason for bulge in stressed asset is Quality of loan provided to likely defaulters.

sathianarayanan.t (chartered accountant) (267 Points)
Replied 17 February 2016

Erosion of audit independence may be one of the reasons. But the main reason for these bad loans may be due to Government interference in the working of the banks. Too many funding by Nationalised banks on Govt schemes made the nationalised banks to this situtation. e.g., education loan, Agri loans. No private banks have advanced to govt schemes as did by the nationalised banks. Indirect presure to advance to some multi national companies (SBI to Adhani group) also a reason for this debacle. All the branches of the banks including private banks should be come under compulsory audit and auditors have to be appointed by the RBI and not by the bank management.

CA Prateek Garg (CA in Practice) (1444 Points)
Replied 21 February 2016

I dont think annual auditors can anyhow help in controlling the high percentages of NPAs.. An auditors job is limited to the verification of correctness of asset classification.. auditor can't contribute in any way to convert an NPA into a standard asset

It is matter related to better management of banks.. which includes government interference, professional management of PSBs etc

sathianarayanan.t (chartered accountant) (267 Points)
Replied 21 February 2016

No Mr. Garg. You know why the advance limit increased to 20 crores for compulsory statutory audit? SBI was the main reason because in the previous year their branch auditors classified many accounts as NPA. Hence It supported for autonomy in appointment of auditors by the bank. For so many years window dressing was going on. If there is audit independence auditor would have classified the accounts in accordance to the norms. The RBI should have avoided this present position. So you can not say that the branch statutory auditors have no role to play.