S b a 2015

Hi  Satyanarayanji  -  Glad  that you are back here  

Prime minister is likely to meet and have a brain storming session with   Senior Bank Executives  at Pune .  Major agenda is understood to be Merger of Banks . How this would impact our profession 

Few weeks back a  team led by  CA Khurana  met the president . They had handed over a draft pointing out anomalies  in Bank branch audit allottment , which the president agreed to take up with the P D C  Chairman 

 SBI is understood to  be  in  the process of  proving  redundancy of  statutory branch audit  since  their  CBS  have  been able to keep the NPA s below  a specified % ( say 5 or less ) 

United Bank's  chairman's statement  last year  is the only encouraging news for us 

Lot of  our  colleagues  are of the opinion that  we ourselves are  responsible  for this  as some of us were very casual  in  doing bank audits 

I  have  some statistics  to share  

Total  eligible audit firms   for the year  2015   = 27326   

Category - I  firms   2045  

Category  II  firms  3411 

Category III  FIRMS  4277 

Category IV  Firms   17593 

This is All India  statistics   which is is 99 % + accurate 

Onus  is upon these firms  to ensure that public money is used  effectively to ensure  the growth of our economy  

As at  30/09/2014    Stressed Loans were  stated to be  12.9% of the Total Loans  of state owned Banks while for private sector Banks it stood at 4.4% 

How many of us is ready to accept the 4.4% at face value . 

In private sector banks there is a much more concerted effort to give rosy figurs and to distort the facts.  

Our intervention  could be one of the reasons to minimise distortions in PSU Banks 

It appears that  the Institute has forwarded  the list of firms to  RBI 

RBI once  circulates  it amongst the Banks  ,  the process of taking confirmation  of New Audit firms  for fresh appoinments ( other than continuing auditors whose tenure of 4 years not yet over ) by various banks  would begin .  

Normally  this used to happen  during  the 1st week of Jan . Now  this may begin any time 

KINDLY  PROVIDE UP DATES 

I have been told from my sources, the Indian Bank expect the list from RBI in the 3rd week of this month, the Vijaya Bank expects in the first week of Feb.  Hence as such no bank has received any list from RBI and no allotment process has been commenced till today.

Thank you Satyanarayananji  for sharing your information  which benifit  all of us  Other colleagues  may kindly provide  valuable updates 

List of eligible firms  ( 2 list  continuing cases and other  eligible firms ) is probabbly circulated by the RBI  to all the Banks simulataneously  .  As per earlier  experience  this used  to be  during  January ist / iind week   of the year .  Can it  go up to February  as suggested by Vijaya Bank ?   I doubt  . Because  after finalising the  audit firms  Banks   get it approved by RBI .   (  I think   Multiple  consent  & overlapping  cases  is checked  at this point  .  Also  compliance  of  rotation  after 4 year tenures  need to be ensured   )  

 After getting approval  from RBI  , Banks allocate  Branches  to Individual  Firms  and get it further  approved by RBI   . By the time  it  may  be  the last week of March or atleast  20th of March   

This  is the procedure  as understood   from the Banks  . So inordinate  delays  can not happen  particularly at the instance of RBI .   

Thank you  Mr. Satyanarayananji  for your valuable in puts  .  Pl  keep a watch  & provide updates  

Finally it is now confirmed that  ICAI  has forwrded the list to RBI  .( Thanks to Mr. Akshay Jain ) 

A Note has been appended by ICAI  regarding cooling period  to make the allottment rational  

Hopefully we may be provided access  to this in MEF portal 

From CA Amresh Vashisht, Meerut page. Cut & paste here for the benefit of the readers

COUNCIL DECIDES ROAD MAP FOR CONCURRENT AUDITS.LETS HOPE SOME UNIFORMITY IN ALLOTMENTS.

Dear Colleagues In the preceding Central Council Meeting of the ICAI held on Nov. 20th and 21st , 2014, the Report of the Group on Equitable Audit Allotments, Mechanism to control Tendering System and Introduction of Ceiling on Number of Concurrent Audit of Banks was taken up for discussion and consideration. As the report is quite voluminous and due to paucity of time I made power point presentation with particular reference to recommendations of contents in the Report. The recommendations of the Report were as follows : RECOMMENDATIONS 1. Equitable audit allotments 1. Eligibility criteria of three years’ seniority in profession (in case of Bank Branch Auditors) may be reconsidered. 2. To find ways and means for reservation/preference to firms with less than 10/7 years standing in the profession or those with the annual turnover of less than Rs. 10 lakhs in stock and/or revenue audits and/or other assignments in banks. 3. To send a letter to all the banks under the signatures of the President informing that allotment should be strictly as per the pre-determined criteria and ICAI as a regulator is interested in ensuring that all allotments are done on the basis of an objective and decided criteria and to provide details of the allotments of branch statutory audit done. Moreover, as and when next allotment happens, in the interest of all the stakeholders and to ensure transparency in the matter, banks should be forthcoming with the requisite details like advances level of their branches, how the selection of branches (with advances level of less than Rs. 20 crore) has been done for audit, etc. 4. Institute should approach those entities where empanelments are not happening but ideally should happen including public authorities or entities in which funds of the government or semi-government organizations are employed substantially as the same is a public organization wherein substantial public interest is involved. 5. For other audits, to suggest all the government authorities, regulators, organizations to allot audits/assignments on empanelment basis. At the least, process and criteria of empanelment should be clearly specified and should be made available not only on the website of the Institute but also as and when the same is in progress, the same should be publicised through local newspapers also and the ultimate allotment should be done in a very transparent and objective manner. There should be conspicuous intimation to the chartered accountants about the empanelment taking place. 6. Strong and continuous liaison with different authorities/regulators empowered by various statutes to appoint auditors for various entities like Registrar of Co-operative Societies of various states for co-operative Societies of respective states, O/o C&AG for Government companies, Reserve Bank of India for banking companies etc. 7. To collect data from all the practicing firms in respect of their receipts from audit/accounting/tax audit/concurrent audit/management assignments/ any specific special assignment along with details of specialization of respective firms and their capacity i.e. staff strength, qualification and experience. 8. To know the actual number of members in practice and in industry, details may be called: - from the respective companies or - making it mandatory for all our members to inform the Institute - call for income-tax return from all the practicing members, as a one-time measure. 2. Development of Mechanism to control tendering system 1. Tendering should be discouraged in the exclusive areas of practice of our members like audit and attestation services. It was the unanimous view that tendering should not be allowed in such practice areas and group preferred to have norms in such areas, copy enclosed as Annexure M. 2. If we can prohibit / restrict members from responding to exclusive areas in respect of pure audit assignments and attestation services, that will be most ideal. 3. The members must adhere to the recommended scale of fees prescribed by the ICAI in the context of various professional assignments. To ensure such adherence, a member responding to a tender should be required to furnish to the ICAI’s specified website the maximum details about the estimated hours to be devoted by the partner/proprietor, paid CAs, other staff and the fees quoted in the tender. Such details will be furnished by the member within a period of seven days of his responding to the tender. If the member is successful in securing the tendered assignment, then the member will also furnish the actual hours devoted by the partner/proprietor, paid CAs and the staff. 4. A draft letter which may be considered to be sent to the members across the country requesting them to maintain cost sheet in the given format while submitting any tender/bid as discussed by the Group enclosed as Annexure K. 5. A draft letter which may be considered to be sent to the authorities/companies floating tenders for services of Chartered Accountants enclosed as Annexure L. 6. It should be made compulsory for the members to file an online copy of the bid submitted by them in response to any tender within 30 days with ICAI. The office should check whether recommended scale of fees has been followed or not in the bids. The purpose of calling such huge details from the members, method or structure required for the purpose and methodology should also be set so that there is no ambiguity at later stages. Any member who does not provide the information within the given time period may be referred to the Disciplinary Section. 3. Introduction of ceiling on number of concurrent audit of banks per firm 1. To write to all the banks, requesting them for details of allotment of concurrent audit for the year 2012-13 and to have an allotment policy be framed for concurrent audits and make it available on the bank’s website so that the whole procedure is transparent. 2. To make efforts and get smaller audits be reserved for smaller firms. 3. A proprietary concern be allowed to take up 1 bank branch concurrent audit at a time. However, if such proprietary concern has a full time paid CA. employee for a period of 12 months or more, immediately preceding the date of appointment as a concurrent auditor, then the proprietary concern be allowed to take one more branch concurrent audit per such paid CA. employee. However, at the time of renewal of a concurrent audit, the same criteria will be applicable as if it is a fresh audit. 4. In the cases of partnership firms, the firm be allowed to take one concurrent audit per 2 partners of firm and not more than five concurrent audits on overall basis. However, at the time of renewal of a concurrent audit, the same criteria will be applicable as if it is a fresh audit. 5. Council of the Institute should promulgate strong recommendation/guideline for concurrent audit limit like tax audit limit. The Council accepted all the above recommendations unanimously except the recommendations stated at serial nos. 1.2., 3.3. and 3.4 above. The said recommendations not accepted are reproduced once again below : 1.2. : To find ways and means for reservation/preference to firms with less than 10/7 years standing in the profession or those with the annual turnover of less than Rs. 10 lakhs in stock and/or revenue audits and/or other assignments in banks. 3.3. : A proprietary concern be allowed to take up 1 bank branch concurrent audit at a time. However, if such proprietary concern has a full time paid CA. employee for a period of 12 months or more, immediately preceding the date of appointment as a concurrent auditor, then the proprietary concern be allowed to take one more branch concurrent audit per such paid CA. employee. However, at the time of renewal of a concurrent audit, the same criteria will be applicable as if it is a fresh audit. 3.4. : In the cases of partnership firms, the firm be allowed to take one concurrent audit per 2 partners of firm and not more than five concurrent audits on overall basis. However, at the time of renewal of a concurrent audit, the same criteria will be applicable as if it is a fresh audit. On the recommendation at 1.2. not much discussion took place but members did not agree with any kind of reservation. On the recommendations at 3.3. and 3.4. about the ceiling on number of bank branch concurrent audits, there was a heated and charged up discussion as opinions on both the sides were expressed emphatically. At the end of the discussion, I sought a vote, against which frantic efforts were made as usual whenever voting is demanded by a council member to prevail upon me to leave my demand for voting. However, when insisted and persisted, the voting took place and by a majority of thin line the decision came that the placing a ceiling is a must but the ceiling will be worked out by the Council as against what is recommended by the Group. I hope the above information about the council proceedings will be helpful to the members.

With warm regards,

CCM CA. Tarun Ghia

tarunghiaca @ yahoo.co.in tarunghiaca @ gmail.com

Detailed Procedure  for appontment  of SBA is understood   as under 

(i) The list of eligible auditors/audit firms will be prepared by the Institute of Chartered Accountants of India (ICAI) as per the norms prescribed by RBI.   ( LIST prepared and  sent to  RBI   )

(ii) The above list will be subjected to scrutiny by RBI for identifying the continuing and rested firms and excluding audit firms against whom adverse remarks/disciplinary proceedings are pending or who have been denied audit.

(iii) RBI will, thereafter, forward the final list of all eligible auditors/audit firms to PSBs for selection.

(iv) The PSBs will select the required number of branch auditors/audit firms. Banks will be required to clearly advise the audit firms selected for consideration of appointment that each audit firm can take up audit assignment (branch audit) in one PSB only. The audit firm should give their consent in writing for consideration of appointment in the bank concerned for the particular year and the subsequent continuing years.( the firms whose four year term has not completed shall be on the panel of same  bank .no fresh consent shall be required)

(v) The consent given by an audit firm will be treated as irrevocable and request, if any, from audit firms for changing the bank, after giving its consent to the bank concerned will not be entertained.

( some of the banks takes consent from auditor and dont carry their names to list.auditors ignore the other bank offer being consent given .Attention is required for such exercise)

After giving consent  if the bank does not include  the firm in the list  what recourse the Firm has ? 

(vi) After the selection of branch auditors, PSBs will be required to recommend the names of both continuing and selected branch auditors to RBI for seeking its prior approval before their actual appointment, as per statutory requirement.

VII)  SBAs will have a maximum tenure of four years. The appointment of SBAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time and also subject to their suitability.

VIII). The number of eligible auditors / audit firms is more than the number of branches to be audited at the following 33 centres (viz. Mumbai, Kolhapur, Pune, Solapur, Thane, Kolkata, Chennai, Coimbatore, Delhi/ New Delhi, Ajmer, Bikaner, Jaipur, Kota, Udaipur, Ahmedabad, Vadodara, Surat, Hyderabad, Chandigarh, Raipur, Faridabad, Gurgaon, Panchkula, Panipat, Sonipat, Bangalore, Ernakulam, Indore, Nagpur, Ludhiana, Jodhpur, Bhilwara, and Ghaziabad). In such centres, the auditors/ audit firms will be put to a period of compulsory rest for two years after completion of four years of continuous branch audit. In other centres, where the number of eligible auditors / audit firms is less than the number of branches to be audited, the branch auditors on completion of four years of continuous branch audit will be subjected to the policy of rotation.(as per policy the other places are out of rotation but the same is being misused)

DOES IT MEAN THAT IN 33 CITIES THERE IS NO MANDATORY ROTATION  ?

 IX). While allotting branches, banks are required to select auditors/audit firms which are in close proximity to their offices/branches. Banks are also required to have a suitable mix of various categories of auditors / audit firms while selecting the branch auditors keeping in view the size of the branches to be audited.( Though banks have nothing to do with the cooling of firms other than 33 places but the same is being implemented from last four years as CAs are in surplus .Though this year PDC has prescribed a list with gap)

CAN ANY ONE ELOBORATE THIS - WHILE FILLING MEF  , BASED ON UCN   THERE WAS AN  AUTOMATIC CALCULATION AND DISPLAY OF IMMEDIATELY PRIOR RESTED YEARS  . FURTHER PDC IS SAID TO HVE APPENDED A NOTE TO THE COVERING LETTER TO R.B.I  WHICH WAS SUPPOSED TO BE MADE ACCESSIBLE  IN MEF PORTAL 

X) . As regards statutory branch audit to be carried out by SCAs, banks will allot the top 20 branches(to be selected strictly in order of the level of outstanding advances) in such a manner as to cover a minimum of 15% of total gross advances of the bank by SCAs.

Dear All 

Latest  information  is that  Rbi's  List of SBA  would be made available to  P S .B 's  by February only . Another information is that  the 3rd quarter is still done by the old SCA  firms  

Kindly provide all  up dates here

All the best

is cooling period abblocable to some small cities / towns also?

please read above as

is cooling period applicable to samll cities / towns also ?