Statutory audit of banks

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C.A. P. HAREESH KUMAR

PRACTICE

375 Points Joined July 2008

Our firm was the stautory Branch Auditor for one of the State Bank Group Banks - State Bank of ------- head quartered at -------- , ------state . This was our first Branch Audit assignment in the state bank group.

Rather than deliberating on intricacies , would like our esteemed professional colllegues to discuss , deliberate and deal with the following observations

1) Monetary figures forming part of the financial Information were clumsy devoid of comma style making it difficult and time consuming for the auditors to apprehend and work upon

2) Balance sheet and the Profit / loss statement were too detailed without the use of appropriate supporting schedules making it difficult for the Auditor to comprehend the over all content /information

I understand from my collegues that State Banks as a whole follow this practice .

Banks are the back born of our economy

Unable to under stand whether these have the tacit approval of our professsion.

Pl deliberate on this - spare some time to air your views

Replies (2)

C.A. P. HAREESH KUMAR

PRACTICE

375 Points Joined July 2008

Another point that is worth discussing is on the format of Branch Auditors Report

An illusrtative format is available in the Institute site - To the best oof my knowledge verbatim reproduction is followed by many Banks without any addition / deletion.

However the Main Branch Audit Report of the said Bank included additional clause on Certifications - " As per the terms of appointmeent letter We have also verified the statements prepared by the Branch and the Books of the Branch and furnish here with relevant certificates in respect of ---------- " Surprisingly Management's responsibility clause did not deal with the same and deceptively excluded their responsibility for the preparation of the statements / books of the Branch there by passing it on to the Auditor

The question is whether the Branch Auditor need to accede to these aberrations or can insist for the illustrative format in verbatim The word illustrative connotes - descriptttive , expressive - explanatory - demonstrative - instructive etc etc in which case no aberrations need to be acceded to

Pl air your views

Rajagopalakrishnan R

PARTNER

1422 Points Joined May 2010

As you have rightly said, the job of a SBA in a nationalised bank is getting trickier year on year. Loads of certifications are insisted upon and as you rightly pointed out these are brought within the purview of the main audit report also. Time is a major constraint. Signing the certifcates and annexures alone takes nearly 1/2 a day. This with the tight schedule of 5 or 6 working days within which to finish all the branches. The SCA's have a major role to play in these matter as they are in a much more commanding position to impress upon the management on the format etc. of audit reports and certificates. They should ideally vet whether these fit and adhere to the audit standards of ICAI. An SBA has very little choice in thsi matter, as the branch and regional officials are as helpless as the auditors themselves. They cannot allow or accept a change in the standard formats supplied by the HO's on their own. Therefore my suggestion would be to our professional brethren who take up SCA of banks to devote some time to these formats and vet them before they are circulated.I know of a case this year whereby the HO of the bank wrongly circulated the old form 3CA/CD for 2015 audit in spite of the matter being discussed at the pre-audit meeting.