Verification of Fixed Deposits

Dear Praveen,

I tell u this has become the biggest area of worry specially aftr that Satyam's scam......

I ws expecting ICAI to come up with a Standard on How to verify BRS and FDs....:) Just joking bhai...

Audit Procedures would include -

1) Prepare a reconcilitaion chart like opening balance + made during the year - matured = closing balance.

2) Chek the physical certifIcate.

3) Obtain management confirmation

4) Obtain Banks confirmation in the form of certificate (or ASK THE BANK TO CERTIFY THE RECONCILIATION STATEMENT PREPARED AT STEP 1)

5) Check the Interest Income with the TDS certificates, InteresT certificates, etc

6) Check the Management Approvals for Investment in FD's like Boards Resolution or the Delegation of Power

Hi, dont thank me... You can check their register of investments for reconciling opening and closing balance.. Make sure that the FDs are carried as per AS-13, and that they are disclosed as per the requirements to schedule VI (Run a google search for schedule VI, look for Shah and jain) Check for interest recognition as per AS-9, i.e. on passage of time period basis... If any FD has matured, make sure they have been encashed or otherwise, see if they are recognising interest at rate of Banks' policy in this case. Any liquidated FD, u make sure the proceeds have actually come to the client. You can ask the client for the original FD receipts as well... If thats not there, get a certifed copy from a proper person in charge. Best is bank's confirmation of FDs held. Pls dont thank me ok. Just keep the info flow open to answer questions when i ask...

Dear Amir Bhai Thanks a lot...urs procedure is good..

I dint realise that our Master already replied... :) was typing awaayyy....

Bhai,

I think all my good friends have now become one in pulling my leg.

Come on yaar please give me a break n plz include me in ur gang n let’s target someone else so that I can also enjoy this.....:)

What say....?

Tell me fast.......

This post has been modified....

Thats solves my query.. I am extremely satisfied with your answers...

Thanks all again.

Hi Praveen procedure of verif. of FDs:

1) A/cs/ Register of Fdr for rlevent period.

2) Verify FD receipts ginen by Bank with point 1.

3) U take Bank confirmtion of FDRs as on date.

 

Sorry for asking another instead of solving this one, though it is being solved already.

 

M related to investigative Audits and scare of a situation where the client has withdraw the FD before its maturity and do not show the receipts anywhere.

 

What can I do to tackle such sort of situation please tell me. And I will highly gratified if someone suggest me some out of book ways.

You can mention it in the audit report if you are not satisfied with the clarification given by the client and the evidence produced by him

contents of the Fixed Deposit Receipt have been mentioned below:

• Declaration by the bank.
• Name and age of the depositor.
• Account number linked to the FD.
• Total amount deposited (Principal amount)
• Tenure/Term of the deposit.
• The applicable rate of interest on the deposit.
• Booking date.
• Maturity date.