Long Form Audit Report: Ca. Rupal Garg 9634414555
Long Form Audit Report: Ca. Rupal Garg 9634414555
Long Form Audit Report: Ca. Rupal Garg 9634414555
• Capital
• Reserve and Surplus
• Deposits
• Borrowings
• Other liabilities and provisions
• Contingent Liabilities
• Bills for Collection
• Head Office
• Regional Office
• Zonal Office
Generally, the Branch cash balance has been covered under the Bankers’ Indemnity Policy.
A copy of the policy to be obtained from Branch. In case the insurance is taken by Head Office /
Controlling Office, a copy of policy or any correspondence from Head Office / Controlling Office in this
regard to be perused.
Obtain the instructions in this regard and peruse the compliance thereof.
Generally, the Cash is held in the Joint Custody of Cashier and Officer of the Branch.
Obtain the copy of the procedure prescribed by the Controlling Authorities and examine the compliance thereof.
In addition, ascertain, whether the branch is under Concurrent Audit. Generally, the Concurrent Auditors do the
Cash verification every month.
In addition to above, officials who are not dealing with cash are also doing verification on monthly basis.
Balance confirmation certificates obtained in respect of outstanding balances as at the year end.
If the reconciliation is not carried out or carried out incorrectly the same to be reported.
If any difference is observed, then report the amount, nature of difference and period since lying in the
reconciliation statement
(iii) Old outstanding balances remaining unexplained/ unadjusted. Give details for:
Outstanding between six months and one year; (including Receivable or payable)
One year and above (including Receivable or payable)
Generally, this is looked after by Treasury Department, hence, such types of transactions generally do not
appear in Branch Books.
However, confirm that no such transactions are appearing in the Branch Trial Balance.
If there are transactions, obtain the instructions / guidelines laid down by the Controlling Authorities and
examine the compliance thereof.
However, confirm that no Investments are appearing in the Branch Trial Balance.
If Investments are appearing in the Trial Balance physical verification should be conducted and reported
accordingly. Also verify investment balance confirmation of counter party (Investee) with balance appearing in
Branch Books.
If Investments are held on behalf of Head Office / Other Offices physical verification of the records
should be conducted and reported accordingly.
b) Whether any amounts received as income on such investments have been reported to the Head
Office?
Confirm from the Branch Trial balance whether any such income is received. If yes, ascertain whether the
instructions in this regard of the head office / controlling office is complied with..
c) In respect of investments held by branches on behalf of Head Office/ other offices of the bank
whether any income is accrued / received and recognised as income of the branch contrary to
the instructions of the Controlling Authorities of the bank?
Confirm from the Branch Trial balance whether any such income is received. If yes, ascertain whether
the instructions in this regard of the head office / controlling office are complied with.
Give full details including details about the investment, the date on which the said investment has got matured
or overdue, maturity value, etc.
e) Whether the guidelines of the Reserve Bank of India regarding Transactions in Securities have
been complied with.
Refer guidelines of Reserve Bank of India together with Head Office instruction.
f) Whether the guidelines of the Reserve Bank of India regarding valuation of Investments have been
complied with.
Refer guidelines of Reserve Bank of India together with Head Office instruction (Valuation Policy of the
Bank).
CA. RUPAL GARG
9634414555
ADVANCES
(a)Credit Appraisal
(b)Sanctioning/Disbursement
(c)Documentation
Enquire whether specific facility wise loan application form is prescribed by the Bank.
Confirm that the instructions are followed by the Branch while accepting the loan application form.
Refer circular issued by Head Office regarding preparation of proposals for grant / renewal of advances,
enhancement of limits, etc., including adequate appraisal documentation in respect thereof.
While reporting under this clause, auditor should consider the “Early mortality cases” in the branch
The branch is adhering to the prudential exposure limits prescribed by RBI and Head Office.
In case of corporate borrower, it is necessary for branch auditor to carefully go through the annual reports
to ensure that there no adverse comments in main auditor report or CARO report on annual accounts of
the borrower that affects sanction at the branch level.
Latest IT returns of Borrowers / Guarantors have been obtained and verified with financial documents and
other information available on record.
Latest CIBIL or other Credit Information Company report has been obtained and verified
(i) In the cases examined by you, have you come across instances of credit facilities having
been sanctioned beyond the delegated authority or limit fixed for the branch? Are such
cases promptly reported to higher authorities?
Report the cases where credit facilities having been sanctioned beyond the delegated authority or limit fixed for
the branch
Generally, cases are seen in the branch where the limits of existing borrowers are allowed to be overdrawn for a
period beyond permissible time. Such cases should be reported.
Obtain original Title deed, Execution of Documents. Vetting of documents by legal dept./ legal resource.
Report the cases where advances have been disbursed without complying with the terms and conditions of the
sanction letter.
Main aspects to be covered are:
- Registration of charges – search report.
(i) In the cases examined by you, have you come across instances of credit facilities released by
the branch without execution of all the necessary documents? If so, give details of such
cases.
Report the cases where credit facilities released by the branch without execution of all the necessary documents.
Physical verification of documents is critical. This is one of the important functions of the branch audit and the
reason why branch audit exists.
Verify Custody of Documents – Whether document movement register tracking changes is maintained. Whether
scanning of important documents is maintained.
The exact nature of irregularity / document not obtained may be provided in the following format.
Make sure that the documents are adequately stamped and also that they are executed within six months of
purchasing the stamp paper.
(iii) Whether advances against lien of deposits have been properly granted by marking a lien
on the deposit in accordance with the guidelines of the Controlling Authorities of the bank.
Report the cases, where the deposits / NSCs, paper securities etc., are matured, however not adjusted against
the respective advances.
Date / month in which accounts were due for review and the date / month on which the review was done may be
obtained.
It may be noted that there would be cases that are seen performing at the balance sheet date but evidently
stressed. Comments on such account with respect to branch efforts on monitoring and information
availability on same should be commented upon.
In view of changes in the reporting requirements in CARO for corporate borrowers, it is necessary for branch
auditor to carefully go through the annual reports to ensure that there no adverse comments in the balance sheet of a
borrower that affects reporting at the branch level. CA. RUPAL GARG
9634414555
Date / Month of review can be verified from the sanction documents / terms
(ii) Are the stock / book debt statements and other periodic operational data and financial
statements, etc., received regularly from the borrowers and duly scrutinised? Is suitable
action taken on the basis of such scrutiny in appropriate cases?
Borrower wise / month wise record showing receipt of security statement be confirmed.
Confirm the working of drawing power based thereon.
Confirm whether these statements are obtained on time
(iii) Whether there exists a system of obtaining reports on stock audits periodically? If so,
whether the branch has complied with such system?
Refer the guidelines issued by Head Office in this regard and confirm the compliance thereof.
Examine the compliances obtained, action taken in cases wherein deficiencies are reported by the stock auditors.
Obtaining written reverts from the Borrower.
Whether adverse issues in stock audit reports are duly factored in review / renewal notes.
Compare with annual accounts for divergences and obtain satisfactory explanations
(v) Has the inspection or physical verification of securities charged to the Bank been
carried out by the branch as per the procedure laid down by the Controlling Authorities
of the bank?
(vi)In respect of advances examined by you, have you come across cases of deficiencies
in value of securities and inspection thereof or any other adverse features such as
frequent/unauthorised overdrawing beyond limits, inadequate insurance coverage, etc.?
(ix) Has the branch identified and classified advances into standard/substandard/ doubtful/
loss assets in line with the norms prescribed by the Reserve Bank of India.
(xi) Have you come across cases where the relevant Controlling Authority of the bank has
authorised legal action for recovery of advances or recalling of advances but no such action was
taken by the branch? If so, give details of such cases.
(xii) Have all non-performing advances been promptly reported to the relevant Controlling
Authority of the bank? Also state whether any rehabilitation programme in respect of such
advances has been undertaken, and if so, the status of such programme.
(xiii) Have appropriate claims for DICGC/CGSTE and Export Credit Guarantee/ Insurance and
subsidies, if any, been duly lodged and settled? The status of pending claims giving year wise
break-up of number and amounts involved should be given.
CA. RUPAL GARG
9634414555
(xiv) In respect of non-performing assets, has the branch obtained valuation reports from
approved valuers for the fixed assets charged to the bank, once in three years, unless the
circumstances warrant a shorter duration?
(xv) In the cases examined by you has the branch complied with the Recovery Policy
prescribed by the Controlling Authorities of the bank with respect to compromise/ settlement
and write-off cases? Details of the cases of compromise/ settlement and write-off cases
involving write-offs/ waivers in excess of Rs.50 lakhs may be given.
The Head Office instructions to be seen and confirm whether internal control is in existence.
Carry out the physical verification of security items including stamps.
Whether lost security items are reported to Controlling Authority.
Note down the accounting treatment given to Stationery items as every Bank is having different policy in this
regard.
Comment on the usage of security items during the year and the stock of such items vis a vis usage.
Report lacunas observed in the system at the branch as this is a fraud prone area.
(ii) Have you come across cases of missing/ lost items of such stationery?
CA. RUPAL GARG
9634414555
LIABILITIES
Compare the aggregate deposits as on 15th March, 20XX, 31st March, 20XX and last day of audit.
Ascertain the reason for large variation other than due to application of interest / provision as on 31st March,
20XX
Ensure there is no evergreening
(iii) Are there any overdue/ matured term deposits at the end of the year? If so, amounts
thereof should be indicated.
List of claims against the branch together with the status of claim may be obtained.
List of contingent liability to be verified and the same to be compared with last year’s list.
The items not appearing in the current year’s list may be enquired with reasons thereof.
Whether any provisioning is warranted against these Contingent Liabilities.
Refer concurrent audit / internal inspection audit / income & expenditure audit reports.
Test check interest / discount calculations. Whether changes in interest rates are correctly captured.
Generate Exceptional Transactions report and verify interest is applied to all applicable accounts
Generally, interest application is a system-generated entry; hence test check may be applied for confirming
interest calculations.
Test check cases of premature withdrawals for re-computing interest wrt revised tenor.
Refer RBI Master circular on IRAC norms together with other circulars issued by RBI on IRAC norms from
time to time.
Ensure asset classification is being done through system and no manual intervention is in place.
(c) Whether the branch has a system to compute discrepancies in interest on deposits and for
timely adjustment of such discrepancies in accordance with the guidelines laid down in this
regard by the Controlling Authorities of the bank? Has the test check of interest on deposits
revealed any excess/ short debit of material amount? If so, give details thereof.
(e) Are there any divergent trends in major items of income and expenditure, which are not
satisfactorily explained by the branch? If so, the same may be reported upon. For this purpose,
an appropriate statement may be obtained from the branch Management explaining the
divergent trends in major items of income and expenditure.
The divergent trends can be identified by way of comparison analysis on the basis of previous quarters / half year
/ previous year figures, keeping in mind the changes in business volumes and business mix.
Compare the aggregate figures as on 15th March, 20XX, 31st March, 20XX and last day of audit. Also compare
some of the transfers on the last two days of the year end and identify whether there are any transfers of undrawn
portion from the loan accounts to current account or deposit account
CA. RUPAL GARG
9634414555
GENERAL
Now a days CBS is followed hence question of maintaining manual books of accounts does not arise.
Balancing is also done through system.
Balancing report may be generated to confirm that no difference is appearing in the balancing report.
Exception Reports can be generated from the system to verify whether there are differences. If there
are differences, the same should be reconciled / rectified by branch.
Indicate the extent of computerisation and the areas of operation covered through manual
intervention.
Are the access and data security measures and other internal controls adequate?
Refer the guidelines issued by Head Office – Awareness of Branch officials with Security guidelines -
Password Policy, Anti viruses on systems, Access to pen drives etc. may be checked as a part of access
and data security controls
Whether adequate contingency and disaster recovery plans are in place for loss/
encryption of data?
Refer the guidelines issued by Head Office & compliance thereof. Note if any fire drills or any other
evacuation drills are conducted – Whether any Fire Safety Audits are conducted
Do you have any suggestions for the improvement in the system with regard to
computerised operations of the branch?
(ii) In framing your audit report, have you considered the major adverse comments arising out
of the latest reports of the previous auditors, concurrent auditors, stock auditors or internal
auditors, or in the special audit report or in the inspection report of the Reserve Bank of India?
State the various adverse features persisting in the branch, though brought out in these audit/
inspection reports.
Obtain a list of audit which the Branch was subjected to during the previous year.
The scope of each audit may be reviewed to identify adequate coverage of branch activities.
Obtain all the reports and peruse the reports for any adverse remarks.
Whether branch has been addressing all issues noted promptly – whether there are any repeat issues
Whether the Gap or Process failure that lead to the transactional error reported is addressed
Enquire about any fraud reported to Controlling Authority/vigilance dept. Head Office during the
financial year.
The auditor should also examine whether:
the branch is having an effective credit monitoring for its Advances portfolio.
the branch has an adequate system in place to identify Early Warning Signals(EWS) of incipient
sickness / fraudulent activities in respect of loans. Some of the Early Warning signals which should alert
the bank officials about some wrongdoings in the loan accounts which may turn out to be fraudulent:
o Default in payment to the banks/ sundry debtors and other statutory bodies, etc., bouncing of the high
value cheques.
o Raid by Income tax /sales tax/ central excise department.
Compare the aggregate figures as on 15th March, 20XX, 31st March, 20XX and last day of audit.
(ii) Does the branch maintains records of all the fixed assets acquired and held by it
irrespective of whether the values thereof or depreciation thereon have been centralised?
Where documents of title in relation to branch or other branches are available at the branch,
whether the same have been verified.