Bank Audit – Major Points to be Considered

  • Break Even Date for NPA is 01.01.2013 for the year 2012-2013
  • Auditor Report should be in New Format (Download New Audit Report Format). Banks may not sent new format in their Guidelines for the year 2012-13.
  • Once an account has been classified as NPA, all the facilities granted to the borrower will be treated as NPA except in respect of Primary Agricultural Credit Societies (PACS)/Farmers Service Societies (FSS).
  • Overdue period starts immediately on expiry of due date, concept of ‘past due’ has already been dispensed with in past years.
  • Stock statements older than 3 months should not be considered
  • Interest on advances (accrued and outstanding) should be calculated as on 31st March (few banks charges interest on advances few days prior to 31st March which should not be considered)
  • Long outstanding entries (unexplainable and where there is no movement at all) in suspense account should be suggested for provisioning.
  • ‘NIL’ MOC Certificate should be issued even if there is no MOC.
  • MOC should also be countersigned by Branch Manager (views of the BM if any has to be attached on a separate sheet duly signed by him)
  • Submit all the Reports including Tax Audit Reports & Long Form Audit Report immediately on completion of Audit and before leaving the branch.
  • Make a columnar list of documents to be submitted to branch/regional/zonal/other office before commencement of Audit. (it is advisable to get all documents in your custody duly signed by the Branch Manger at the beginning of Audit)
  • Must get Certificate of Attendance signed by Branch Manager in duplicate before leaving the branch
  • Availability of security or net worth of borrower/guarantor should not be considered for the purpose of NPA recognition – it should always be based on recovery
  • 100% provision is required for assets which has become doubtful for more than 3 years i.e. NPA date on or before 31.03.2009.
  • To specifically report simultaneously to the CEO of the bank and regional office of the Department of Banking Supervision RBI where the HO of the bank is situated, any matter susceptible to be fraud or fraudulent activity or any foul play in any transactions. Any deliberate failure on part of the Auditors should render himself liable for action. If amount of fraud involve Rs 1 Crore or more – central office of the Department of Banking Supervision, RBI, Mumbai to be reported immediately.

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