2. Peculiarity of Bank Audit
Peculiar nature of banks and need for special audit considerations owing to
risks associated with the transactions- custody of large volumes of monetary items,
which needs to be stored and transferred, they are vulnerable to misappropriation and
fraud
Scale of operations
large number of branches –inland and overseas
large volume and variety of transaction in both numbers and value
extensive dependence on IT to process transactions as
operates through wide network of branches requiring decentralization of authority and
delegation of power.
Wide range of services offered such as ATM, net/phone banking, etc.
Statutory and regulatory requirements
Increasing number of new services and banking options
Large number of branches requiring decentralization of authority and delegation of
power.
3. Audit Planning
Time is short as
Banks desire adoption of audited accounts within a few
weeks of the year end
Many a times appointments of auditors are delayed
There is a limited time available for familiarisation of
systems & processes
Time available does not match the scope and risk
Computerisation has increased the banking activity
manifold .
This makes off site preparation and pre-
commencement work essential
4. Audit Planning contd.
The basis audit activity can be divided into
three segments namely
Off Site Preparations
On Site and
Audit Executions.
6. Off site activities
Get information on Bank profile, Staff, etc.
Study thoroughly
Previous report of Branch Auditors
Concurrent Audit report of the branche
Revenue Audit report (if any)
System Audit report
Unit/stock Inspection reports
Diligence reports
RBI inspection reports
Bank internal management report
Relevant laws/ regulations /RBI circulars
Knowledge of banking business
7. Off site activities contd.
Receipt of appointment letter
Audit Engagement letter
Send acceptance letter
8. HR allocation and skills
Plan for the requisite staff
Number
Adequate knowledge and experience
Obtain updated information on changes
RBI circulars
Change in related laws
Corporate laws
Foreign policy
9. Other pre-commencement
activities
Knowledge of business
Banking Industry and the Bank
Organisational structure of the Bank
Products of Bank
Banking terminology and schemes
AAS relevant in understanding business of branch
A reading of Guidance note on audit of banks by
ICAI would provide valuable guidance.
Review accounting policies and auditors report of
the bank for the preceding year.
Ratio analysis with previous years figures
10. Coordination
Co-ordination with management for effective and
efficient audit
Availability of books, personnel and equipment
Travel to unit visits chosen by you – especially
outstation
Discussion of serious pending issues
12. Audit programme
Scope of audit
Expected assessment of inherent and control risk
Delegation of work to audit team
Nature, timing and extent of audit procedure
Going concern assumption
Materiality thresholds
Time schedule
Flexibility to accommodate change in programme to
focus on weak areas
Remember , Audit planning is a continuous exercise
13. Compliance aspects
Compliance with RBI/ICAI Guidelines
Compliance with Banks internal
guidelines/manual of instructions
Compliance with terms of appointment
Compliance with Accounting Standards
Compliance with Auditing and Assurance
Standards.
14. Peer Review
ICAI has introduced Peer Review in 2007
Assessing the quality of attestation service
engagements performed by practise units.
Ensuring that the practise unit has maintained
adequate documentation
Peer Reviewers appointed by Peer Review Board
Records for immediately preceding three completed
financial years are verified by the Peer Reviewer.
15. Peer Review for Branch
Auditors
AllCentral Statutory Auditors of Public
Sector, Private Sector Banks and
ForeignBanks are covered by Peer Review in
Stage 1
Peer Review ensures that the practise units
comply with the professional and ethical
standards
Practise units have adequate training
programmes and systems and procedures for
conducting audit
