The document discusses the products and services offered by Development Credit Bank Ltd. to its customers in India. It provides an overview of the various account services, savings services, credit facilities, endowment facilities, and other services such as EFT, phone/email banking, debit cards, money transmittal, and cash chests. It also discusses the bank's branches across various Indian states and union territories, as well as its history originating from cooperative bank mergers in the 1930s and its transformation into a scheduled commercial bank in 1995.

1. 1
EXECUTIVE SUMMARY
This project is to view the task perform by an auditor while conducting the audit of bank
deposit and loans & advances. It explains the role played by different types of auditor, effect
of Non-Performing Asset on the asset of a bank. The auditor needs to be familiarizing with
the direction of RBI affecting the sanctioning and disbursement of advances. The auditor has
to ensure that documents are executed as per the terms of sanction. The auditor examine the
procedure for review of advances laid down by the authorities bas been complied with or not.
Basel II Recommendations affecting the capital adequacy norms advocated by the year,
which perhaps is the beneficial fall-out from the tightening of the prudential norms. The
auditing not only provide true and fair value but it also helps us to financial position and
internal control system of a bank

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RESEARCH METHODOLOGY
The data collected by me is secondary data. Due to lack of time. It is difficult to collect
primary data.
Objective of the study
 Helpful in analysis of Financial Statements.
 Helpful in comparative Study.
 Helpful in locating the weak spots of the business.
 Helpful in Forecasting.
 Estimate about the trend of the business.
 Fixation of ideal Standards.
 Effective Control.
 Study of Financial Soundness.
Limitations of the study
 Comparison not possible if different firms adopt different accounting policies.
 Data analysis becomes less effective due to price level changes.
 Amounts may be misleading in the absence of absolute data.
 Limited use of a single data.
 Lack of proper standards.
 False accounting data gives false information.
 Financial statement alone are not adequate for proper conclusions.
 Effect of personal ability and bias of the analyst.

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DCB BANK (DEVELOPMENT CREDIT BANK)
DCB Bank Ltd. (Formerly Development Credit Bank Ltd.) is a private sector scheduled
commercial bank in India. It has a network of 160 branches and 370 ATMs in the country. It
offers products to individuals, small and medium businesses, rural banking and mid
corporates across its branch network. The Bank is present in 17 states and 2 Union
Territories. Metros having DCB Bank branches are Ahmedabad, Aurangabad, Bengaluru,
Bhopal, Bhubaneswar, Chennai, Delhi NCR, Gandhinagar, Gurgaon, Hyderabad, Indore,
Jabalpur, Jaipur, Jalandhar, Jodhpur, Kochi, Kolkata, Lucknow, Ludhiana, Mumbai, NOIDA,
Panjim, Pune, Surat, Trichy and Vadodara.
DCB Bank is also focussed in expanding in tier 3 to tier 6 towns in Andhra Pradesh,
Chhattisgarh, Gujarat, Haryana, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and
Telangana. States where DCB Bank branches are located: Andhra Pradesh, Chhattisgarh,
Delhi NCR, Gujarat, Goa, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra,
Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal.
DCB Bank recently inaugurated branches at Ashoknagar in Madhya Pradesh and Waghodiya
in Gujarat. The Aga Khan Fund for Economic Development (AKFED) in the promoter of the
Bank with around 16.3% stake. Public shareholding under the Resident Individual category is
approximately 39.4%. The Bank received the Scheduled Commercial Bank licence from the
Reserve Bank of India on 31 May 1995.
DCB Bank's products and services range from loans for Small and medium enterprises and
Mid Corporate customers, to Loans for individual needs such as home loan, loan against
gold, commercial vehicle loan and small business loan. Agri & Inclusive Banking from DCB
Bank includes tractor loan, loan against gold, warehouse finance, loan against warehouse
receipt, dairy and farm loan, loans for microfinance organisations amongst other products.
DCB Bank Savings Accounts provide attractive value such as cash back option and
personalised account number. Additionally, DCB PayLess secured credit card is a credit
builder card. The Bank is active in the online and digital banking space with DCB on the Go -
instant mobile banking, SMS banking, telephone banking, Visa money transfer, foreign
exchange remittance service amongst others. Banking for NRIs or Non Resident Indians is
also provided at DCB Bank.
Founded in the 1930s, in Mumbai from a series of Co-operative bank mergers with the
Ismailia Co-operative Bank Limited and the Masalawala Co-operative Bank respectively.

4. 4
These 2 banks later merged to form Development Co-operative Bank, that changed to
Development Credit Bank after it was granted the scheduled bank license by the Reserve
Bank of India in May 1995. The Bank went on to successfully offer shares to the public by an
Initial Public Offering (IPO) in 2006. DCB Bank Limited is the new name of the Bank,
changed with due regulatory approval in January 2014.
DCB Bank is a modern emerging new generation private sector bank with 130 plus branches
across 17 states and 2 union territories. It is a scheduled commercial bank regulated by the
Reserve Bank of India. It is professionally managed and governed. DCB Bank has
contemporary technology and infrastructure including state of the art internet banking for
personal as well as business banking customers. DCB Banks business segments are Retail,
micro-SMEs, SMEs, mid-Corporate, Agriculture, Commodities, Government, Public Sector,
Indian Banks, Co- operative Banks and Non Banking Finance Companies (NBFC). DCB
Bank has approximately 450,000 customers. DCB Bank has deep roots in India since its
inception in 1930s. Its promoter and promoter group the Aga Khan Fund for Economic
Development (AKFED) & Platinum Jubilee Investments Ltd. holds over 19% stake. AKFED
is an international development enterprise. It is dedicated to promoting entrepreneurship and
building economically sound companies. History Founded in the1930s, in Mumbai from a
series of Co-operative bank mergers with the Ismailia Co-operative Bank Limited and the
Masalawala Co-operative Bank respectively. These 2 banks later merged to form
Development Co-operative Bank, that changed to Development Credit Bank after it was
granted the scheduled bank license by the Reserve Bank of India in May 1995. The Bank
went on to successfully offer shares to the public by an Initial Public Offering (IPO) in 2006.
DCB Bank Limited is the new name of the Bank, changed with due regulatory approval in
January 2014. Development Credit Bank (DCB) is the only co-operative bank which has
successfully attained prosperity in the face of change. On May 31, 1995 bank was converted
into a Scheduled Commercial Bank. The bank has considerably expanded the DCB network
by 2008 through shared networks. It is not just a bank but a financial supermarkets.

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BANK PRODUCTS AND SERVICES
Mentioned below is the list of products and services offered by Development Credit Bank Ltd to its
resident Indian client
Account Services
 Current Account
 Savings Account
Savings Services
 Recurring Deposits
 Fixed Deposits
Credit Facilities
 For Business
 Credit Against Gold
 Construction Tools Credits
 Auto Credit
 Business Vehicle Credits
Endowment Facilities
 Life Insurance
 General Insurance
 Demat Account Services
 Mutual Funds
 Licensed Banking
 Smart Business facilities
Other Services
 Electronic Funds Transfer (EFT) Services
 Account Statement by E-Mail
 Card to Card Money Transfer Services
 Telephone Phone Banking
 E-mail Banking
 Cell Phone Banking Services
 Global Debit Card Services
 Visa Money Transmittal Services
 Cash Chests
Bank offers an extensive range of products through its branches. The low-cost products have
been designed to cater the needs of small and medium businesses in selective regions. asic
products like savings and current accounts and innovative products like ‘DCB Trio’ and
‘Easy Business,’ are also being offered. Bank also offers demat account and a range of
investment products like mutual funds, insurance and bonds make the product offering
complete. Development Credit Bank (DCB) is emerging private sector banks in India has the
Network of 80 state-of-the-art branches and extension counters spread across the states of
Maharashtra, Gujarat, Andhra Pradesh, Karnataka, New Delhi, Rajasthan, Goa, Tamil Nadu,
Haryana, West Bengal, Union Territories of Daman & Diu and Dadra & Nagar Haveli. The

6. 6
terms of the banking license issued to the Bank under Section 22 of the Banking regulation
Act stipulated, amongst others, that:
a) the Bank must comply with the Guidelines on Entry of Private Sector Banks dated January
22, 1993 issued by the Reserve Bank of India;
b) on the date of conversion, the unimpaired value of the paid up capital and reserves of the
Bank together with the share application money received by it should not be less than
Rs.1000 million; c) the Bank must make a public issue of its equity and arrange to have its
shares listed on stock exchanges immediately after one year of its operations;
d) the Bank must comply with the priority sector lending norms of 40% as applicable to
private sector banks; and that
e) the Bank must ensure that not less than 25% of its branches are in rural/semi- urban areas
within three years of its operations. The Guidelines on Entry of Private Sector Banks which
chalk out the scheme for permitting the entry of new private sector banks, prescribe, in
relation to such a new private sector bank that: a) the new bank may be listed in the Second
Schedule of the Reserve Bank, 1934; b) shares of the banks should be listed on stock
exchanges; c) voting rights of the shareholders of the bank shall be governed by the ceiling of
16 1% (now increased to 10%) of the total voting rights as stipulated in Section 12(2) of the
Banking Regulations Act; d) the new bank must not have as its director any person who is a
director of any other banking company or of companies which are entitled to exercise voting
rights in excess of 20% of the total voting rights of all the shareholders of the banking
company as laid down in the Banking Regulation Act, 1949; e) the bank must achieve capital
adequacy of 8% (now increased to 9%) of the risk weighted assets from the beginning.
Similarly norms for income recognition, asset classification, and provisioning will also be
applicable to it from the beginning. The bank must also comply with the single borrower and
group borrower exposure limits that will be in force from time to time;
f) though the bank must comply with the norms for priority sector lending, some modification
in the composition of the priority sector lending may be considered by the RBI for an initial
period of three years;
g) the bank may be issued an authorized dealer’s license to deal in foreign exchange when
applied for;
h) it shall be governed by the policy that banks are free to open branches at various centers
including that banks are free to open branches at various centers including urban/metropolitan
centers without the prior approval of the RBI once they satisfy the capital adequacy and
prudential accounting norms. However, to avoid over-concentration of their branches in

7. 7
metropolitan areas and cities, a new bank must open rural and semi-urban branches also; and
that
i) such a new bank must make full use of modern infrastructural facilities in office
equipment, computer, telecommunications etc. in order to provide good customer service.
2007 - Development Credit Bank Ltd (DCB) has appointed Mr. D E Udwadia as an
Additional Director of the Bank. 2009 - Development Credit Bank Ltd (DCB) has appointed
Mr. Suhail Nathani as an Additional Director of the Bank at the Meeting of the Board of
Directors of the Bank held on January 29, 2009. - Development Credit Bank Ltd (DCB) has
appointed Mr. Murali M Natrajan as an Additional Director of the Bank w.e.f April 29, 2009.
Further, pursuant to approval of the Reserve Bank of India, Mr. Murali M Natrajan has been
appointed as Managing Director (MD) & CEO of the Bank for a period of three years from
April 29, 2009. 2010 - DCB Appoints Mr J.K Vishwanath as Chief Credit Officer. -
Development Credit Bank Ltd. and ICICI Lombard GIC Ltd. in Bancassurance partnership. -
DCB received permission to open two Semi-Urban / Rural branches in Gujarat. The locations
are Netrang, a Rural branch in Bharuch district and Mandvi, a Semi Urban branch in Surat
district. 2011 - Development Credit Bank (DCB) inaugurated its newest branch in Gujarat at
Vadodara . The branch is located at Ground floor of Startrek Building, Opposite ABS Tower,
OP Road, Vadodara. - DCB Bank inaugurates 81st branch at Mandvi, Surat District, Gujarat.
- DCB presents Aga Khan Hockey Tournament May 15, 21, 2011. 2012 - Development
Credit Bank Ltd has informed BSE regarding updates on Capital raising plan - QIP issue and
preferential issue. - DCB Bank inaugurates new branches in Itarsi and Pipariya, Madhya
Pradesh. -DCB Bank and ITZ Cash launch Freedom Pre-Paid Card.

8. 8
WHAT IS AUDIT?
MEANING
An audit is the process of checking that the way an organisation presents information about
its financial position (its ‘Financial Statement of Accounts’) is true and fair. In essence, ‘true
and fair’ means that, in the auditor’s opinion, the company’s financial statements offer a true
and fair view of its actual financial position, and that any assumptions they include are
reasonable.
That is not to say that an audit is designed to spot deliberate dishonesty, though it has been
known. Carrying out an audit is a complex and involved process which is most likely to
reveal oversights, accounting errors and over-optimistic predictions. Few unearth serious
issues such as fraud. A good way to visualize what an audit is all about is to imagine it as a
far longer, more complex, more challenging and more sceptical version of a cross-
examination of ‘the numbers’ on Dragon’s Den. An audit is also about gathering the
evidence required to work out whether an organization’s claims about profit, for instance, are
true and fair.
Once the audit process is complete, an organization can publish a set of ‘audited accounts’ –
essentially a detailed description of its financial position which has been verified by its
auditors. The auditor will write an Auditor’s Report, which essentially sets out an opinion on
the truth and fairness of the audited organization’s financial statement of accounts, based on
the evidence gathered during the audit process.
Finally, it is important to note that an audit is carried out on the assumption that the
organization being audited will be in a position to carry on trading for the following 12
months. If the auditor finds good reasons to doubt the organization’s ability to carry on, then
this must be reflected in the Auditor’s Report, for instance by stating ‘there is a material
uncertainty over the organization’s ability to continue as a going concern’.
AUDITING
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of correspondence
between those assertions and established criteria and communicating the results to interested
users. Financial Audits In a financial audit, the assertions about which the auditor seeks
objective evidence relate to the reliability and integrity of financial and, occasionally,
operating information. The examination of the objective evidence underlying the financial
data as reported is called an audit. Analytics, inquiries of management and the verification of
information through evidential matter (support) external to the company (i.e., “other audit
procedures”) are required. Auditing refers to a systematic and independent examination of
books, accounts, documents and vouchers of an organization to ascertain how far the
financial statements present a true and fair view of the concern. It also attempts to ensure that
the books of accounts are properly maintained by the concern as required by law. Auditing
has become such an ubiquitous phenomenon in the corporate and the public sector that

9. 9
academics started identifying an "Audit Society". The auditor perceives and recognizes the
propositions before him/her for examination, obtains evidence, evaluates the same and
formulates an opinion on the basis of his judgement which is communicated through his audit
report.
Any subject matter may be audited. Audits provide third party assurance to various
stakeholders that the subject matter is free from material misstatement. The term is most
frequently applied to audits of the financial information relating to a legal person. Other areas
which are commonly audited include: internal controls, quality management, project
management, water management, and energy conservation. As a result of an audit,
stakeholders may effectively evaluate and improve the effectiveness of risk management,
control, and the governance process over the subject matter. The word audit is derived from a
Latin word "audire" which means "to hear". During the medieval times when manual book-
keeping was prevalent, auditors in Britain used to hear the accounts read out for them and
checked that the organization's personnel were not negligent or fraudulent. Although a review
is less extensive than an audit, review procedures do provide a basis for expressing limited
assurance that the accountant did not become aware of any material changes that should be
made to the financial statements. To perform a review, the accountant must be familiar with
the company’s business and the accounting practices of its industry.
DEFINITION of 'Auditing'
A systematic process of (1) objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of correspondence
between those assertions and established criteria and (2) communicating the results to
interested users.

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FEATURES OF AUDITING
1. Training
One of the most basic standards for an audit is that the auditor has to be trained to conduct the
audit properly. He must be familiar with standard accounting principles as well as with
business management and administration. In most cases, a degree in business or accounting,
along with certification by organizations such as the American Institute of Certified Public
Accountants, usually provides some verification of the auditor's capabilities. The amount of
experience the auditor has also indicates whether he is qualified.
2. Independence
Auditors must conduct audits independently, which means they have to remain objective
throughout the audit process. If the auditor fails to remain objective, the results of the audit
may be skewed toward the auditor's preferences or beliefs and therefore will not represent
what really is happening or what is best for the company. The auditor should not appear to be
associated with the company's interests outside of the audit.
3. Due Professional Care
Another characteristic of a proper audit is that the auditor uses due professional care. He uses
all of his business and accounting knowledge to gather the information necessary to
determine what is happening within the company to render a logical, unbiased opinion to
managers. He also is careful not to reveal confidential information to unauthorized parties.
This characteristic describes the auditors fiduciary duty to the company using his services.
4. Planning, Supervision and Sufficiency
Planning is the first phase of all audits. It is a major characteristic of audits because failure to
plan results in the auditor being less efficient. Part of proper planning involves hiring any
audit assistants necessary and supervising them well. As the auditor and his assistants
progress through their audit plan, they must gather information sufficient to meet the audit's
objectives and support the opinions rendered.
5.Statements
If an audit is performed well, the auditor explains in his report whether the information
received adheres to current accounting standards. He also details any circumstances that led
the company to deviate from those standards if deviations are present. The auditor tells
whether the information he has received is accurate and states a formal opinion about the
results of the audit or shows why he couldn't reach a conclusion

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ADVANTAGES OF AUDIT
1. Audited accounts are readily accepted by Government authorities like Tax authorities and
Central banks.
2. By auditing the accounts Errors and frauds can be detected and rectified in time.
3. Audited accounts carry greater authority than the accounts which have not been audited.
4. For accessing finance from financial institutions like Banks, previous years audited
accounts are evaluated for determining repayment capability.
5. Regular audit of account create fear among the employees in the accounts department and
exercise a great moral influence on clients staff thereby restraining them from commit frauds
and errors.
6. Audited accounts facilitate settlement of claims on the retirement/death of a partner.
7. In the event of loss of property by fire or on happening of the event insured against,
Audited accounts help in the early settlement of claims from the insurance company.
8.In case of Public Company where ownership is separated from management, auditing of
accounts reassure the shareholders that accounts have been properly maintained, funds are
utilized for the right purpose and the management have not taken any undue advantage of
their position.
9.To determine the value of the business in the event of purchase or sales of the business,
audited account will be the treated as the base for the evaluation.
10. The audit of accounts by a qualified auditor also help the management to understand the
financial position of the business and also it will help the management to take decision on
various matters like report in internal control system of the organization or setting up of an
internal audit department etc.
11.If the accounts have been audited by an independent person, disputes between the
management and labor unions on payment of bonus and higher wages can be settled
amicably.
12. In the event of admission of a new partner, audited accounts will facilitate the formation
of terms and conditions for joining the new partner. Last 3 years audited accounts will give a
general idea about the growth and financial position of the business to the new partner.

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DISADVANTAGES
1. Frauds by management Auditing fails to check planned frauds. The management can play
tricks to manipulate the accounts in order to conceal their inefficiencies. The audited accounts
could not show the true view.
2. Wrong certificate Auditing is based on many certificates taken from management and other
persons. Auditing may fail to provide the desired results. When certificates provides wrong
information.
3. Misleading clarification Auditing fails to disclose correct information. The management
may not provide correct clarification. The auditor is bound to present his report even of the
clarification is not true.
4. No true picture The auditing does not present true picture. Auditing fails to disclose true
picture when figures have been manipulated.
5. No correct view Auditing fails to present correct view. There are limitations of accounting
so figures are not facts. These figures are based on opinion. Thus auditing is unable to
disclose correct view.
6. No suggestion Auditing is not concerned with the management policies. The auditor
cannot guide management for better use of capital. He is unable to suggest what should have
been done.
7. Absence of honesty Honesty and independence are highly essential traits. The auditor must
certify what is true. The absence of honesty and independence means failure of audit purpose.
8. Bias of auditor The auditing fails to present fair view due to bias of an auditor. It is the
quality of an auditor that he should be independent. The bias auditing fails to help many
people.
9. High cost The audit work is completed without cost. The cost of audit should not exceed of
errors and frauds. Auditing fails to serve million of business entities.
10. Past action Auditing is nothing more than checking of past activities. It is not concerned
with present or future. The audit fees increase the cost of business. Such cost does not help to
improve market standing of enterprises.

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PROCESS OF AUDITING
1. Notification First, you will receive a letter to inform you of an upcoming audit. The
auditor will send you a preliminary checklist. This is a list of documents (e.g. organization
charts, financial statements) that will help the auditor learn about your unit before planning
the audit.
2. Planning After reviewing the information, the auditor will plan the review, conduct an
engagement risk assessment, draft an audit plan, and schedule an opening meeting.
3. Opening Meeting The opening meeting should include senior management and any
administrative staff that may be involved in the audit. During this meeting, the scope of the
audit will be discussed. You should feel free to ask the auditors to review areas that you are
concerned about. The time frame of the audit will be determined, and you should discuss any
potential timing issues (e.g. vacations, deadlines) that could impact the audit. It doesn't take
as much of your time as you might expect!
4. Fieldwork
After the opening meeting, the auditor will finalize the audit plan and begin fieldwork.
Fieldwork typically consists of talking with staff, reviewing procedure manuals, learning
about your business processes, testing for compliance with applicable university policies and
procedures and laws and regulations, and assessing the adequacy of internal controls. You
should make your staff aware that the auditor will be scheduling meetings with them.
5. Communication
Throughout the process, the auditor will keep you informed, and you will have an opportunity
to discuss issues noted and the possible solutions.
6. Report Drafting
After the fieldwork is completed, the auditor will draft a report. The report consists of several
sections and includes: the distribution list, the follow-up date, a general overview of your
unit, the scope of the audit, any major audit concerns, the overall conclusion, and detailed
commentary describing the findings and recommended solutions. You should read the draft

14. 14
report carefully to make sure there are no errors. If you find a mistake, inform the auditor
right away so that it can be corrected before the final report is issued.
7. Management Response
Once the report is finalized, we will request your management responses. The response
consists of 3 components: whether you agree or disagree with the problem, your action plan
to correct the problem, and the expected completion date.
8. Closing Meeting
A closing meeting will be held so that everyone can discuss the audit report and review your
management responses. This is an opportunity to discuss how the audit went and any
remaining issues.
7. Report Distribution
The report is then distributed to you, your manager(s), senior university administrators,
internal audit, and the university's external auditors. We also distribute an audit survey to the
audited unit to solicit feedback about the audit. Feedback is important to us, since it can help
us improve the audit process.
8. Follow-Up
Follow-up reviews are performed on an issue-by-issue basis and typically occur shortly after
the expected completion date, so that agreed-upon corrective actions can be implemented.
The purpose of the follow-up is to verify that you have implemented the agreed-upon
corrective actions. The auditor will interview staff, perform tests, or review new procedures
to perform the verification. You will then receive a letter from the auditor indicating whether
you have satisfactorily corrected all problems or whether further actions are necessary.

15. 15
AUDIT OF BANK
Legal Framework
There is an elaborate legal framework governing the functioning of banks in India. The
principal enactments which govern the functioning of various types of banks are: Banking
Regulation Act, 1949
♦ State Bank of India Act, 1955
♦ Companies Act, 1956
♦ State Bank of India (Subsidiary Banks) Act, 1959
♦ Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
♦ Regional Rural Banks Act, 1976
♦ Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
♦ Information Technology Act, 2000
♦ Prevention of Money Laundering Act, 2002
♦ Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002
♦ Credit Information Companies Regulation Act, 2005
♦ Payment and Settlement Systems Act, 2007
Besides, the above enactments, the provisions of the Reserve Bank of India Act, 1934, also
affect the functioning of banks. The Act gives wide powers to the RBI to give directions to
banks which also have considerable effect on the functioning of banks.
Form and Content of Financial Statements
Sub-sections (1) and (2) of section 29 of the Banking Regulation Act, 1949, deal with form
and content of financial statements of a banking company and their authentication. These
subsections are also applicable to nationalized banks, State Bank of India, subsidiaries of the
State Bank of India, and Regional Rural Banks. Salient Features of the Third Schedule -
Form A of the Third Schedule to the Banking Act, 1949, contains the form of balance sheet
and Form B contains the form of profit and loss account. The balance sheet as well as the
profit and loss account are required to be presented in vertical form. Capital and liabilities are
to be presented under the following five broad heads:
 Capital
 Reserves and Surplus
 Deposits

16. 16
 Borrowings
 Other liabilities and provision
Assets are required to be presented under the following six broad heads:
 Cash and Balances with Reserve Bank of India
 Balances with Banks and Money at call and short notice
 Investments
 Advances
 Fixed assets
 Other assets
Details of items of capital, liabilities and assets are required to be presented in the prescribed
form in various schedules. The aggregate amounts of contingent liabilities and bills for
collection are to be presented on the face of the balance sheet. While details of contingent
liabilities are to be presented by way of a schedule. The following items are required to be
presented on the face of the profit and loss account.
I Income
 Interest earned
 Other income
II. Expenditure
 Interest expended
 Operating expenses
 Provisions and contingencies
III. Profit (Loss)
 Net profit (loss) for the year
 Profit/loss brought forward
IV. Appropriations
 Transfer to statutory reserves
 Transfer to other reserves
 Transfer to Government/Proposed Dividend
 Balance carried over to balance sheet
Prescribed details of interest earned, other income, interest expended and operating expenses
are required to be given by way of schedules to the profit and loss account.

17. 17
Other Disclosures
In addition to the disclosures to be made in the balance sheet and profit
and loss account in pursuance of the requirements of the Third Schedule to the Act, the RBI
has directed to disclose some other information specified by RBI by way of notes on
accounts.
Advanced Auditing and Professional Ethics
Profit and Loss account prescribed under The Banking Act, 1949 and other information
specified by RBI by way of notes on accounts, Student may refer Chapter 6 Financial
Statements of Banking Companies of IPCC Level Paper 5 Advanced Accounting Study
Material. Signatures - Sub-section (2) of section 29 of the Act requires that the financial
statements of banking companies incorporated in India should be signed by the manager or
principal officer of the banking company and by at least three directors (or all the directors in
case the number is less than three). The financial statements of a foreign banking company
are to be signed by the manager or agent of the principal office in India. It may be noted that
the accounts of a branch are usually signed by the manager of the branch and/or the
accountant. The provision of sub-section (2) of section 29 are also applicable to nationalized
banks, State Bank of India, its subsidiaries, and regional rural banks. Requirements of
Banking Regulation Act, 1949, vis a vis Companies Act, 1956 – The requirements of the
Companies Act, 1956, relating to the balance sheet and profit and loss account of a company,
in so far as they are not inconsistent with the Banking Regulation Act, 1949, also apply to the
balance sheet or profit and loss account, as the case may be, of a banking company [sub-
section (3) of section 29 of the Act]. It may be noted that this provision does not apply to
nationalized banks, State Bank of India, its subsidiaries and regional rural banks. Banks listed
on a stock exchange have to comply with the requirements of the Listing Agreement as
amended from time to time.

18. 18
TYPES OF BANK AUDIT
INTERNAL AUDIT (IA)
Internal Audit (IA) is an independent unit that performs regular audits to evaluate the
adequacy and effectiveness of internal controls and overall risk management. IA is staffed by
professionals with varied skills and expertise. The Audit Committee of the Board (ACB)
provides direction and monitors the effectiveness of the IA function. IA uses a comprehensive
risk based approach taking into account the guidelines of RBI and international best practices.
In order to continuously innovate and keep a high vigil and enhanced risk management, IA
uses innovative audits methodologies including optimum use of analytics and technology. In
FY 2014, IA revamped the branch audit approach and tools. The continued use of specialized
snap audits has provided management with quick and deep insights into weak links and
ability to address the gaps promptly. As a result of its consistent inputs and value added
observations, IA has become a value partner in improving the overall risk management and
controls of various units of the Bank. Corrective Action Trackers are part of regular
management updates and forms a basis of evaluating units’ performance. IA is playing an
active role in providing inputs for enhancing the existing policies and procedures. IA also
undertakes thematic reviews of key products and projects. It uses experienced audit firms for
concurrent audits in line with ACB approved framework. IA continues to appraise the Board,
the Audit Committee of the Board (ACB) and the Management teams in terms of newer
emerging threats and recommend appropriate mitigating measures.
STATUTORY AUDIT:
This is an annual audit determined by statute and done normally at the end of the financial
year while some of the larger branches are similarly audited half yearly. A bank’s statutory
audit is essentially a balance sheet audit including the Long Audit Report though there is no
scope restriction of the statutory auditor to perform certain actions of other auditors as part of
his duty or if some findings lead him into the domain of the auditors such as Revenue,
inspector and even concurrent. The statutory auditor performs the following functions.
Verifies the classification of items of the Balance Sheet to assure their correct placement
Basel II accord, which has influenced the prudential norms, has included the statutory auditor
as an active member to assure the proper execution of the prevailing prudential norms. The
direct result of an accurate classification is the appropriateness of income recognition and
thus the effect on the profitability of the Bank.

19. 19
CONCURRENT AUDIT:
In the beginning of the 1990’s, the Great Banking Scam or the Harshad Mehta Scam rocked
the nation. This brought into limelight special category of audit called concurrent audit or
continuous audit. This stemmed from the need of filling in the gap between the annual
statutory audits and the intervening period between two inspections, which is a period
sufficiently large to cause damage to the Bank. Now, RBI who insisted that at least 50% of
the business of the Bank should be covered under concurrent controlled the spotlight of the
concurrent audit. While some Banks covered very large branches under the umbrella of
concurrent audit. Some banks took the excurse for improvement by including weak branches
though having low volume of business. Concurrent audit in one sentence will mean checking
yesterday’s transactions today. Let us see the broad areas covered by the Concurrent Auditor.
A. Revenue Aspects:
1. Interest earned and service charges earned by the Bank
2. Interest Paid
3. All charges paid like cancellation charges, compensation under Court Directive etc.
B. Expenditure:
1. Salary payments
2. Branch expenses like printing and stationary, temporary employees etc.
3. Rent of premises etc.
C. Documentation and other aspects of advances department:
1. Documentation correctness of ALL new advances granted during the period
2. Validity of all old advances to ensure that they are not time barred.
3. Currency of insurance cover of stock machinery etc.
4. Whether the inspections of units and stock have been carried out at the pre-set
intervals.
D. Administrative and other aspects:
1. Correctness of attendance and leave records
2. Cash Department working including security aspects with periodic surprise inspection
by the auditor
3. Stock check at regular intervals of all security documents like Blank cheque books,
Demand Drafts, Pay orders, Pass Books etc.

20. 20
RBI AUDIT:
The Central Bank of the country also sends its own auditors to the Banks for their own
inspection. Their actions cannot be covered in this project because it is more of a supervisory
implementation of a Government Policy existing from time to time. The primary aim of this
audit is as follows.
Overall assessment of the assets and liabilities of the Bank, whether its financial position is
satisfactory, whether it is in position to pay its depositors in full as and when their claims
accrue, and in the event of loss, whether it has sufficient cushion of owned funds to safeguard
the interests of depositors.
Soundness of Bank’s policies and procedures and effectiveness of the management to
safeguard point No.1 mentioned above as also whether they are on approved lines and in
conformity with socio-economic objectives.

21. 21
TYPES OF AUDIT REPORT
An audit report is an appraisal of a small business’s complete financial status. Completed by
an independent accounting professional, this document covers a company’s assets and
liabilities, and presents the auditor’s educated assessment of the firm’s financial position and
future. Audit reports are required by law if a company is publicly traded or in an industry
regulated by the Securities and Exchange Commission (SEC). Companies seeking funding, as
well as those looking to improve internal controls, also find this information valuable. There
are four types of audit reports.
Unqualified Opinion
Often called a clean opinion, an unqualified opinion is an audit report that is issued when an
auditor determines that each of the financial records provided by the small business is free of
any misrepresentations. In addition, an unqualified opinion indicates that the financial records
have been maintained in accordance with the standards known as Generally Accepted
Accounting Principles (GAAP). This is the best type of report a business can receive.
Typically, an unqualified report consists of a title that includes the word “independent.” This
is done to illustrate that it was prepared by an unbiased third party. The title is followed by
the main body. Made up of three paragraphs, the main body highlights the responsibilities of
the auditor, the purpose of the audit and the auditor’s findings. The auditor signs and dates
the document, including his address.
Qualified Opinion
In situations when a company’s financial records have not been maintained in accordance
with GAAP but no misrepresentations are identified, an auditor will issue a qualified opinion.
The writing of a qualified opinion is extremely similar to that of an unqualified opinion. A
qualified opinion, however, will include an additional paragraph that highlights the reason
why the audit report is not unqualified.
Adverse Opinion
The worst type of financial report that can be issued to a business is an adverse opinion. This
indicates that the firm’s financial records do not conform to GAAP. In addition, the financial
records provided by the business have been grossly misrepresented. Although this may occur
by error, it is often an indication of fraud. When this type of report is issued, a company must
correct its financial statement and have it re-audited, as investors, lenders and other
requesting parties will generally not accept it.

22. 22
Disclaimer of Opinion
On some occasions, an auditor is unable to complete an accurate audit report. This may occur
for a variety of reasons, such as an absence of appropriate financial records. When this
happens, the auditor issues a disclaimer of opinion, stating that an opinion of the firm’s
financial status could not be determined.
AUDITORS INFO
M/s. B S R & Co. LLP, Chartered Accountants (Registration No.101248W), were appointed
as Statutory Auditors at the last Annual General Meeting. They are eligible for appointment
for the FY 2014-15. Section 139 of the Companies Act, 2013 and the Rules made there under
provide that a company can appoint a firm as auditor for maximum two terms of five
consecutive years. In other words, company can make appointment of auditor for five years at
a time. However the Bank is also governed by the provisions of Banking Regulation Act,
1949 and the circulars/notification/guidelines issued by Reserve Bank of India (RBI) from
time to time. As per the extant provisions, RBI gives permission for appointment of auditor
on year to year basis. Further as per RBI’s directive, it is mandatory to rotate the Auditor
after completion of four years. M/s. B S R & Co. LLP has already completed term of two
years. Taking into consideration the mandatory rotation after four years, appointment of the
auditors has been recommended for up to two years which is also be subject to prior approval
of RBI and ratification of shareholders in subsequent Annual General Meeting. The Reserve
Bank of India has been approached for their re-appointment. Your Board recommends their
appointment as Statutory Auditors at the ensuing Annual General Meeting for a period of up
to two financial years, subject to RBI approval.

23. 23
NOSTRO ACCOUNT
A bank account held in a foreign country by a domestic bank, denominated in the currency of
that country. Nostro accounts are used to facilitate settlement of foreign exchange and trade
transactions. The term is derived from the Latin word for "ours." Conversely, accounts that
are held by the domestic bank in its home country for foreign banks are called vostro
accounts, derived from the Latin word for "yours.
Home Currency of one country is foreign currency for other country. Conversion of foreign
currency in to home currency is the fundamental of foreign exchange. Therefore in order to
put through the foreign exchange transaction, the bank which is authorized to deal in foreign
exchange, maintains an account with its overseas Bank to keep stocks of foreign currencies.
Normally, such account is a current account in the books of the overseas Bank. For example,
an Indian bank authorized to deal in foreign exchange maintain an account with overseas
bank in USA in US Dollar such account maintained in the foreign currency at foreign center
by Indian bank is said as ‘Nostro Account’ . Nostro is an Italian word which literally means
‘Our’. So the ‘Nostro Account’ of the Indian bank with its branch/correspondents in USA is
said as ‘Our Accounts with You’.

24. 24
BALANCE SHEET
Parameter MAR'15
(₹ Cr.)
MAR'14
(₹ Cr.)
YoY
%Change
SOURCES OF FUNDS
Share Capital 282.01 250.32 12.66%
Share warrants & Outstandings 3.20 2.96 7.91%
Total Reserve 1,303.36 900.67 44.71%
Shareholder's Funds 1,588.58 1,153.96 37.66%
Deposits 12,609.13 10,325.16 22.12%
Borrowings 1,163.80 860.16 35.30%
Other Liabilities & Provisions 770.81 583.86 32.02%
TOTAL LIABILITIES 16,132.31 12,923.14 24.83%
APPLICATION OF FUNDS:
Cash and balance with Reserve Bank of India 633.68 505.07 25.46%
Balances with banks and money at call and short notice 85.49 184.50 -53.66%
Investments 4,470.56 3,634.22 23.01%
Advances 10,465.06 8,140.19 28.56%
Gross Block 376.95 349.70 7.79%
Less : Accumulated Depreciation 140.27 111.06 26.30%
Less : Impairment of Assets 0.00 0.00 0.00%
Net Block 236.68 238.64 -0.82%
Lease Adjustment 0.00 0.00 0.00%
Capital Work in Progress 0.00 0.00 0.00%
Other Assets 240.83 220.51 9.21%
TOTAL ASSETS 16,132.31 12,923.14 24.83%

25. 25
Contingent Liability 2,456.57 2,521.04 -2.56%
Bills for collection 375.71 430.45 -12.72%
PROFIT & LOSS
Parameter MAR'15
(₹ Cr.)
MAR'14
(₹ Cr.)
Change %
I. INCOME
Interest Earned 1,422.42 1,128.26 26.07%
Other Income 165.72 138.66 19.51%
Total Income 1,588.14 1,266.92 25.35%
II. EXPENDITURE
Interest Expended 914.20 759.87 20.31%
Operating Expenses 396.49 319.09 24.26%
PBIDT 277.45 187.96 47.61%
Provisions and Contingencies 69.42 36.56 89.85%
Profit Before Tax 208.03 151.40 37.40%
Taxes 16.85 0.04 42016.00%
Total 1,396.95 1,115.56 25.22%
III. Profit & Loss
PAT 191.18 151.36 26.31%
Extraordinary Items 0.00 0.00 0.00%
Profit brought forward -138.41 -249.47 44.52%
Adjusted Net Profit -6.12 0.00 100.00%
Total Profit & Loss 185.06 151.36 22.27%
Appropriations 46.65 -98.10 147.56%

26. 26
Equity Dividend (%) 0.00 0.00 0.00%
Earnings Per Share (in ₹) 6.78 6.05 12.12%
Book Value (in ₹) 54.39 43.88 23.96%
CASH FLOW STATEMENT
Parameter MAR'15
(₹ Cr.)
MAR'14
(₹ Cr.)
Change
%
Net Profit Before Taxes 207.95 151.36 37.39%
Adjustments for Expenses & Provisions 102.79 63.46 61.98%
Adjustments for Liabilities & Assets -815.85 273.25 -398.58%
Cash Flow from operating activities -495.71 489.75 -201.22%
Cash Flow from investing activities -28.83 -18.75 -53.74%
Cash Flow from financing activities 554.14 -664.68 183.37%
Effect of exchange fluctuation on translation reserve 0.00 0.00 0.00%
Net increase/(decrease) in cash and cash equivalents 29.61 -193.68 115.29%
Opening Cash & Cash Equivalents 689.57 883.25 -21.93%
Cash & Cash Equivalent on Amalgamation / Take over /
Merger
0.00 0.00 0.00%
Cash & Cash Equivalent of Subsidiaries under
liquidations
0.00 0.00 0.00%
Translation adjustment on reserves / op cash balalces
frgn subsidiaries
0.00 0.00 0.00%
Effect of Foreign Exchange Fluctuations 0.00 0.00 0.00%
Closing Cash & Cash Equivalent 719.18 689.57 4.29%

27. 27
AUDITOR CHECKS THE ACCOUNT
Preliminary work:
a) The auditor should acquire knowledge of the regulatory environment in which the bank
operates. Thus, the auditor should familiarize himself with the relevant provisions of
applicable laws and ascertain the scope of his duties and responsibilities in accordance with
such laws. He should be well acquainted with the provisions of the Banking Regulation act,
1956 in the case of audit of a banking company as far as they relate of preparation and
presentation of financial statements and their audit.
b) The auditor should also acquire knowledge of the economic environment in which the
bank operates. Similarly, the auditor needs to acquire good working knowledge of the
services offered by the bank. In acquiring such knowledge, the auditor needs to be aware of
the many variation in the basic deposit, loan and treasury services that are offered and
continue to be developed by banks in response to market conditions. To do so, the auditor
needs to understand the nature of services rendered through instruments such as letters of
credit, acceptances, forward contracts and other similar instruments.
c) The auditor should also obtain and understanding of the nature of books and records
maintained and the terminology used by the bank to describe various types of transaction and
operations. In case of joint auditors, it would be preferable that the auditor also obtains a
general understanding of the books and records, etc, relating to the work of the other auditors,
In addition to the above, the auditor should undertake the following:
• I. Obtaining internal audit reports, inspection reports, inspection reports and
concurrent audit reports pertaining to the bank/branch.
• II. Obtaining the latest report of revenue or income and expenditure audits, where
available.
• In the case of branch auditors, obtaining the report given by the outgoing branch
manager to the incoming branch in the case of change in incumbent at the branch during the
year under audit, to the extent the same is relevant for the audit.
d) RBI has introduced and offsite surveillance system for commercial banks on various
aspects of operations including solvency, liquidity asset quality, earnings, performance,
insider trading etc., and has indicated that such reports shall be submitted at periodic intervals
from the year commencing 1-04-1995. It will be appropriate to be familiar with the reports
submitted and to review them to the event that they are relevant for the purpose of audit.

28. 28
e) In a computerized environment the audit procedure may have to appropriately tuned to the
circumstances, particularly as the books are not authenticated as in manually maintained
accounts and the auditor may not have his in-house computer facility to taste the software
programmes. The emphasis would have to be laid on internal control procedure related to
inputs, security in the matter of access to EDP system, use of codes, passwords, data inputs
being prepared by person independent of key operators and other build-in procedure for
datavalidation and system controls as to ensure completeness and correctness of the
transaction keyed in. system documentation of the software may be obtained and examined.
f) One set of tests that the auditor at both the branch level and head office level may apply for
audit of banks in analytical procedure.
2) Evaluation of internal control system:
It may be noted that transaction in banks are voluminous and repetitive, andfall into limited
categories/heads of account. It may, therefore, be moreappropriate that the evaluation of the
internal control is made for each class/category of transaction. If the exercise of internal
control evaluation is properly carried out, it assist the auditor to determine the effectiveness
or otherwise of the control systems and accordingly enable him to strengthen his audit
procedures, and lay appropriate emphasis on the risk prone areas. Internal control would
include accounting control administrative controls.
a)Accounting controls:
Accounting controls cover areas directly concerned with recording of financial transactions
and maintenance of such registers/records as to ensure their reliability .Internal accounting
controls are also envisaging such procedures as would determine responsibility and fix
accountability with regard to safeguarding of the assets of the bank. It would not be out of
place of mention that there is a distinction between accounting system and internal
accounting controls. Accounting system envisages the processing of the transaction and
events, their recognition, and appropriate recording. Internal controls are techniques, method
and procedures so designed and usually built into systems, as would enable prevention as
well as detection of errors, omissions or irregularities in the process of execution and
recording of transaction/events. The internal accounting controls as would ensure prevention
of errors, omissions and irregularities would include following:
I. No transaction can be registered/recorded unless it is sanctioned/approved by the
designated authority

29. 29
II. Built- in dual control/supervisory procedures ensure that there is an independent
automatic check on input/vouchers.
III. No single person has authority to initiate transaction and record through all stages to
the general ledger. Each day transactions are accurately and promptly recorded, and the
control and subsidiary records are kept balanced through personnel independent of each
other. The auditor would be well advised to look into other areas may lead to detection of
errors, omissions and irregularities, inter alias in the following:
a) Missing/loss of security paper, stationery forms.
b) Accumulation of transactions/balances in nominal heads of accounts like suspense,
sundries, inter-branch accounts, or other nominal head of accounts particularly if there
accounts particularly if these accounts are extensively used to balance books, despite
availability of information.
c) Accumulation of old/large unexplained/unsubstantiated entries in accounts with
Reserve Bank of India and other banks and institutions.
d) Transaction represented by mere book adjustments no tevidenced/substantiated or
upon non-honoring of contracts/commitments.
e) Origination debits I head office accounts/inter-branch accounts.
f) Analytical review procedure.
g) Serious irregularities pointer out in internal audit/inspection/special audit
h) Complaints/matters pending in the vigilance/grievances cell, as regards discrepancies
in accounts of constituents, etc.
i) Results of periodic analytical review, if observed as adverse.
b) Administrative control:
These are broadly concerned with the decision making process and laying down of
authority/delegation of powers by the management. It may be noted that in the normal course,
the head office use the zonal/regional offices donot conduct any banking business. They are
generally responsible for administrative and policy decisions which are executed at the
branch level.
3) Preparation of audit programme for substantive testing and its execution
Having familiarized him the requirements of audit, the auditor should prepare an audit
programme for substantive testing which should adequately cover the scope of his work. In
framing the audit programme, due weightage should be given by the auditor to areas where,

30. 30
in his view, there areweaknesses in the internal controls. The audit programme for the
statutory auditors would be different from that of the branch auditor. At the branch level,
basic banking operation are to be covered by the audit. On the other hand, the statutory
auditors at the head office ( provisions for gratuity, inter-office accounts, etc.). The scope of
the work of the statutory auditors would also involve dealing with various accounting
aspects and disclosure requirements arising out of the branch returns.
4) Preparation and submission of audit report
The branch auditor forwards his report to the statutory auditors who have to deal with
the same in such manner, as they considered necessary. It is desirable that the branch
auditors’ reports are adequately in unambiguous terms. As far as possible, the financial
impact of all qualification or adverse comments on the branch accounts should be clearly
brought out in the branch audit report. It would assist the statutory auditors if a standard
pattern of reporting, say, head wise, commencing with assets, then liabilities and thereafter
items related to income and expenditure, is followed. In preparing the audit report, the auditor
should keep in mind the concept of materiality. Thus, items which do not materially affect the
view presented by the financial statements may be ignored. However, in the judgement of the
auditor, an item though not material, is contrary to accounting principles or any
pronouncements of the Institute of Chartered Accountants of India or in such as would
require a review of the relevant procedure, it would be appropriate for him to draw the
attention of the management to this aspect in his long form audit report. In all cases, matters
covering the statutory responsibilities of the auditor should be dealt with in the main report.
The LFAR should be used to further elaborate matters contained in the main report and as
substitute thereof. Similarly while framing his main report, the auditor should consider,
wherever practicable, the significance of various comments in his LFAR, where any of the
comments made by the auditor threr in is adverse, he should consider whether qualification in
his main report is necessary by using his discretion on the facts and circumstances of each
case. In may be emphasized that the main report should be self-contained document

31. 31
AUDITOR’S REPORT
Auditor’s Report
To the Members of DCB Bank Limited
(formerly known as Development Credit Bank Limited)
Report on the Financial Statements
1. We have audited the accompanying financial statements of DCB Bank Limited (formerly
known as Development Credit Bank Limited) (‘the Bank’), which comprise the Balance
Sheet as at 31 March 2014, the Profit and Loss Account and the Cash Flow Statement for the
year then ended, a summary of significant accounting policies and other explanatory
information. Management’s Responsibility for the Financial Statements
2. Management is responsible for preparation of these financial statements that give a true
and fair view of the financial position, financial performance and cash flows of the Bank in
accordance with provisions of Section 29 of the Banking Regulation Act, 1949 read with
Section 211 of the Companies Act, 1956 and circulars and guidelines issued by Reserve Bank
of India from time to time. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material misstatement, whether due
to fraud or error. Auditor’s Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit of the Bank including its branches in accordance with Standards on
Auditing (‘the Standards’) issued by the Institute of Chartered Accountants of India. Those
Standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatements.
4. An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Bank’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Bank’s internal control. An audit also includes evaluating the appropriateness of accounting
the overall presentation of the financial statements.

32. 32
5. We believe that policies used and the reasonableness of the accounting estimates made by
management, as well as evaluating the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to the explanations given to
us, the financial statements give the information required by the Banking Regulation Act,
1949 as well as the Companies Act, 1956, in the manner so required for banking companies
and give a true and fair view in conformity with accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31 March 2014;
(b) in the case of the Profit and Loss Account, of the profit of the Bank for the year ended on
that date; and
(c) in the case of the Cash Flow Statement, of the cash fl ows of the Bank for the year ended
on that date.
Report on Other Legal and Regulatory Requirements
7. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance
with the provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 211
of the Companies Act, 1956.
8. We report that:
(a) we have obtained all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purpose
of our audit and have found them to be satisfactory;
(b) the transactions of the Bank, which have come to our notice, have been within the powers
of the Bank; and
(c) during the course of our audit we have visited 13 branches. Since the key operations of
the Bank are automated with the key applications integrated to the core banking systems, the
audit is carried out centrally as all the necessary records and data required for the purposes of
our audit are available therein.
9. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement comply with the Accounting Standards referred to in subsection (3C) of section
211 of the Companies Act, 1956, to the extent they are not inconsistent with the accounting
policies prescribed by Reserve Bank of India.
10. We further report that:

33. 33
(i) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with
by this report are in agreement with the books of account;
(ii) the financial accounting systems of the Bank are centralised and, therefore, returns are
not necessary to be submitted by the branches;
(iii) in our opinion, proper books of account as required by law have been kept by the Bank
so far as appears from our examination of those books; and
(iv) on the basis of written representations received from the Directors and taken on record
by the Board of Directors, none of the Directors is disqualified as on 31 March 2014 from
being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the
Companies Act, 1956.

34. 34
CONCLUSION
The project the position of Indian banking system as well as the principal laid down
by the Basel Committee on banking supervision. This assessment was done in seven major
areas, which are core principals, concurrent audit, internal audit, deposit, loan accounting and
transparency and foreign exchange transaction. The project concluded that, given the
complexity and development of Indian banking sector, the overall level of compliances with
the standards and codes is of high order. This project gives the correct ideas about how the
major areas can be found by way of effective auditing system i.e. errors, frauds,
manipulations etc. form this auditor get the clear idea show to recommend on the banks
position. Project also contain that how to conduct of audit of the banks, what are the various
procedure through which audit of banks should be done. Form auditing point of view, there is
proper follow up of work done in every organization whether it is banking company or any
other company or any other company there no misconduct of transactions is taken places for
that purpose the auditing is very important aspect in today’s scenario form company and
point

35. 35
BIBLIOGRAPHY
 http://www.investopedia.com/terms/a/audit.asp
 http://www.bankexamstoday.com/2014/12/what-is-bank-audit-and-its-process-in.html
 http://accounting-simplified.com/audit/introduction/types-of-audits.html
 http://smallbusiness.chron.com/characteristics-audit-18425.html
http://purebusinessschool.blogspot.in/2013/05/advantages-disadvantages-and.html
 http://www.trueandfair.org.uk/what_is_an_audit
 http://www.accountingconcern.com/accounting-dictionary/auditing/
 http://www.audit.cornell.edu/audit.html
 https://docupub.com/docs/cd8a90c2-910b-466b-a8ae-fcda551d9f00/chapter-11-audit-
of-banks.pdf
 http://smallbusiness.chron.com/4-types-audit-reports-3794.html
BOOKS:
1. Modern Auditing
By Graham W. Cosserat; Neil Rodda
Wiley, 2009 (3rd edition)
2. Audit, Accountability and Government
By Kathryn Hollingsworth; Fidelma White
Clarendon Press, 1999
3. The Audit Society : Rituals Of Verification
By Michael Power
Oxford University Press, 1997
4. Accounting Quality, Auditing and Corporate Governance
By Imhoff, Eugene A., Jr
Accounting Horizons, Vol. 17, Annual 2003