Bank Audit | Audit Approach, Procedure & Checklist to be followed by the Auditor

Advances are one of the primary sources of income for banks. Hence, it is necessary to carefully audit the advances to ensure effectiveness & compliance with regulations. Bank auditors play a critical role in the correct reporting of advances in financial statements. SBAs have adequate knowledge of the banking industry and its regulations. Advances generally comprise of:

a) Money lent by the bank to its customers including interest accrued and due

b) Debit balances in depositor accounts

c) Inter-Bank Participation Certificates

Checkpoints to be considered by the Statutory Branch Auditor while conducting the audit are:

1. Whether the auditor has checked the compliance with the terms of sanction and end use of funds should be ensured
2. Whether surprise checks should be made in respect of hypothecated goods
3. Whether accounts exceed the drawing power and the sanctioned limit
4. Whether the SBA has requested the branch manager for the files identified for examination in absence of original documents
5. Whether appropriate steps are taken for lodging claims for guarantees of ECGC/CGTS in case of default of advances covered by guarantees
6. Whether the auditor has checked the quantity and value of goods hypothecated with reference to the statement received from the borrower
7. Whether an inspection has been done by SBA of Life Insurance Policies and see whether they are assigned to the bank and whether such assignment has been registered with the insurer

Click Here To Read The Full Story