Bank Audit | Audit Procedure and Reporting of Cash & Balance

Bank audits are an essential component of the financial reporting process for banks and financial institutions. The audit procedures for banks are complex and require specific expertise to ensure the accuracy and reliability of financial statements. One crucial area of bank auditing is the verification of cash and balances with the Reserve Bank of India (RBI), State Bank of India (SBI), and other banks. In this context, it is important to understand the audit procedures and reporting requirements for cash and balances with these institutions.

I. Physical Cash Verification by SBA:

The physical verification of cash by SBA needs to be evidenced by the working papers of SBA indicating the denominations and the number of currency notes. It includes Physical verification of cash on hand, Cash at ATMs, Cash at CDMs, and Reconciliation with the GL balances.

II. Timing for Physical Verification of Cash:

The auditor should make every effort to physically visit the branch at the close of business on the last working day of the year or before the start of business hours on the next day.

III. Audit procedure and Reporting Obligations:

a) The SBA shall examine the large transactions in inter-bank accounts, particularly towards the year-end, to ensure that no transactions have been put through for window-dressing

b) The SBA should examine the original deposit receipts in respect of balances in deposit accounts and confirmation certificates obtained from banks in respect of outstanding deposits.

c) The SBA shall examine that all outstanding cheques or bills sent for collection and outstanding as of the closing date have been credited subsequently.

d) The balances with banks outside India should also be verified in the manner described above. These balances should be converted into Indian currency at the exchange rates prevailing on the balance sheet date.

This story discusses the timing for cash verification, cash verification procedure, and audit procedure for balance with RBI, SBI and other Banks and Reporting obligation under LFAR of SBA.

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