Bank Audit – Illustrative List of Special Purpose/Exception Reports in CBS

With the adoption of Core Banking System (CBS) by banks, the audit is required to be conducted through the system. The CBS is the set of basic software components that manage the services provided by a bank to its customers through its branches. It helps banks to reduce the risk that can result from manual data entry and out-of-date information. Under CBS the data is stored in centralized servers at the data centre. From the bank’s perspective, control over the application and processes has been entrusted at Data Centre Level.

The branch auditor should call for reports, if any, of the CBS environment in use at the branch. The branch auditor should scrutinise automated as well as manually compiled MIS reports on a sample basis to assess their quality and report any shortcomings therein in the LFAR. This story discusses an indicative list of reports that will benefit Statutory Branch Auditors while undertaking the audit in a fully computerised environment.

I. Advances snapshot covering all important parameters

II. Accounts overdue in excess of 90 days & are classified as Standard Assets

III. List of Bank Guarantees (BGs) invoked during the period/ year and current status of the account, including a list of forced debits pertaining to the invocation, not debited to the operative accounts of the borrower i.e. parked separately either under advances or office accounts

IV. List of accounts such as SMA/ Watch list/ Probable NPA /Weak account as of the last date of the audit period

V. Loan to minors (Excluding Non-individual accounts and excluding Education, Loan/OD against deposit cases)

VI. Data submitted to CERSAI

VII. Red flagged accounts since more than 6 months

VIII. Loans above the maximum lending rate (as applicable in each bank)

IX. Quick mortality (NPA within 1 year of original sanction date)

X. List of Letter of Credits (LCs) devolved during the period/ year and current status of the account, including a list of forced debits pertaining to the devolvement, not debited to the operative accounts of the borrower i.e. parked separated either under advances or office accounts

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