Akuntansi Perusahaan Dagang

Bank Branch Audit – Managing Risk
An Integrated Work Paper Model

CA Sripriya Kumar
Member – SIRC of ICAI

Bank Branch Audit Working Paper Manual
A FOREWORD
Dear Professional Colleague
This model working paper on Audit planning, Audit Program and a template of a Working Paper
Document file has been designed to assist Small and Medium Practitioners in the performance and
documentation of our Bank Branch audit engagements and to enable Peer review processes
There are 2 key risks associated with Bank Audits. One, the Audit risk that a material misstatement
could go undetected and two, a professional risk which may arise due to non-performance of
appropriate and relevant audit procedures or maintenance of working papers to demonstrate the work
done. This Standard template of work paper document will minimise, if not eliminate such risks
This is intended to ensure process standardization that will assure a base line quality in the work we
do as well as Common Minimum Standard that we will be able to display as a profession to mitigate
the above risks. This is an indicative document that helps us to approach the work we do on a Top
down basis as well as to ensure that we comprehensively cover and document the engagement
correctly and consistently. User discretion is recommended to modify this document to suit the needs
to the entity you are auditing
There is a tremendous amount of published data on Bank Branch Audits and I have merely attempted
to consolidate and compile some of this into an integrated template. This is my personal view and does
not necessarily reflect all Best Practices in Audit Planning and Work Paper Management that are
unique to every practicing professional.
This document will also enable an acceptable level of documentation for Peer Reviews whose key
expectation in a Bank Audit Peer review process would be the ability of the working papers to
demonstrate adequate work done to ensure :
 Financial statements being true and fair and free from material misrepresentations
 Compliance with RBI norms including master and other circulars
 Compliance with relevant Accounting Standards as relevant to Bank Branches
 Compliance with Audit, Review and Other Standards of the ICAI as relevant
One of the key changes in reporting as compared to the previous year is the introduction of a new
reporting format in line with SA700, SA705 and SA706. In addition to this we are required to provide
data on the number and value of Memorandum of Changes proposed by us on the face of the Main
Audit Report, a measurable output of the branch audit exercise.
This entire document may be printed at the end of the audit and working papers be organised
and cross referenced in the respective sections for user and reviewer convenience
I have for this compilation used certain audit plan tables / appendices from a publication tilted Hand
book on Bank Branch Audit by CA P R Suresh and gratefully acknowledge the same
CA Sripriya K
2
Page
Prepared By : Reviewed By :
BANK BRANCH AUDIT

INTEGRATED WORK PAPER FILE
Bank Name
Branch
Year 2014-15
Date of Commencement
Date of Completion
Partner In Charge
File reference
Number of Staff deployed
Advances Value
Address of the Branch
Name of the Manager
Phone Number
Circle Office Contact

3
Page
TABLE OF CONTENTS
1. Objective and Scope of audit _____________________________________________________________________ 6

2. Scope Limitations, if any _________________________________________________________________________ 8
3. Report, Returns and Certificates ________________________________________________________________ 9
4. Auditing Review and Other Standards ________________________________________________________11
5. Engagement documentation ____________________________________________________________________13
6. Branch Overview _________________________________________________________________________________14
7. General Ledger – Sub Ledger reconciliation _________________________________________________20
8. Review Notes of Concurrent, Risk Based Audit, Inspection Reports _____________________21
9. Audit Strategy _____________________________________________________________________________________22
10. Key Reports from CBS to be used for audit ________________________________________________24
11. Standard Schedules ___________________________________________________________________________25
12. Advances and General Audit plan ___________________________________________________________28
13. Advances Verification – Large advances ____________________________________________________30
14. Special Note on Audit of Restructured Advances _________________________________________34
15. Advances Verification – Cash Credit and overdraft accounts____________________________35
16. Advances Verification – Housing loans _____________________________________________________37
17. Advances Verification – Educational loans_________________________________________________38
18. Advances Verification – Vehicle loans ______________________________________________________39
19. Advances Verification – Jewel Loans ________________________________________________________40
20. Advances Verification – Loans against Own Deposits ____________________________________41
21. Advances Verification – Loans against financial assets __________________________________42
22. NPA Review _____________________________________________________________________________________43
23. Verification of Deposits _______________________________________________________________________44
24. Interest Verification ___________________________________________________________________________45
25. Check list for Long Form Audit Report _____________________________________________________46
26. Profit and Loss Account – Analytical review procedures ________________________________49
27. Certification Related Working papers ______________________________________________________49
28. Tax Audit Workings____________________________________________________________________________49
29. Other Working papers ________________________________________________________________________50
30. References ______________________________________________________________________________________50
4
31. Appendices _____________________________________________________________________________________50

Page
5
Page
1. Objective and Scope of audit
1.1. We have been appointed as the Statutory Auditors of the ……………………… Branch of
……………………………………….. ……………………………… Bank for the year 2014-15
1.2. The appointment letter dated ………………… has been accepted by us on

……………………………………………. after due communication to the previous year auditor vide letter
dated …………………………………….
1.3. The key terms of reference is to certify the financial statements of the branch as at March 31,
2014 with reference to a True and Fair perspective
1.4. The Branch audit instructions as received from the Head / Circle office have been duly cognised
for in the preparation of this integrated work paper document
1.5. The following key reports / certificates are required to be issued by us
 Branch Auditors report

 Memorandum of Changes if any
 Certified / Attested financial statements
 Long Form Audit Report
 Schedules and Certificates as per index attached in the next segment
 Tax Audit report under Section 44AB of the Income tax Act
1.6. The audit was commenced on ……………. and completed on …………………. By the following team
Name Designation Days From To
Partner
Qualified Paid Assistant
Audit Assistant
Articleship trainee
1.7. The key risks in Bank Branch Audits are as under

 Misstatement of income, expenses, Assets or Liabilities.
 Unrecorded liabilities and contingent liabilities
 Asset Classification and NPA provisions not adequate for impaired assets , Asset
Classification and Income Recognition especially for restructured assets
 KYC / AML norm compliance related issues
 Internal control failures over banking operations including potential / undetected /
detected frauds
 Wrong certification
6
Page
1.8. The details of Bank Staff from whom data / records / information and explanations were
solicited / obtained for the purpose of this audit are as under
Designation Name Grade

Branch Manager
Loans Officer
Deposit Officer
Other Officers
7
Page
2. Scope Limitations, if any
2.1. The following scope limitations have been appropriately dealt with in the Audit report of the
branch / LFAR and suitably highlighted as matters of emphasis
2.2. The Branch management has not been able to furnish the following details / records /
explanations in connection with the audit
Information Amount Impact on audit, if any Management Comments

requested and
not provided
Refer 7. 1
2.3. The following unit visits requested by us could not be undertaken due to the following reasons
Information Amount Impact on audit, if any Management Comments

requested and
not provided
Refer 7.2
8
Page
3. Report, Returns and Certificates
3.1. Key Deliverables
We are required to certify and complete the following individual reports / returns and certificates
( modify as necessary based on banks standard instructions ). The number of copies of each
submission, applicability and / or completion status is also as under
No of copies
Completion
Status
S No Index
RETURNS
1 BS - 1 Liabilities
2 BS - 2 Assets
3 BS - 3 Expenditure for the half year ended 31-03-15
4 BS - 4 Income for the half year ended 31-03-15
5 Final A & L as on 31-03-15
6 Final P & L for the year 31-03-15
BS 7 – STATEMENT OF CLAIMS MADE AGAINST THE BANK NOT
7 ACKNOWLEDGED AS DEBT
8 BS 8 – DETAILS OF RESTRUCTUTRED A/C (EXCLUDING CDR)
9 BS 9 – DETAILS OF COUNTRYWISE, RISK CATEGORY WISE EXPOSURE
B Supplementary to BS Schedules
10 SUPP. B – BREAK UP OF LCS, GUARANTEES, ETC.
11 SUPP. C – CLASSIFICATION OF ADVANCES
12 Supp D - Break iup of sundry receivables and sundry depsoits
13 SUPP. E1 & E2 – EXPOSURE TO SENSITIVE SECTOR
14 Supp F - information relating to DSB 1 and additional information
15 SUPP. G – CASH & BANK BALANCE FOR SELECT NON-FRIDAYS
16 Supp H - Residual maturity pattern of forex advances / deposits
SUPP. K - PARTICULARS OF EXPENDITURE AND INCOME RELATING TO
17 PREVIOUS YEARS
SUPP. M – BREAK UP OF PAYMENTS TO AND PROVISIONS FOR
18 EMPLOYEES
C LA General and LA Suit Filed as at 31-03-15
19 Loan Analysis Summary
20 Recoveries made in Select Borrowal accounts from 01-04-14 to 31-03-15
Control Sheet for NPA, Income Recognition, Movement of NPA and
21 Interest reversal of NPA
22 BS - 3 Expenditure for the half year ended 30-09-15
23 BS - 4 Income for the half year ended 30-09-15
24 Supp M - 30-09-14
9
Page
25 SFVM inventory statement
No of copies
Completion
Status
S No Index
CERTIFICATES
26 Branch Audit Report
27 Annexure A to E ( Memorandum of Changes )
28 Questionnaire in addition to Branch Audit report
29 Special Deposit Scheme 1975
30 Compulsory Deposit scheme 1974
31 PMRY scheme
Form of Certificate on sharing of recoveries in claim settled accounts under
32 SLGS 1971/SLGS(SSI) 1981
33 Interest Subvention claim
34 Interest relief on Rupee Export credit
35 Compliance of Accounting Standard 11 as per Annual Closing Circular
36 Technology upgradation fund scheme
37 Capital subsidy scheme for processing machinery
38 LFAR
39 Tax audit report
40 SLR / CRR
41 Ghosh Committee Report
42 Jhilani Committee Report
43 Statement of Capital Adequacy
44 Statement of Risk Weight Assets
45 Certificate of passing previous year MOC
Certificate of Compliance with Income recognition, Asset Classsification and
46 provisioning norms
47 Provision for sacrifice under NPV method for restructured advances
48 Provision held on upgraded restructured advances for two years
49 Sector wise, security wise and asset classification wise statement
50 Certificate of Lending to Sensitive Sector
51 Certificate of Cash Margin held
3.2. Attach final attested report, statements and certificates to be attached to this segment
3.3. In case of any schedules not audited by us ( eg. Sep 30 A/L, P/L etc) these may be signed with a
seal as “Initialled for Identification purposes only”
10
Page
4. Auditing Review and Other Standards
The work has been planned and performed in accordance with the following Auditing, Review and
Other Standards as prescribed by the Institute of Chartered Accountants of India to the extent
applicable for the engagement
SA reference Description
SA 200 OVERALL OBJECTIVES OF THE INDEPENDENT AUDITOR AND THE CONDUCT
OF AN AUDIT IN ACCORDANCE WITH STANDARDS ON AUDITING.
SA210 AGREEING THE TERMS OF AUDIT ENGAGEMENTS.
SA220 QUALITY CONTROL FOR AN AUDIT OF FINANCIAL STATEMENTS.
SA230 AUDIT DOCUMENTATION.
SA240 THE AUDITOR’S RESPONSIBILITIES RELATING TO FRAUD IN AN AUDIT OF
FINANCIAL STATEMENTS.
SA250 CONSIDERATION OF LAWS AND REGULATIONS IN AN AUDIT OF FINANCIAL
STATEMENTS.
SA260 COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE.
SA265 COMMUNICATING DEFICIENCIES IN INTERNAL CONTROL TO THOSE
CHARGED WITH GOVERNANCE AND MANAGEMENT.
SA299 RESPONSIBILITY OF JOINT AUDITORS.
SA300 PLANNING AN AUDIT OF FINANCIAL STATEMENTS.
SA315 IDENTIFYING AND ASSESSING THE RISK OF MATERIAL MISSTATEMENT
THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT.
SA320 MATERIALITY IN PLANNING AND PERFORMING AN AUDIT.
SA330 THE AUDITOR’S RESPONSES TO ASSESSED RISKS.
SA402 AUDIT CONSIDERATIONS RELATING TO AN ENTITY USING A SERVICE
ORGANISATION.
SA450 EVALUATION OF MISSTATEMENTS IDENTIFIED DURING THE AUDIT.
SA500 AUDIT EVIDENCE.
SA501 AUDIT EVIDENCE—SPECIFIC CONSIDERATIONS FOR SELECTED ITEMS.
SA505 EXTERNAL CONFIRMATIONS.
SA510 INITIAL AUDIT ENGAGEMENTS—OPENING BALANCES.
SA520 ANALYTICAL PROCEDURES.
SA530 AUDIT SAMPLING.
SA540 AUDITING ACCOUNTING ESTIMATES, INCLUDING FAIR VALUE ACCOUNTING
ESTIMATES, AND RELATED DISCLOSURES.
SA550 RELATED PARTIES.
SA560 SUBSEQUENT EVENTS.
SA570 GOING CONCERN.
SA580 WRITTEN REPRESENTATIONS.
SA600 USING THE WORK OF ANOTHER AUDITOR.
SA610 USING THE WORK OF INTERNAL AUDITORS.
11
SA620 USING THE WORK OF AN AUDITOR’S EXPERT.

Page
SA reference Description
SA700 FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS.
SA705 MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITOR’S

REPORT.
SA706 EMPHASIS OF MATTER PARAGRAPHS AND OTHER MATTER PARAGRAPHS IN
THE INDEPENDENT AUDITOR’S REPORT.
SA710 COMPARATIVE INFORMATION— CORRESPONDING FIGURES AND

COMPARATIVE FINANCIAL STATEMENTS.
SA720 THE AUDITOR’S RESPONSIBILITY IN RELATION TO OTHER INFORMATION IN

DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS.
SA800 SPECIAL CONSIDERATIONS—AUDITS OF FINANCIAL STATEMENTS

PREPARED IN ACCORDANCE WITH SPECIAL PURPOSE FRAMEWORKS.
SA805 SPECIAL CONSIDERATIONS—AUDITS OF SINGLE FINANCIAL STATEMENTS

AND SPECIFIC ELEMENTS, ACCOUNTS OR ITEMS OF A FINANCIAL
STATEMENT.
SA810 ENGAGEMENTS TO REPORT ON SUMMARY FINANCIAL STATEMENTS.
SRE2400 ENGAGEMENTS TO REVIEW FINANCIAL STATEMENTS.
SRE2410 REVIEW OF INTERIM FINANCIAL INFORMATION PERFORMED BY THE

INDEPENDENT AUDITOR OF THE ENTITY.
SAE3400 THE EXAMINATION OF PROSPECTIVE FINANCIAL INFORMATION.
SAE3402 ASSURANCE REPORTS ON CONTROLS AT A SERVICE ORGANISATION.
SRS4400 ENGAGEMENTS TO PERFORM AGREED-UPON PROCEDURES REGARDING

FINANCIAL INFORMATION.
SRS4410 ENGAGEMENTS TO COMPILE FINANCIAL INFORMATION.

12
Page
5. Engagement documentation
5.1. Audit Acceptance Letter
The audit acceptance letter has been provided to the CO and a copy is kept in the next page.
Related documentation including Declaration of fidelity and secrecy, Declaration of full time
practice and Declaration of Indebtedness has also been attached to this section. Refer Appendix 1
for acceptance letter
5.2. Engagement Letter
An engagement letter has been issued and kept in Appendix 2
5.3. Letter of communication with previous auditor
Communication to the previous auditor M/s ………………………….. has been sent on ……………………….
Vide courier ref ……………………… dated ……………………… and response has / has not been received.
Further the previous auditor has / has not been contacted over phone / e mail. Refer Appendix 3
for Communication sent and response received. Refer Appendix 3
5.4. Representation letter
Management Representation letter has been obtained and kept in Appendix 4
13
Page
6. Branch Overview
6.1. Key data
Description 2014-15 2013-14

Rs . lakhs Rs . lakhs
Total Assets
Total liabilities
Total Advances
Total Deposits
Income
Expenditure
Profit / Loss
6.2. Target Vs Accomplishment
Description 2014-15 2013-14

Target Actual
Rs . lakhs Rs . Lakhs
Total Advances
Total Deposits
Rating of the Branch
14
Page
6.3. Advances Overview - top 10 advance categories of the branch
S No Category of advances 2014-15 2014-15 2013-14 2013-14

Rs . lakhs No of Rs . lakhs No of
accts accts
1 Cash Credit
2 Overdraft
3 Term loans
4 Crop loans
5 Housing loans
6 Jewel loans
7
8..
10 Other advances
Total Advances
15
Page
6.4. Large Advance Profiling
List of advances greater than Rs 2 Crores or individually accounting for 5% of the total advances
whichever is lower to be covered for detailed checking are as under
S No Account reference / name 2014-15 2014-15 2013-14 2013-14

accts accts
1
2
3
4
5
6
6.5. Customer wise advances
Based on our discussions with the branch manager, these advances belong to the same party and are
considered for checking on a collective basis as slippage in one account could result in NPA status for
all accounts
S No Customer Name Facilities 2014-15

Rs . lakhs
1 1
2
3
2 1
2
3
3 1
2
3
16
Page
6.6. Advance profiling by value
S No Slab - Rs Lakhs outstanding 2014-15 2014-15

Rs . lakhs No of accts
1 < Rs 1 lakh
2 Rs 1 – 5 lakhs
3 Rs 5 – 10 lakhs
4 Rs 10 - 50 lakhs
5 Rs 50 lakhs – Rs 1 Crore
6 Rs 1 to 2 Crores
7 Rs 2 to 5 Crores
8 Rs 5 to 10 Crores
9 > Rs 10 Crores
6.7. Deposit profiling
S No Category of deposit accounts 2014-15 2014-15 2013-14 2013-14

accts accts
1
2
3
4
5
6 Others
Total Deposits
17
Page
6.8. Restructured advances
The following are the advances restructured by the branch and to be reviewed for compliance with
restructuring terms and conditions as per revised sanctions. Repeated restructured accounts will
also be reviewed
S No Account reference / Name During Upto 2014-15

2014-15 2013-14
Rs . lakhs Rs. Lakhs Rs . lakhs
1
2
3
4
5
6.9. Interest rate and other charges on major advances
Advances Type Interest % Charges % Charges % Charges %
18
Page
6.10. Interest rate on deposits
Deposit type Days Interest %
6.11. Any frauds reported
Note on frauds reported at the branch in the last few years
6.12. Information in the public domain
We have scanned the public domain for information pertaining to the Bank and we report as under :
19
Page
6.13. Asset Classification as of date of audit
S No Category 2014-15 2014-15 2013-14 2013-14

accts accts
1 Standard
2 Substandard
3 Doubtful
4 Loss
Total advances
6.14. Review of previous year Audit report and LFAR
A short note on any significant issues noticed in the last years audit report , LFAR, NPA provisioning
and Note on frauds / large write offs at the branch in the last few years
6.15. Any other matters for consideration to be included
7. General Ledger – Sub Ledger reconciliation
The GL / SL reconciliation report to be obtained from CBS and differences if any have been
investigated and reported as under
Nature of discrepancy Amount
20
Page
8. Review Notes of Concurrent, Risk Based Audit, Inspection Reports
Concurrent Audit
S No Account reference / nature of Amount Present Status – Impact, if any

issue / date of report Rectified, LFAR, on audit
MoC, strategy
Unadjusted
Refer 20.1
Risk Based Internal Audit

MoC, strategy
Unadjusted
Inspection Reports

MoC, strategy
Unadjusted
Previous Year LFAR / Audit report issues

MoC, strategy
Unadjusted
21
Page
9. Audit Strategy
Based on our high level review of the branch data, loans and deposits CBS files and based on
discussions with the Branch manager the following is proposed as the audit strategy
9.1. Top Down Approach to audit
The audit strategy will envisage a top down approach which involves understanding the Balance
Sheet and P & L and a drill down to perform compliance and substantive procedures at a component
/ transaction level
9.2. Utilisation of Other Audit reports
The branch has been covered under Concurrent audits / Risk based internal audits as well as
Inspections. These reports will be reviewed to gain a quick understanding of the control framework
and the efficient functioning at the branch.
9.3. Sample selection
CBS reports will be downloaded converted to excel and samples selected across loan types,
accounting periods, rates , value slabs
9.4. Advances
 Understand and appreciate target related pressures and potential impact on misstatements
 Top accounts ( Rs 2 Crs / 5% advance ) will be checked 100% to cover all accounts
 Samples of ….. accounts will be taken across all categories of advances to check sanction,
documentation, income accrual and monitoring controls
 Particular attention will be paid to the following accounts based on our review of the
Concurrent / inspection reports
o ………………..
o ……………….
o ……………….
 The following unit visits will be undertaken to perform inspection of books / assets held by
customers
o ………………..
o ……………….
o ……………….
 All accounts with irregularities as indicated in CBS ( based on loan balance file ) will be
undertaken for review with bank manager to identify potential NPA cases. The Irregular loan
22
balance report will also be reviewed in detail and documented

Page
 Sanity checks of advances file will be undertaken for interest rate inconsistencies / sub rate /
off standard rates for the particular categories
 Interest and processing charge accruals will be test checked for 10 random months across ….
Loan files and CCOD files ( periodic / daily interest computation )
 Large disbursements close to year / quarter end will be reviewed in detail on a test basis
 Clean loans / bullet loans to be reviewed in detail
 Special emphasis on restructured advances
9.5. Deposits
 Top deposit accounts will be checked to review completeness, adequacy , relevance of

documentation
 Large deposits placed at year end will be reviewed in detail
 Sanity checks of advances file will be undertaken for interest rate inconsistencies / sub plr /
off standard rates for the particular categories
9.6. Other items
 Checklist driven approach guided by key control aspects as stated in the LFAR
23
Page
10. Key Reports from CBS to be used for audit
The following key reports have been obtained from CBS
 Balance sheet
 Profit and Loss account
 Loan Balance file
 CC OD file
 Deposit balance file
 Interest ledger
 NPA file
 SMA file
 Irregular loans file
 Previous year NPA file
 TDS ledgers
 Guarantee Commission register
24
Page
11. Standard Schedules
11.1. Top Notes for attention of Manager / Partner
S No Nature of Issue Amount LFAR MoC Fraud related Final Disposal

Status
25
Page
11.2. Items Adjusted –Memorandum of Changes
The following MoC’s have been recommended by us based on our audit of the financial
statements and on the basis of information and explanations provided to us
S No Nature of Issue Debit Credit Amount Remarks

Account Account
Rectification of
Income recognition
Reclassification of
NPA’s ( fresh )
Change in the
status of Old NPA’s
Account
reclassifications
within P&L: and
A&L
Reclassification of
Loans and
Advances where
done differently by
the branch
Assets put to use
and not capitalised
Any other
26
Page
11.3. Minutes of discussions with Branch Manager including NPA review
S No Rationale for Account Amount Remarks LFAR / MoC /

selection for reference outstanding Unadjusted
NPA review and name Differences
Inadequate
documentation
Inadequate
security cover
Irregularity in
servicing
principal and /
or interest
Repeated
restructuring
Drawing Power
related issues
Failed sanity
checks on limits
vs financial data
Solitary credits
in accounts
Inoperative
accounts
Financials
related issues
observed
Public domain
information
Suspected
Frauds
Any other
reason
27
Page
12. Advances and General Audit plan
12.1. Summary of advances of the branch ( as per Balance Comparison report)
Advance Category Amt 2014-15 Amt 2013-14
28
Page
12.2. General Audit plan for advances
12.2.1. Obtain the Loan listing as at the Date of Audit

12.2.2. Loans greater than Rs.2Crore limit or Rs 2 Cr balance outstanding to be taken up for
detailed review documentation for LFAR
12.2.3. Generate the following reports:
o Special Watch Report
o Restructured accounts report
o Suspended Accounts
o NPA Listing
12.2.4. Identify samples of loans to be checked.
12.2.5. Ensure 100% of files selected for samples are available to confirm that no file is lost
12.2.6. Review loans against checklist prepared category wise in relation to
o Application
o Credit appraisal
o Sanction letter
o Disbursement
o Master data updation in CBS
o Interest computation
o Principal repayment
o Fixation of drawing power
o Verification of securities
o Submission of stock and book debts
o Submission of financial statements
o Any other documentation
29
Page
13. Advances Verification – Large advances
13.1. Checklist for large advances
Obtain list of all large advances ( Rs 2 Crs / 5% ) and complete the following aspects
30
Page
Sl No Particulars Remarks Page

Number
ref
1 Name of the borrower
2 Date of Loan Application
Whether loan application is processed duly obtaining all
records / documents, Audited Financial Statements and unit
inspection
Date on which recommended by branch
Whether approved by competent authority
Date on which duly approved
3 Nature of Limit
Fund Based
Cash Credit
Overdraft
Term Loan
Bills purchase / discounting
Non Fund based
Letters of Credit
Bank Guarantees
Total Exposure
Classification Priority / NPS
4 Date of original Sanction
5 Due Date of renewal
Date of renewal / review
6 Number of days overdue since
7 Sanction terms
8 Primary security
9 Collateral security
10 Facility wise margin
11 Special terms and conditions for compliance
Documentation
Execution of Hypothecation and other documents
Registration of Charges if company
Legal opinion
Valuation report copy
Audited financial Statements
Margin requirement and additional capital infusions
others
12 Disbursement – is it done directly in term loan accounts
Are there bullet disbursement in Housing loan for
31
construction
Deficiencies in disbursements
Page
Is the operative account allowed to be utilised in single

disbursement
Ensure end use of funds
Verify and if applicable, Report diversion of funds at the point
of disbursement
13 Post disbursement monitoring
Is the facility operated with the limit, identify number of days
when it is beyond limit / DP
Verify adhoc and the manner of adjustment of adhoc
Deviation from sanction terms
14 Whether stock statements are being obtained regularly
Whether book debt statements duly certified by CA’s / as per
terms are obtained regularly
Is the Drawing power correctly marked in the system
Is there delay in obtaining the above
Whether penal interest is charged for delay in submission of
stock / book debt statements
Whether stock statement are perused and checked by branch
officials
Whether stock inspections are carried out by branch officials
/ concurrent auditors
Report of inspections / Concurrent auditors
Is the stock statement / book debt statement as at 31st March
of previous year tallying with the Audited Financial Statement
of the same date.
Deviations if any, how dealt with
If the deviation is significant whether it has any impact on the
drawing power determination and consequent
asset classification
Whether insurance cover is obtained
Is it fully insured or under insured – quantum of under
insurance
Whether RC book, Key and transfer forms obtained for vehicle
loans
Whether term loan disbursements are done directly
Whether receipts of payments made to vendors obtained
15 Operation in the account
Whether operation in the account is satisfactory
Whether frequent overdrawing is authorised / approved
Whether term loan repayments are regular
If overdue, number of instalments and whether any
instalment is regularised by way of additional facility or
accomodation
Any other observation / deficiency in the account
16 Whether processing and inspection charges are charged and
32
recovered
17 Whether the Sector wise classification is correct
Page
18 Whether the securities offered are in place to ensure

correctness of security wise classification
19 Whether asset classification is correctly made
20 Whether interest and legal charges on NPA accounts are not
debited to borrowers account.
13.2. Samples and Matters for Consideration
33
Page
14. Special Note on Audit of Restructured Advances
14.1. Indicative Checklist
 Obtain a general understanding of the type of advance which has been restructured – project
/ non project advances, prior to or after Commencement of Commercial production etc as
per the RBI master circular which deals in detail on manner and mode of treatment of
restructured advances
 Restructured advances to be reviewed with reference to revised terms of sanction properly

approved by the relevant sanctioning authority
 Repeated restructuring to be reviewed for NPA classification
 All terms of revised sanction are complied with ( including but not limited to revision in
commercial production, interest rate revision, rescheduling of repayments, additional
security cover, promoters contribution enhancements, escrow requirements etc ). In case of
non-compliance, appropriate reclassifications have been considered
14.2. Verification and results
34
Page
15. Advances Verification – Cash Credit and overdraft accounts
Financial Statements and solvency / capability of borrower / limit

 Unaudited financial statements have been furnished for balances < Rs 1 lakh
 Audited financial statements have been furnished for balances > Rs 1 lakh
 Audited financial statements have been furnished for corporate borrowers
 Income tax returns have been furnished
Limit fixation and approval

 Proposal for assessment of Working capital needs is available
 Sanction as per limits of branch
If immovable property has been offered as security ,

 EC for continuous period is available and is clear
 Title Deeds have been deposited with the bank
 If immovable property , EM regn > Rs 25 lakhs
 Legal opinion is available and indicates clean title deeds
 Valuation report is present and is commensurate
 Valuation report is less than three years old
 Insurance policy available, adequate and comprehensive
Security of stock and book debts / other collaterals

 Demand Promisory note has been furnished
 Hypothecation agreement for stocks and Drs
 Guarantee Agt has been executed properly
 ROC regn of charge for cos for hyp of stock and book debts - Form 8
 ROC regn of charge for cos for hyp of immov property
 ROC search report once in 3 years
 Others
35
Page
Monitoring Actions
 Submission of stock stts

 Maintenance of drawing limit based on Working capital statements
 Qtrly book debts certf by CA
 Stock audit once a year by CA for > Rs 1 cr
 Godown visit by banker - monthly or qtrly
Repayments / TOD / One off credits

 Review of accounts to ensure continuous operation
 Review of accounts featuring in Irregular report as per CBS
 One off credits to be investigated
 Drawing in excess of sanctioned limit on a continuous basis
 Consistent excess over drawing power as per sanction
CBS Updation
 Loan details recorded correctly in CBS
 Test of repayments done
 Test of interest accrual done
15.2. Sample verification and results
36
Page
16. Advances Verification – Housing loans
 Loan application is available

 Loan application is signed and properly executed
 Sanction letter is available
 Loan proposal indicating projections etc
 Title deeds lodged with bank
 Assessment of repayment capability - Sal cert / it returns / pl acct etc
 Margin at XX% ( Land cost + constrn cost )
 EC available
 Legal opinion
 Approved Building plan
 Insurance policy
 Pledge deed
 All documents refer to the same survey number
 EM creation by deposit of title deeds
 EM registered for Rs 25 lakhs
 Direct payment to vendor of land / contractor
 If client own construction, stage payment subj to original bills cert by civil engg for work
done
 Inspection of property by bank
 Final valuation cert for completed properties
 Valuation report is less than three years - available from expert
 Construction not completed in 2 years
16.2. Samples verified
37
Page
17. Advances Verification – Educational loans

 Loan appln is signed and properly executed
 Loan for Grad / PG
 Loan - Inland – Foregin
 Plus 2 pass proof
 Asst of repayment of parent
 For loan to minor , parent should sign the application and all documents for self and on
behalf of
 Where minor > 18 yrs after disbursement, AOD and LOU counter signed by parent
 Parent IT return
 Parent Salary certificate / PL acct profit
 Ceiling based on course
 Not given for capitation fee
 Margin maintained at X%
 Less than max ceiling
 , Rs 25K no sec
 Rs 25 - 50K - surety apart from parent
 > Rs 100 K – collateral
 EM creation by deposit of title deeds
 EM registered for . Rs 25 lakhs
 All documents refer to the same survery number
 Approved plan
 Inspection of property by bank, if collaterial
 Interest to be serviced before completion of course for loans to employed Persons

38
Page
18. Advances Verification – Vehicle loans

 DPN
 Hypothecation agreement
 Loan proposal indicating projections etc
 Financials of the borrower prior to loan date
 IT returns for period before loan sanc. Date
 RC book - certified true copy
 RC endorsed in favour of bank - Hypothecation endorsement
 Loan is sanctioned net of margin for 'Cost and Accessories" not for charges
 Disbursement amount , tenure and tenor as per sanction
 Duplicate keys
 Original invoice
 Direct payment to dealer for vehicle
 Guarantor signature
 Comprehensive insurance - live now and bank clause in fav of Ind Bank
 For second hand vehicle - valn report from approved valuer
 Higher margin requirement for second hand vehicle
39
Page
19. Advances Verification – Jewel Loans
 Total packets to be tallied to total loans

 All expired loans to be classified as NPA where balance is outstanding (
where such loans are bullet loans repayable at the end of the specific
tenor )
 Special emphasis to be paid to expired loans
 Loan to packet and packet to loan verification to be done for test cases
Say 25 both ways to ensure that wrong packets have not been redeemed
Specific
 Loan agreement is available and properly executed
 Jewel packet verified for weight and purity
 Letter of pledge is available
 Rate of interest updated properly
40
Page
20. Advances Verification – Loans against Own Deposits
 Letter of pledge is available

 Nature of security - RD / FD
 Lien is marked in system against the FD
 Deposit receipt is available with bank and discharged
 Loan closed after due date of deposit
41
Page
21. Advances Verification – Loans against financial assets

 Loan amount original sanctioned is within powers
 Securities in the name of the borrower
 In case security not in the name of the borrower , consent letter is available
 Shares - demat and pledged noting in demat
 LIC - Assignment in favour of bank and regd
 Govt instruments tfd as "Sec to Ind Bank " - NSC / KVP
 Loan is within margin limits of surr. Value
 Loan is within margin limits of mkt. Value for shares
 Loan is within margin limits of face value for govt notified instmts
 Shares erosion in market value
 LIC erosion in surr. Value due to unpaid premium has been cognised for
42
Page
22. NPA Review
22.1. General Audit plan for NPA review
 The NPA file was obtained from CBS as at date of audit

 The Specially Marked Accounts files were obtained
 The irregular files were obtained
 The files were cross referenced to the loan balance and CCOD file
 Clean loans – top value were test checked to ensure that there are no impairments
 Loans featuring in any of the above reports – NPA / SMA and IRR were considered for the
review
 The accounts were reviewed individually with the Branch manager to determine the
extent of slippage, possibility of recovery and the need for reclassification
 Additionally, accounts identified as potential NPA based on documentation / security
lapses were also considered for the review and rectification before the Balance Sheet date
 Restructured accounts listing was obtained and reviewed in detail
22.2. Details of MoC’s
S No Nature of Issue Debit Credit Amount Remarks

Account Account
Rectification of
Income recognition
Reclassification of
NPA’s ( fresh )
Change in the status

of Old NPA’s
Account
reclassifications
within P&L: and A&L
Reclassification of
Loans and Advances
where done
differently by the
branch
Assets put to use and
not capitalized
43
Page
23. Verification of Deposits
23.1. General Audit plan for deposits
 Date of deposit
 If SB acct holder, give SB ref
 Application form and complete
 Photograph
 ID proof and age proof
 Address Proof
 Introducer
 Pan copy
 Pan related documentation
 Rate as per norm
 CBS updation done correctly
 Interest Computation is accurate
 Deposit file has been reviewed for interest rates on a substantive basis ( sanity
checks )
23.2. Details of Sample selected
44
Page
24. Interest Verification
Loan type Interest Amount Interest verified
 For loans, check interest computation on PNR basis as per agreement terms
 For CC OD check interest by Daily balance method
 Document all interest verified
 Check one month interest ledger to ensure that interest is accounted for all loan accounts.
Sample if interest considered at the correct rate
45
Page
25. Check list for Long Form Audit Report
A.ASSETS:
1 Cash
- Obtain a schedule of denomination of cash
- Physically verify the existence of cash and tally with the (and tally
with the) above schedule
- Tally physical balance with Cash Scroll and the General Ledger as on
the date of verification
- Ascertain the retention limit of cash fixed by the head office. In case
the balance exceeds the Retention Limit the same may be reported
in the following format:
Cash Balance in excess of Rs.

Date: Amount Rs.
- Verify the insurance cover taken on transit cash.
- Verify whether cash is maintained in effective joint custody of two
or more persons
- Ensure that are responsible official verifies physical cash on a daily
basis.
- Check whether the cash balance has been verified periodically by
the Branch Manager in addition to the Head cashier.
2 Balances with other Banks
- Verify whether the branch has any balances with other banks.
- Obtain confirmatory letter from the bank or branch wherever
applicable.
- Ensure whether BRS is prepared periodically.
- Verify BRS on a test check basis.
- Check for unresponded credits/debits found in the BRS and report
the same.
3 Investments
- Obtain the schedule of investment held by the branch.
- Check for appropriate authorization issued by H.O/ Controlling

Authority
- Conduct physical verification of investments and tally with the
above schedule
4 Advance
- Ensure that monitoring of slippage of accounts from standard to
substandard/doubtful is done and reported promptly to the
Controlling Authority.
- Ensure that recovery measures are promptly taken.
-
46
Page
5 Bank Branch Audit Working Paper Manual
Other Assets
Stationery/Stamps
- Obtain schedule of Stationery Stocks
- Ensure that the physical balance tallies with the above schedule.
- Suspense Accounts/Sundry Assets.

- Obtain an schedule/return of suspense account and verify the
items for long outstanding items.
- Report unusual/long outstanding items.
- Verify transfer to H.O during the year
- Does the scrutiny of accounts under various sub-heads reveal
balances, which in your opinion are not recoverable and would
require provision/ write off.
B. LIABILITY:
Bills payable, Sundry deposits etc.,

- Does the scrutiny of account sunder various sub-heads reveal odd
balances?
- Report the number of items and aggregate of amount of old
outstanding item spending for 3 or more years
- Check amount received against suite filled accounts
- Check unidentified deposits e g. Excess cash found in the branch etc.,
C. PROFIT AND LOSS ACCOUNT

- Ensure that the branch has followed the income recognition norms
stipulated by RBI
- Test check calculations of interest on deposits for excess/short
credit of material amount if so give details thereof.
- Study preceding 2 years half year returns for divergent trends in

major items of income and expenditure and report those which are
not satisfactorily explained by the branch
- Indicate the effect of changes if any in accounting policies on the
items of income and expenditure.
D. GENERAL
House keeping
- Ensure whether the branch is regular in furnishing a house keeping
return to the Controlling Authority.
- Verify whether the branch maintains the books and records
properly in accordance with the H.O guidelines.
- Ensure that the balances are duly linked and properly authenticated
by responsible official /authorised signatories?
47
Page
- Report the lapses in balancing procedures

- Report differences in crystallised balances lying unattended
- Ensure that the control and subsidiary records have been reconciled
at the year-end or at the prescribed intervals
- Inter Branch Accounts
- Are there any double responses or wrong responses in H.O A/c.
- Indicate the outstanding entries in the inter branch accounts
together with a statement of reasons for their remaining
outstanding and the steps taken by the management in respect
thereof.
- Are there any frauds discovered during the year under audit and
report if any.
- Does the examination of the accounts indicate possible window
dressing?
- Are there any matter ,which you as branch auditors would like to
bring to the notice of the management or the central statutory
auditor.
- Tax Audit U/s 44AB ofI.TAct,1961
- Audit Report to be made in form3CA
- Obtain verify and certify particulars required in form3CD
- Other Certifications
- 1. PMRY, SEEUY and SEPUP scheme certification
Ensure that correct claim/subsidy is calculated
- 2.DICGCscheme
Verify whether the information furnished is correct according to the
books/records maintained by the Branch.
- Verify whether the recoveries effected in the Claims Received A/c
have been proportionately remitted to the corporation.
- 3 Ensure that the certificates required are within the scope of audit
e g. Certification that the debts are fully secured.
48
Page
26. Profit and Loss Account – Analytical review procedures
Description 2014-15 2013-14 2013-14 2013-14

Amount Amount % Change Nos Nos % Change
Rs . lakhs Rs . Lakhs
Total Advances
Total Deposits
Interest on advances
Interest on deposits
Other Incomes
Profit / Loss
NPA Amount
Ratios
Interest to advances
Interest to deposits
27. Certification Related Working papers
 Asset Liability Management

 Jilani committee and Ghosh committee
 Capital adequacy ratio
 PMRY / SEEUY
 SLR / CRR – 12 odd dates
 Compliance with RBI Norms on IRAC
 DICGC / ECGC
 Interest subvention schemes
 TUF schemes
 Certification of Provision for Restructured Accounts
 Certificate of Sensitive Sector and CRE
 Other Certificates
28. Tax Audit Workings
1.1. Tax audit report

1.2. Audit program
49
1.3. Samples
Page
29. Other Working papers
Any other relevant information
30. References
 Branch Audit guidance document as received from the HO / CO

 Bank Authority levels for sanction limits for loans and advances
 Loan manual
 IRAC norms relevant for this audit
 RBI master circular – July 2, 2013
 Other RBI Circulars relevant for the purpose of this audit
 Guidance Note on Bank Branch audit as issued by the ICAI
 Revised SA700, 705 and 706 for modification in reporting
31. Appendices
Appendices 2014-15
1 Appointment Letter
2 Engagement Letter
3 Previous Auditor Communication
4 Management representation letter
5 Checklist for advances
6 Other appendices on a need to basis
50
Page

Akuntansi Perusahaan Dagang

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Akuntansi Perusahaan Dagang

Загружено:

Авторское право:

Доступные форматы

Bank Branch Audit – Managing Risk

An Integrated Work Paper Model

Member – SIRC of ICAI

Dear Professional Colleague

BANK BRANCH AUDIT

Number of Staff deployed

Address of the Branch

Name of the Manager

Circle Office Contact

1. Objective and Scope of audit _____________________________________________________________________ 6

31. Appendices _____________________________________________________________________________________50

1. Objective and Scope of audit

1.2. The appointment letter dated ………………… has been accepted by us on

1.5. The following key reports / certificates are required to be issued by us

 Branch Auditors report

Name Designation Days From To

Qualified Paid Assistant

1.7. The key risks in Bank Branch Audits are as under

Designation Name Grade

2. Scope Limitations, if any

Information Amount Impact on audit, if any Management Comments

Information Amount Impact on audit, if any Management Comments

3. Report, Returns and Certificates

3.1. Key Deliverables

9 BS 9 – DETAILS OF COUNTRYWISE, RISK CATEGORY WISE EXPOSURE

25 SFVM inventory statement

39 Tax audit report

4. Auditing Review and Other Standards

SA620 USING THE WORK OF AN AUDITOR’S EXPERT.

SA705 MODIFICATIONS TO THE OPINION IN THE INDEPENDENT AUDITOR’S

SA710 COMPARATIVE INFORMATION— CORRESPONDING FIGURES AND

SA720 THE AUDITOR’S RESPONSIBILITY IN RELATION TO OTHER INFORMATION IN

SA800 SPECIAL CONSIDERATIONS—AUDITS OF FINANCIAL STATEMENTS

SA805 SPECIAL CONSIDERATIONS—AUDITS OF SINGLE FINANCIAL STATEMENTS

SRE2400 ENGAGEMENTS TO REVIEW FINANCIAL STATEMENTS.

SRE2410 REVIEW OF INTERIM FINANCIAL INFORMATION PERFORMED BY THE

SAE3400 THE EXAMINATION OF PROSPECTIVE FINANCIAL INFORMATION.

SAE3402 ASSURANCE REPORTS ON CONTROLS AT A SERVICE ORGANISATION.

SRS4400 ENGAGEMENTS TO PERFORM AGREED-UPON PROCEDURES REGARDING

SRS4410 ENGAGEMENTS TO COMPILE FINANCIAL INFORMATION.

5.1. Audit Acceptance Letter

5.2. Engagement Letter

An engagement letter has been issued and kept in Appendix 2

5.3. Letter of communication with previous auditor

5.4. Representation letter

Management Representation letter has been obtained and kept in Appendix 4

6.1. Key data

Description 2014-15 2013-14

6.2. Target Vs Accomplishment

Description 2014-15 2013-14

6.3. Advances Overview - top 10 advance categories of the branch

S No Category of advances 2014-15 2014-15 2013-14 2013-14

6.4. Large Advance Profiling

S No Account reference / name 2014-15 2014-15 2013-14 2013-14

6.5. Customer wise advances

S No Customer Name Facilities 2014-15

6.6. Advance profiling by value

S No Slab - Rs Lakhs outstanding 2014-15 2014-15

6.7. Deposit profiling

S No Category of deposit accounts 2014-15 2014-15 2013-14 2013-14

6.8. Restructured advances

S No Account reference / Name During Upto 2014-15

6.9. Interest rate and other charges on major advances