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Index
No Particular Pg. No
1. Introduction
2. Type of Audit
3. 1. Statutory Audit
4. 2. Concurrent Audit
5. 3. RBI Audit
6. Principal Enactent! "o#ernin$ Ban% Audit
&. Sta$e! of Auditin$
'. Pro#i!ion Relatin$ to Audit
(. )i!t of docuent! of Ban% Audit
1*. Audit Plannin$
11. Audit a!pect of ite! of Balance S+eet
12. Audit a!pect of ite! of Profit , )o!!
13. A!!et Cla!!ification
14. Audit Report -f /0C Ban%
15. ue!tion
16. Conclu!ion
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INTRODUCTON
What is an audit?
An audit is the examination of the nancial report of an organisation - aspresented in the annual report - by someone independent of thatorganisation. The nancial report includes a balance sheet, anincome statement, a statement of changes in equity, a cash owstatement, and notes comprising a summary of signicantaccounting policies and other explanatory notes.
The purpose of an audit is to form a view on whether theinformation presented in the nancial report, taen as a whole,
reects the nancial position of the organisation at a given date, forexample!
Are details of what is owned and what the organisation owesproperly recorded in the balance sheet"
Are prots or losses properly assessed"
#hen examining the nancial report, auditors must follow auditingstandards which are set by a government body. $nce auditors havecompleted their wor, they write an audit report, explaining what
they have done and giving an opinion drawn from their wor. #ithsome exceptions, all organisations sub%ect to the &orporations Actmust have an audit each year. $ther organisations may require orrequest an audit depending on their structure and ownership or for aspecial purpose.
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Bank audit process
'an audit process consists of the following steps
Bank Audit Process
Pre-commencement Work
Understanding the business of bankbranch
Overall audit plan Audit
Programme
Audit Procedures:
ubstantive !esting " Anal#ticalProcedure
$eport
%& Pre-commencement Work
The following points have to be considered before commencing the
audit
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A. (eceipt of appointment letter
'. &ompliance u)s. **+ of &ompanies Act, /01+ with regard to
qualications and disqualications of auditors
2one of the following persons shall be qualied for
appointment as auditor of a company-
a. A body corporate3b. An o4cer or employee of the company3c. A person who is a partner, or who is in the employment,
of an o4cer or employee of the company3d. A person who is indebted to the company for an amount
exceeding one thousand rupees, or who has given anyguarantee or provided any security in connection withthe indebtedness of any third person to the company foran amount exceeding one thousand rupees3
e. A person holding any security of that company after aperiod of one year from the date of the companiesAmendment Act, *555
&. 6nternal Auditor can not be statutory auditor for the same
nancial year
7. The nature of audit wor has to be ascertained as to whetherit is &oncurrent Audit, 8toc Audit, (evenue Audit, &redit (isAuditor or any other Assignments of any branch of that ban
9. 7ecision for Acceptance or (e%ection of Assignment has to becommunicated to the concerned authority
:. 6t should be ensured that minimum fees are set as per ('6circular
;. The $b%ective and 8cope of #or has to be considered withspecic considerations to time available for conducting auditAA8-* deals with $b%ective and 8cope of the audit of nancialstatements
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6. The >revious Auditor must be communicated &lause ? of :irst8chedule of &hartered Accountants Act, /0@0
. 9ngagement Better under AA8 *+ has to be issued
C. There must be a &ommunication with %oint auditor as per AA8/*
B. A list of accounting standard applicable to the branch must beprepared
D. &opy of all circulars of ('6 applicable to branch have to beobtained and ept ready for reference
2. Attending branch audit seminars could enhance the auditorsnowledge on ban audits
$. 'aning terminology and schemes should be well understood
>. A reading of ;uidance 2ote on audit of bans by 6&A6 wouldprovide valuable guidance.
'& Understanding the business of bank branch
The next step is in understanding the business of the branch with specic
reference to
Type of constitution
A. Applicable Baws
*. 'aning (egulation Act, /0@0. (eserve 'an of 6ndia, /0@@. Dulti 8tate &o-operative Act, *55*1. (elevant 8tate &o-operative Act+. &ompanies Act, /01+E. &irculars);uidelines issued by ('6?. &irculars);uidelines issued by rovisions/5. T78 >rovisions under 6ncome tax Act
//. >revention of Doney Baundering Act, *55*
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/*. 'aning cash transaction tax
&. Type)2ature of transactions7. Fuantum of Transactions under various heads as detailed
below!
8r.
2o.
>articulars 2os. Total Galue
A > H B 6ncome
A/ 6nterest earned
A* $ther income
' > H B expenditure
'/ 6nterest expended
'* $perating expenses
& 'alance 8heet H Assets
&/ &ash and balance with ('6
&* Doney at call and short notice
& 6nvestments
&@ Advances
&1 :ixed assets&+ $ther assets
7. 'alance sheet H liabilities
7/ 7eposits
7* 'orrowings
7 $ther liabilities and provisions
9. $ther items
9/ &ontingent liabilities
9* 'ill for collection
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9. &omputeriIation 8ystem H software used by the branch:. 8ecurity aspect of software, output of software, interlining
between various reports;. 6nternal &ontrol H (is Assessmentrime Dinister (o%gar Ko%ana 8cheme(eport etc.
Bong :orm Audit (eport
Tax Audit (eport Dain (eport 8ec. 5 of 'aning (egulation Act, /0@0
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&. Auditor should plan his wor based on the clients business toenable him to conduct an e=ective audit in an e4cient and timelymanner as per AA8 ?
pecimen Audit Plan
2ame of Auditee!
:inancial Kear!
Type of Audit! 8tatutory )&urrent)
>erson in charge Demb. 2o. 8ignature! 9xperience
Team Dembers2ame
Fualications 9xperience
/.
*.
7. The auditor should design and select an audit sample, performaudit procedures thereon, and evaluate sample results so as toprovide su4cient appropriate audit evidence as per AA8 /1Audit sampling
8r
.
2
o.
>articulars 2os. Total
Galue
8amp
le
8iIe
&riteria
for
selectio
n of
data in
sample
7ate)
Donths)
>eriod
Action
to be
taen
>erson
6n
charge
A. >H B
6ncome
A
/
6nterest
earned
A
*
$ther
income
'. >H B
9xpenditur
e
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TYPES OF AUDITS
It i! ell %non t+at no any day of t+e year t+ere ill e at lea!t one auditor
or%in$ in t+e an% ranc+. T+e folloin$ are t+e popular type! of audit!
conducted in a an% ranc+. T+e title! ay e odified in !oe an%!
e!pecially for Internal Audit and !y!te Audit ut t+e content reain! t+e !ae.
I. Statutor! Audit
T+i! i! an annual audit deterined y !tatute and done norally at t+e
end of t+e financial year +ile !oe of t+e lar$er ranc+e! are !iilarly audited
+alf yearly. A an%! !tatutory audit i! e!!entially a alance !+eet audit includin$
t+e )on$ Audit Report t+ou$+ t+ere i! no !cope re!triction of t+e !tatutory
auditor to perfor certain action! of ot+er auditor! a! part of +i! duty or if !oefindin$! lead +i into t+e doain of t+e auditor! !uc+ a! Re#enue in!pector
and e#en concurrent. T+e !tatutory auditor perfor! t+e folloin$ function!.
erifie! t+e cla!!ification of ite! of t+e Balance S+eet to a!!ure t+eir correct
placeent Ba!el II accord +ic+ +a! influenced t+e prudential nor! +a!
included t+e !tatutory auditor a! an acti#e eer to a!!ure t+e proper
e7ecution of t+e pre#ailin$ prudential nor!. T+e direct re!ult of an accurate
cla!!ification i! t+e appropriatene!! of incoe reco$nition and t+u! t+e effect on
t+e profitaility of t+e Ban%.
II. Concurr"nt Audit
In t+e e$innin$ of t+e 1((*! t+e "reat Ban%in$ Sca or t+e
ar!+ad 8e+ta Sca roc%ed t+e nation. T+i! rou$+t into lieli$+t !pecial
cate$ory of audit called concurrent audit or continuou! audit. T+i! !teed
fro t+e need of fillin$ in t+e $ap eteen t+e annual !tatutory audit! and t+e
inter#enin$ period eteen to in!pection! +ic+ i! a period !ufficiently lar$e
to cau!e daa$e to t+e Ban%. 9o RBI +o in!i!ted t+at at lea!t 5*: of t+e
u!ine!! of t+e Ban% !+ould e co#ered under concurrent controlled t+e
!potli$+t of t+e concurrent audit. ;+ile !oe Ban%! co#ered #ery lar$eranc+e! under t+e urella of concurrent audit. Soe an%! too% t+e e7cur!e
for ipro#eent y includin$ ea% ranc+e! t+ou$+ +a#in$ lo #olue of
u!ine!!. Concurrent audit in one !entence ill ean c+ec%in$ ye!terday!
tran!action! today. )et u! !ee t+e road area! co#ered y t+e Concurrent
Auditor.A. R"#"nu" As$"cts
1. Intere!t earned and !er#ice c+ar$e! earned y t+e Ban%
2. Intere!t Paid
3. All c+ar$e! paid li%e cancellation c+ar$e! copen!ation under Court
/irecti#e etc.
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Principal (nactments )overning Bank Audit:
'aning (egulation Act, /0@0
8tate 'an of 6ndia Act, /011
&ompanies Act, /01+
8tate 'an of 6ndia 8ubsidiary 'ans Act, /010
'aning &ompanies Acquisition and Transfer of Jndertaings Act,
/0E5
(egional (ural 'ans Act, /0E+
'aning &ompanies Acquisition and Transfer of Jndertaings Act,
/0?5
6nformation Technology Act, *555
>revention of Doney Baundering Act, *55*
8ecuritisation and (econstruction of :inancial Assets and9nforcement of 8ecurity 6nterest Act, *55*
&redit 6nformation &ompanies (egulation Act, *551
>ayment and 8ettlement 8ystems Act, *55E
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STA)ES IN AUDITIN)
*+Pr"li'inar! ,or-
a@ T+e auditor !+ould ac>uire %noled$e of t+e re$ulatory
en#ironentin +ic+ t+e an% operate!.T+u!t+e auditor !+ould failiarie+i!
elf it+ t+e rele#ant pro#i!ion! of applicale la! and a!certain t+e !cope of +i!
dutie! and re!pon!iilitie! in accordance it+ !uc+ la!. e !+ould e ell
ac>uainted it+ t+e pro#i!ion! of t+e Ban%in$ Re$ulation act 1(56 in t+e ca!e
of audit of a an%in$ copany a! far a! t+ey relate of preparation andpre!entation of financial !tateent! and t+eir audit.
@ T+e auditor !+ould al!o ac>uire %noled$e of t+e econoicen#ironent in
+ic+ t+e an% operate!. Siilarly t+e auditor need! to ac>uire $ood or%in$
%noled$e of t+e !er#ice! offered y t+e an%. In ac>uirin$ !uc+ %noled$e
t+e auditor need! to e aare of t+e any #ariation in t+e a!ic depo!it loan
and trea!ury !er#ice! t+at are offered and continue to e de#eloped y an%! in
re!pon!e to ar%et condition!. To do !o t+e auditor need! to under!tand
t+enature of !er#ice! rendered t+rou$+ in!truent! !uc+ a! letter! of credit
acceptance! forard contract! and ot+er !iilar in!truent!.c@ T+e auditor !+ould al!o otain and under!tandin$ of t+e nature of oo%! and
record! aintained and t+e terinolo$y u!ed y t+e an% to de!crie #ariou!
type! of tran!action and operation!. In ca!e of ?oint auditor! it ould e
preferale t+at t+e auditor al!o otain! a $eneral under!tandin$ of t+e oo%! and
record! etc relatin$ to t+e or% of t+e ot+er auditor! In addition to t+e ao#e
t+e auditor !+ould underta%e t+e folloin$=
I.-tainin$ internal audit report! in!pection report! in!pectionreport!
and concurrent audit report! pertainin$ to t+e an%ranc+.
II. -tainin$ t+e late!t report of re#enue or incoe and e7penditureaudit! +ere a#ailale.
In t+e ca!e of ranc+ auditor! otainin$ t+e report $i#en y t+e out$oin$
ranc+ ana$er to t+e incoin$ ranc+ in t+e ca!e of c+an$e in
incuent at t+e ranc+ durin$ t+e year under audit to t+e e7tent t+e
!ae i! rele#ant for t+e audit.
d@ RBI +a! introduced and off!ite !ur#eillance !y!te for coercial an%! on
#ariou! a!pect! of operation! includin$ !ol#ency
li>uiditya!!et >uality earnin$! perforance in!ider tradin$ etc. and +a!indicat
ed t+at !uc+ report! !+all e !uitted at periodic inter#al! fro t+e yearcoencin$ 1
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!uitted and to re#ie t+e to t+e e#ent t+at t+ey are rele#ant for t+e purpo!e
of audit.
e@ In a coputeried en#ironent t+e audit procedure ay +a#e toappropriately
tuned to t+e circu!tance! particularly a! t+e oo%! are not aut+enticated a! in
anually aintained account! and t+e auditor ay not +a#e +i! in
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III. 9o !in$le per!on +a! aut+ority to initiate tran!action and record
t+rou$+ all !ta$e! to t+e $eneral led$er. Eac+ day tran!action! are
accurately and proptly recorded and t+e control and !u!idiary
record! are %ept alanced t+rou$+ per!onnel independent of eac+
ot+er. T+e auditor ould e ell ad#i!ed to loo% into ot+er area! aylead to detection of error! oi!!ion! and irre$ularitie!
inter alia! in t+e folloin$=
a@ 8i!!in$lo!! of !ecurity paper !tationery for!.
@ Accuulation of tran!action!alance! in noinal +ead! of account!
li%e !u!pen!e !undrie! inter
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T+e !cope of t+e or% of t+e !tatutory auditor! ould al!o in#ol#e dealin$
it+ #ariou! accountin$ a!pect! and di!clo!ure re>uireent! ari!in$ out of t+e
ranc+ return!.
4@ Pr"$aration and su'ission o( audit r"$ort
T+e ranc+ auditor forard! +i! report to t+e !tatutory auditor! +o
+a#e to deal it+ t+e !ae in !uc+ anner a! t+ey con!idered nece!!ary. It i!
de!irale t+at t+e ranc+ auditor! report! are ade>uately in unai$uou! ter!.
A! far a! po!!ile t+e financial ipact of all >ualification or ad#er!e
coent! on t+e ranc+ account! !+ould e clearly rou$+t out in t+e ranc+
audit report. It ould a!!i!t t+e !tatutory auditor! if a !tandard pattern of
reportin$ !ay +ead i!e coencin$ it+ a!!et! t+en liailitie! and t+ereafter
ite! related to incoe and e7penditure i! folloed. In preparin$ t+e auditreport t+e auditor !+ould %eep in ind t+e concept of ateriality. T+u! ite!
+ic+ do not aterially affect t+e #ie pre!ented y t+e financial !tateent!
ay e i$nored. oe#er in t+e ?ud$eent of t+e auditor an ite t+ou$+ not
aterial i! contrary to accountin$ principle! or any pronounceent! of t+e
In!titute of C+artered Accountant! of India or in !uc+ a! ould re>uire a re#ie
of t+e rele#ant procedure it ould e appropriate for +i to dra t+e attention
of t+e ana$eent to t+i! a!pect in +i! lon$ for audit report. In all ca!e!
atter! co#erin$ t+e !tatutory re!pon!iilitie! of t+e auditor !+ould e dealt it+
in t+e ain report. T+e )0AR !+ould e u!ed to furt+er elaorate atter!
contained in t+e ain report and a! !u!titute t+ereof. Siilarly +ile frain$
+i! ain report t+e auditor !+ould con!ider +ere#er practicale t+e
!i$nificance of #ariou! coent! in +i! )0AR +ere any of t+e coent!
ade y t+e auditor t+rer in i! ad#er!e +e !+ould con!ider +et+er >ualification
in +i! ain report i! nece!!ary y u!in$ +i! di!cretion on t+e fact! and
circu!tance! of eac+ ca!e. In ay e ep+a!ied t+at t+e ain report
!+ould e !elf
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*. A$$oint'"nt o( th" auditors/
T+e auditor of a an%in$ copany a nationalied an% or a re$ional
rural an% +a!to e a per!on +o i! duly >ualified under la to e an auditor ofcopanie!. T+u!t+e auditor of t+e copanie! under !ec 226 of t+e copanie!
Act 1(56 and +o doe! not attract any di!>ualification laid don t+erein. T+e
auditor of a nationalied an% i! appointed y t+e oard of director! of t+e an%
concerned +erea! t+e auditor of a an%in$ copany i! appointed y t+e
!+are+older at t+e annual $eneral eetin$. Pre#iou! appro#al of
RBI for appointent of t+e auditor i! re>uired in t+e ot+ ca!e!. T+e auditor! of
t+e !tate an% of India are appointed y RBI in con!ultation of t+e Central
$o#ernent. T+e auditor! of t+e !u!idiarie! of t+e !tate an% of India are
appointed y t+e !tate an% of India. It ay e entioned in t+e State an% ofIndia Act 1(55 !pecially pro#ide! for t+e appointent of t+e Dto or ore
auditor!. T+e auditor! of t+e re$ional rural an%! concerned it+ t+e appro#al
of t+e Central "o#ernent. T+e appointent of auditor of a co
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T+e auditor of a an% +a! !ae poer! a! t+o!e of copany auditor
e7cept t+at t+e poer t+e auditor of a co
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@ ;+et+er or not t+e tran!action! of t+e copany +ic+ +a#e coe to +i!
notice +a#e een it+in t+e poer! of t+e copanyF
c@ ;+et+er or not t+e return! recei#ed fro ranc+ office! of t+e
copany +a#e een found ade>uate for t+e purpo!e! of +i! auditF
d@ ;+et+er t+e profit and lo!! account !+o! a true alance of profit or lo!!
for t+e period co#ered y !uc+ accountF
e@ Any ot+er atter +ic+ +e con!ider! !+ould e rou$+t to t+e notice of t+e
!+are+older! of t+e copany.
It ay e noted t+at in in t+e ca!e of a an%in$ copany t+e auditor +a! to
!pecifically report +et+er in +i! opinion t+e profit , lo!! account and
alance!+eet of t+e an%in$ copany coply it+ t+e accountin$ !tandardreferred to in !u< !ection 3C@ of t+e !ec 211 of t+e Copanie! Act 1(56.
It ay al!o e noted t+e Copanie!Auditor! Report@ -rder GCAR-H 2**3
Re#i!ed in 2**5@ i! not applicale to Ban%in$ Copany.
Approach to banks audits:-
T+e $uidance note on t+e audit of an%! i!!ued y t+e ICAI reco$nie t+at t+e
$eneral approac+ to audit of an%! in#ol#e! e!!entially t+e !ae !ta$e! a! in any
ot+er audit!. oe#er at eac+ !ta$e t+e auditor +a! to ta%e into t+e account t+e
folloin$ !pecial c+aracteri!tic! of an%!F
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Cu!tody of lar$e #olue! of onetary ite! t+erey re>uirin$ foral
operatin$ procedure elluent difficultie! in
aintainin$ unifor operatin$ practice! and accountin$ !y!te! particularly in
t+e ca!e of t+e o#er!ea! operation!.
Si$nificant coitent! it+out tran!fer fund! not re>uirin$ foral
reco$nition! in t+e oo%! of account!.
Special nature of ri!% it+ operation!.
A !trict le$al and re$ulatory fraeor% t+at inter alia influence t+e
accountin$ and auditin$.
*I! O+ ,OU.(/! O+ BA/0 AU,I! Ban% clo!in$ !et=
It contain! Balance S+eet Profit , )o!! Ac and ot+er anne7ure!.
Audit Report
Statutory Audit Report
Copliance Certificate
0or 3CA
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0or 3C/
)on$ 0or Audit Report )0AR@
8eorandu of C+an$e!
Report on "+o!+ and ilani coittee recoendation!
-t+er Certificate!
AU,I! P*A//I/) Proper allocation of or% aon$ Audit Tea !+ould e done for !oot+
perforance of Audit.
A c+ec%li!t of or% to e done !+ould e ade it+ tie frae +ic+
!+ould e !pecifically ad+ered to.
Re#ie late!t a#ailale in!pection report and concurrent audit report of
ranc+.
Re#ie clo!in$ circular i!!ued y -
Study u!ine!! 8i7 of ranc+ to decide t+e !aple !ie and i7.
Study of !i$nificant policie! of t+e ranc+ and coputer !y!te.
Study t+e pre#iou! year! Statutory Audit Report and )0AR
A!% for DStre!! )i!t fro Branc+
"i#e !pecial iportance to client! +o!e nae! are in Stre!! )i!t or
+ic+ are +i$+li$+ted in Concurrent Audit Report.
Jeep a note of point! you coe acro!! durin$ audit +ic+ are rele#ant
for )0AR.
STATUTORY AUDIT REPORT It contain! t+e folloin$ Para$+ar+!=
Report on 0inancial Stateent!
8ana$eent! Re!pon!iility for t+e 0inancial Stateent!
Auditor! Re!pon!iility
-pinion
Report on ot+er )e$al and Re$ulatory Re>uireent!.
It i! enclo!ed it+ a Certificate of Copliance of $uideline! of Re!er#e
Ban% of India on Incoe reco$nition and A!!et >ualification.
It i! addre!!ed to t+e Statutory Central Auditor!
TA3 AUDIT REPORT
Ta7 Audit Report i! done under !ection 44AB of t+e IT Act
0or 3CA
0or 3C/
Anne7ure Part K A
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All t+e anne7ure of 0or 3C/ are to e enclo!ed e#en if t+ey are 9I).
4ON) FOR5 AUDOT REPORT A >ue!tionnaire forulated y RBI.
To e filled y auditor after di!cu!!in$ t+e point! it+ Branc+ ead. It i! ad#i!ale to co#er )0AR and audit pro$ra !iultaneou!ly. T+i!
ould enale auditor to con!ider effect of atter! on )0AR and audit
report.
0orat of )0AR for ay e found online ea!ily.
AU,I! AP(! O+ I!(. O+ BA*A/( 1((!
AD6ANCES
C+ec% if proper docuentation i! done +ile !anctionin$ of loan!.
C+ec% incoe reco$nition A!!et cla!!ification and Pro#i!ionin$ for t+e
ad#ance!.
An ass"t is said to Non P"r(or'ing i(
Intere!t andor In!tallent reain o#erdue for ore t+an (* day!.
If t+e account continuou!ly reain! in e7ce!! of !anctioned
liitdrain$ poer.
9o credit in account continuou!ly for (* day! or credit! i! not enou$+ toco#er t+e intere!t deited durin$ t+e period.
T+e in!tallent or intere!t reain! o#erdue for 2 crop !ea!on for !+ort
duration crop!.
T+e in!tallent or intere!t reain! o#erdue for 1 crop !ea!on for lon$
duration crop!.
If credit facility i! not reneed it+in 1'* day! fro t+e due date.
/rain$! are alloed a$ain!t !toc%oo% det !tateent +ic+ are older
t+an 1'* day!.
Inco'" R"cognition Polic!
Incoe reco$nition fro 9PA i! to e a!ed on reco#ery.
If an account turn! 9PA ranc+ !+ould re#er!e t+e intere!t already
c+ar$ed and not Collected
Suc+ intere!t to e recorded in /uy )e$der.
Anal!sis o( "ntri"s outstanding in
Su!pen!e Account
Sundry /etor!
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Sundry Creditor!
Sundry /epo!it!.
C+ec% for additiondeletion of a!!et!.
C+ec% for alance! +eld it+ ot+er an%! it+ certificate of
clo!in$ alance fro re!pecti#e an%!. C+ec% pro#i!ionin$ of e7pen!e! a! on cut
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FOR5AT
T+ere !+ould e clear ?u!tification for e#ery c+an$e !u$$e!ted y auditor
/eit and Credit !ide of 8oC u!t tally.
Total of recla!!ification of a!!et! !+ould e rou$+t out in 8oC 0or 9- CA9"E 9I) 8oC !+ould e filed.
9o. /r Cr In re!pect of Incoe , e7penditure Me!9o 77 77 In re!pect of
Balance S+eet Ite! Me!9o 77 77 In re!pect of cla!!ification of ad#ance!
Me!9o 77 77 In re!pect of clo!in$ return +ere t+e effect to e $i#en i!
it+in t+e return it!elf ot+er t+an Incoe , E7penditure and Balance
S+eet Me!9o 77 77
P+y!ical #erification of ca!+ on date of Audit. Al!o c+ec% if ca!+ +oldin$
of ranc+ i! it+in retention liit !pecified y -.
erify JMC Copliance of Ban%. C+ec% +et+er any e7pen!e e7ceedin$ R! 2****.** i! paid in ca!+. "et a
certificate for 4*A3@ Copliance.
P+y!ical #erification of !tationery and confiration of alance a! per
CBS. -tain 8ana$eent Repre!entation )etter fro Ban%
-tain 8an
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/i#er$ent Trend!=
/i#er$ent trend! in incoe e7penditure of t+e current year ay e
analy!ed it+ t+e fi$ure! of t+e pre#iou! year.
;+ere#er a di#er$ent trend i! o!er#ed otain an e7planation alon$ it+
!upportin$ e#idence! li%e ont+ly a#era$e fi$ure! copo!ition of t+eincoe e7penditure etc.
%. 6"ri(ication o( %alanc"sh""t It"'
*. Cash 8 %an- %alanc"s
P+y!ically #erify t+e Ca!+ Balance a! on 8arc+ 31 2*14 or reconcile t+e
ca!+ alance fro t+e date of #erification to 8arc+ 31 2*14.
Confir and reconcile t+e Balance! it+ an%! a! on 8arc+ 31 2*14.
0. In#"st'"nts
P+y!ically #erify t+e In#e!tent! +eld y t+e ranc+ on e+alf of ead
-ffice and i!!ue certificate of p+y!ical #erification of in#e!tent! to
an%! In#e!tent! /epartent.
C+ec% receipt of intere!t and it! !u!e>uent credit to e $i#en to ead
-ffice.
1. Ad#anc"s Pro#isioning
A! per RBI nor! unreali!ed intere!t on 9PA account! !+ould e
re#er!ed and not c+ar$ed to NAd#ance Account!O. Re#er!al of unreali!ed
intere!t of pre#iou! year! in ca!e of 9PA account! i! re>uired to e
c+ec%ed
Partial Reco#ery in re!pect of 9PA account! !+ould e $enerally
appropriated a$ain!t principal aount in re!pect of doutful a!!et!.
:. Fi&"d Ass"ts
C+ec% Inter
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=. D"$osit
i. Ter
ii. Sa#in$iii. Current
i#. 0C9R 9RE 9R9R
6"ri(! transactions during th" !"ar r"lating to
9e Account! openedF
Account! clo!edF
/orant Account!F
Intere!t calculation!F
Te!t c+ec% account !tateent! for unu!ual lar$e o#erdrafttran!action!F
-#erdue Ter depo!it! , an%! policy for it! renealF
Accrual of intere!tF
RBI 9or! for 9on. Ad#anc"s
Re#ie onitorin$ report! irre$ularity report!@ !ent y t+e ranc+ to t+e
controllin$ aut+oritie! in re!pect of irre$ular ad#ance!.
Re#ie apprai!al !y!te 0ile! of lar$e a! ell a! critical orroer!
!anction! di!ur!eent reneal! docuentation !y!te! !ecuritie!
etc.
Re#ie on te!t c+ec% a!i! operation! in t+e Ad#ance! Account!.
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Copliance of !anction ter! and condition! in t+e ca!e of ne
ad#ance!.
;+et+er t+e orroer i! re$ular in !ui!!ion of !toc% !tateent! oo%
det !tateent! in!urance policie! alance !+eet! +alf yearly re!ult!
etc. and +et+er penal intere!t i! c+ar$ed in ca!e of default delay in!ui!!ion of !uc+ data.
C+ar$e of intere!t and reco#ery for eac+ >uarter or a! applicale to e
#erified.
Re#ie t+e onitorin$ !y!te i.e. onitorin$ end u!e of fund!
analytical !y!te pre#alent for t+e ad#ance! ca!+ flo onitorin$
ranc+ follo
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/ecessit# for .easurement of /on-PerformingAssets:
T+e repayent of intere!tin!tallent a! eit+er not ea!ily fort+coin$ a!
per !c+edule or reco#ery. Con!e>uently an%! found it increa!in$ly prudent notto rec%on !uc+ intere!tot+er c+ar$e! a! part of t+eir incoe and pay ta7 on
unrealied incoe. Rat+er t+ey c+o!e to cea!e c+ar$in$ intere!t in !uc+
account! of addoutful nature or +ere t+e pro!pectu!e! of reco#ery ere
lea%
$BI 1ealth ode #stem and $elation to /PA:
T+e Re!er#e Ban% of India introduced t+e ealt+ Code Sy!te ofcla!!ification of orroer account! y an%! in t+e year 1('5. Ba!ed on t+i!
cla!!ification of ad#ance! it a! decided y t+e Re!er#e Ban% in t+e year! 1('(
and1((* t+at an%! !+ould cea!e c+ar$in$ intere!t copul!orily in account
under ealt+ Code 5 to ' i.e. Recalled Suit
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P"r(or'ing Ass"t
Perforin$ a!!et i! one +ic+ $enerate! periodical incoe and payent! a!
and +en due or it+in t+e iniu la$ of to >uarter!. T+i! i! ein$ cut
don to one >uarter fro April 2**4.
NonP"r(or'ing Ass"t uarter.
Curr"nt $osition o( NPA trigg"rs.
Ter )oan Intere!t andor in!tallent reain o#erdue for a
period of ore t+an (* day!.
-#erdraftCa!+ Credit Account reain! out of order for a period of
ore t+an (* day!.
Bill purc+a!ed/i!counted -#erdue for ore t+an (* day! fro it! due date.
A$riculture )oan! Intere!t andor in!tallent reain o#erdue for a
period of ore t+an 2 +ar#e!t !ea!on! ut not
ore t+an 2 +alf year!.
Any Aount To e recei#ed reain! o#erdue for a period
ore t+an (* day!.
ategories of /PA
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Sustandard Ass"ts
A !u
e7ceedin$ to year!. ;it+ effect fro 31 8arc+ 2**1 a !u
one +ic+ +a! reained 9PA for a period le!! t+an or e>ual to 1' ont+! and
fro 2**5 it i! furt+er reduced to 12 ont+!.
Dout(ul Ass"ts
A doutful a!!et a! one +ic+ reained 9PA for a period e7ceedin$ to
year!. ;it+ effect fro 31 8arc+ 2**1 an a!!et i! to e cla!!ified a! doutful
if it reained 9PA for a period e7ceedin$ 1' ont+!. ;it+ effect fro
8arc+31 2**5 an a!!et ould e cla!!ified ! doutful if it reained in t+e !u