Concurrent Audit Procedures

1. Concurrent Audit Procedures ICAI Certificate Course on Concurrent Audit of Banks At : MORADABAD BRANCH 05.07.2014 CA Manish Baxi

2. Audit Procedure……Means….. • Established Way of doing Audit • Series of Action in a certain way • Approach of the Audit • Verification according to Check List CA Manish Baxi

3. Introduction – Session I • Concurrent Audit Course –it’s Objectives –Limitations • About Banking • Concurrent Audit Evolution • Scope of Concurrent Audit • Objective of Concurrent Audit CA Manish Baxi

4. About Objective of Course • To assist the Concurrent Auditors and to provide insight of the Audit • Aspires to introduce uniformity in conduct and reporting • TO provide practical and field work approach • To exhibit the RBI & GOI our sincerity to the assignment CA Manish Baxi

5. Limitations • Not a single set of guidelines as Banks vary in size , nature of business • No assurance that only Certified Concurrent Auditor of ICAI would get the assignments • Your direct involvement – Not a just class room training. –TO BE A STUDENT CA Manish Baxi

6. How Many Squares Do U Find ??? CA Manish Baxi

7. Banking Products & Services • Acceptance of Deposits & Granting Advances • Remittances – TT/MT/RTGS • Collections • Clearing • Treasury Function • Cash Management product CA Manish Baxi

8. Banking Products & Services • Letter of Credit and Guarantees • Merchant Banking • Credit – Debit cards • Dividend / Interest/ Refund Warrants • Safe-keeping & Lockers • Handling Government Business CA Manish Baxi

9. Banking Products & Services • DP services • ATMs • Auto Sweep facility in S/B Accounts • Advertisement on ATMs • Securitization of future Lease Rentals CA Manish Baxi

10. Para-Banking Activities • Equipment Leasing, Hire Purchase & Factoring • Mutual Fund business • Money Market Mutual Funds • Insurance Agents • Tax Matters ================================ • Transaction in Foreign Exchange CA Manish Baxi

11. Banking Software – An Overview • 1980 – Computerization of Branches in limited manner • Multi Vendor approach – Hardware and to develop Software.================= Initially software on fox=pro or C ----dos-based. Then Unix based. CA Manish Baxi

12. Banking Software – An Overview • 1990 --Total Branch Automation packages. • Central Server – database – multiple terminals…………AND • Multiple PCs as nodes linked on LAN. • Platform –Simple UNIX-C to RDBMS like ORACLE. CA Manish Baxi

13. Banking Software- An Overview • Middle & Late 90s – deregulation , globalization, rapid revolution in communication technology. • Internet , Mobile , cell phone • Revolutionary changes CA Manish Baxi

14. Evolution of Concurrent Audits in Banks CA Manish Baxi

15. Introduction • Formally introduce by RBI – October 1993- Revised in August 1996 – August 1997 • Ghosh Committee • Financial sector reforms • Banks diversified operations • Investment banking- Gold banking- Mortgage financing- • e-banking - Securitization CA Manish Baxi

16. Concurrent Audit – ConceptExpectation ----JOB to Perform • RBI : • An examination which is contemporaneous with the occurrence of transaction. • It attempts to shorten the interval between a transaction and its examination by a Independent person. CA Manish Baxi

17. Concurrent Audit In Banks • Primary Objective : • To serve as an administrative support to branches , it is a Management process. • To ensure sound internal accounting function---Effective Control ---Setting the tone for vigilance CA Manish Baxi

18. Concurrent Audit in Banks :Objectives • To reduce interval between a transaction and its examination • To point out irregularities at early stage to prevent fraud. • Compliance of internal control as well as RBI/GOI guidelines. • Identify areas requiring corrective action . CA Manish Baxi

19. Concurrent Audit in banksObjectives • To ensure that delegation of Authority is exercised judiciously . • To report to appropriate levels of management for appropriate action for remedial measures. • To verify timely and regular submission of the statutory returns . • To carry out physical verification of cash , Stock and other assets. CA Manish Baxi

20. Concurrent Audit in Banks • Scope: • Emphasis in favour of substantive checking in key areas rather than Test checking. • Transaction vis-à-vis Systems and procedure. • Transaction vis-à-vis Authority • Head office directives and RBI policy CA Manish Baxi

21. Concurrent Audit in Banks • Scope : • To help Branch in charge to ensure on an ongoing basis that the different divisions functions with in laid down parameters . • RBI –working group – Shri Jilani • Some banks have issued guidelines on the scope , coverage ,reporting ….. CA Manish Baxi

22. Concurrent Audit in Banks :Practical TIPS • Go through the circular file of Bank for updating Check List and action points. • To refer : Manual – bank’s instruction booklet – Exchange control manual- Latest inspection file- Previous concurrent audit report. • Personal discussion with in-charge of operational departments CA Manish Baxi

23. Practical TIPS • Introduce concurrent audit Log register • Rectification and compliance of previous reports observations • Advances are backed by documentation and security • Not only regulatory compliance but Value addition approach CA Manish Baxi

24. Practical TIPS • Flash reports in case of robbery , theft , suspected frauds , abnormal transaction. Persisting irregularities needs to be reported to higher ups. Report must be in a FORMAT and Timely. CA Manish Baxi

25. Concurrent Audit = C.A.C.A. + CA Manish Baxi

26. C.A. + • A B C D E F ……. • 1 2 3 4 5 6….. • Knowledge………………96% • Hard work………………..98% • ATTITUDE ..…..100 % CA Manish Baxi