Cash & bank balances

 

Physically verify the cash balance/ATM cash balance as on March 31, 2017 or reconcile the cash balance from the date of verification to March 31, 2017.

Confirm and reconcile the balances with banks as on March 31, 2017.

Investments

 

Physically verify the investments held by the branch on behalf of Head Office and issue certificate of physical verification of investments to bank’s Investments Department.

Check receipt of interest and its subsequent credit to be given to Head Office.

Advances provisioning

 

As per RBI norms, unrealised interest on NPA accounts should be reversed and not charged to “Advance Accounts”. Reversal of unrealised interest of previous years in case of NPA accounts is required to be checked.

The partial recovery in respect of NPA accounts should be generally appropriated against principal amount in respect of doubtful assets.

Fixed assets

 

Check inter-branch transfer memos relating to fixed assets and whether they have been correctly classified in the accounts and depreciation accounting thereof.

 

 

Understand the IBR system and accordingly prepare an audit plan to review the IBR transactions. The large volume of Inter-Branch Transactions and a large number of unreconciled entries in the banking system makes the area fraud-prone.

Check up head office inward communication to branch to ascertain date up to which statements relating to inter-branch reconciliation have been sent.

Check and report

 

Reversal of any large/old/unexplained entries, which had remained outstanding in IBR.

Items of revenue nature, cash-in-transit (for example, cash meant for deposit into currency chest) which remains pending for more than a reasonable period.

Double responses to the entries in the accounts.

Test check accuracy and correctness of “Daily statements” which are prepared by the branch and sent to IOR department.

The auditor should duly consider the extent of non-reconciliation in forming his opinion on the financial statements. Where the amounts involved are material, the auditor should suitably qualify his audit report. Attention is drawn on the paper on “Certain Significant Aspect of Statutory Audit of banks” issued by the Council of ICAI in March 1994, published in the C. A. journal.

 

Further, vide its circular No. BP.BC.22/21…04.018/99 dated March 24, 1999, the Reserve Bank of India (RBI) advised the banks to maintain category-wise (head-wise) accounts for various types of transactions put through inter-branch accounts so that the netting can be done category-wise. Further, RBI advised banks to make 100 percent provision (category-wise) for net debit position in their inter-branch accounts arising out of the unreconciled entries, both debit and credit, outstanding for more than two years.

 

Suspense accounts are adjustment accounts in which certain debit transactions are temporarily posted whose authorisation is pending for approval.

 

Sundry Deposit accounts are adjustment accounts in which certain credit transactions are temporarily posted whose authorisation is pending for approval.

 

As and when the transactions are duly authorised by the concerned officials they are posted to the respective accounts and the Suspense account/Sundry Deposit account is credited/debited respectively.

 

Ask for and analyse their year-wise break-up.

Check the nature of entries parked in such Accounts.

Check any movement in such old balances and whether the same is genuine and has been properly authorised by the competent authority.

Check for any revenue items lying in such accounts and whether proper treatment has been given for the same.