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BANK BRANCH AUDIT PLANNING - Analysis

BANK BRANCH AUDIT PLANNING – Analysis

Step 1 : Understanding the Business of Bank Branch

  • understand the nature of activities carried out at the bank branch
  • study the financial implication of all the products offered at the branches.
  • basic understanding of the Core Banking Solution (CBS) used by the bank
  • find out the role and responsibilities of the branch officials and the internal controls in operation
  • understanding of RBI guidelines, prudential norms and master directions and be updated with the latest circulars and instructions issued by the RBI

Step : 2 Audit Plan

  • Detailed requirement letter seeking information regarding branch should be sent by the auditor to branch management
  • call for previous year’s inspection/ concurrent and other important reports
  • look at the previous year/period’s reports of the previous statutory auditor
  • make a list of all the annual returns/financial statements and certificates to be verified and certified as part of the branch audit
  • Understanding the objective of such forms and certificates is very essential
  • prepare an integrated audit working papers consisting of information requested
  • branch auditor complies with all the pre-audit formalities (like appointment letter, communication with previous auditor, engagement letter etc.) immediately on receipt of confirmation from the bank

Audit Documentation in Bank Branch Audit

An Illustrative list of documents to be maintained in the bank branch audit file is given below:

  • Appointment formalities, including appointment letter, communication with previous auditor, engagement letter etc.
  • Remarks / Verification remarks against working sheet containing summary of latest RBI Master Directions / Circulars, other material for conducting the audit.
  • Working notes complying/ verifying closing guidelines / circular issued by the bank.
  • Summary of the relevant provisions applicable as per latest/ updated RBI Master Directions/Circulars, IRAC norms, closing circular used at the branch.
  • Detailed branch audit plan and program as per SA 230.
  • List of new deposit accounts opened during the audit period. List of samples selected of advances and deposits along with criteria taken as base for selecting sample.
  • Obtaining Delegation of Power (DOP) booklet to understand the powers and responsibilities at various levels in the branch.
  • Bank’s accounting policies and how the auditor has verified their satisfactory compliances.
  • Audit procedures adopted and determination of materiality levels. understanding of the internal controls, IT system controls.
  • Audit working paper documenting the audit procedures carried out for testing IFCoFR controls.
  • Audit working papers and issue trackers. How the issues raised during audit were concluded.
  • Financial statements of the previous year and current year.
  • Management certified trial balance for the year (if available from the system).
  • Summary of various audit reports such as internal inspection report, concurrent audit reports, previous year statutory audit report.
  • Statement of advances with classification along with various fields duly filled such as security, sanction limits, date of sanction / renewal, outstanding balance etc.
  • Specific representation, notes and working papers received from the bank’s management on sensitive or significant audit issues or accounts.
  • List of latest and updated stock and security statements, valuation and inspection reports as on March 31.
  • List of documents verified and minutes of meeting with the bank’s management.
  • Copies of supporting documents that are verified and confirmations obtained during the audit.
  • Break-up of other assets and liabilities and Inter-Branch Adjustments including the confirmation of deposits given by the branch.
  • Proof of various securities, cash and other assets physically verified during the audit.
  • ATM verification details.
  • KYC verification, anti-money laundry verification, FEMA compliance at branches.
  • Proof of verification of third-party products if any.
  • Details of off-balance sheet items, claims against banks and contingent liabilities.
  • Other Bank / RBI balance confirmation.
  • List of customer complaints registered/responded by the branch- nature of complaint and its resolution.
  • Management Representation Letter.
  • Various other audit documents / evidence considered in the audit process.

Mail conversation with Bank branch can also be kept as PDF files to make it easily available in future for ready reference along with all documentation in audit folder.

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