ICAI has released revised/updated ‘Guidance Note on Bank Audits (2024 Edition)’ for helping members in conducting the bank/branch audits for the financial year 2023-24.
This guidance note is divided into various parts and includes illustrative formats of relevant reports, certificates, audit programs, etc.
A. Guidance Note on Bank Audit (2024)
The ICAI publication, “Guidance Note on Audit of Banks 2024,” aims to provide comprehensive guidance to members conducting audits of banks and their branches. This is particularly important because statutory audits of banks/branches present several unique challenges due to the peculiarities of banking operations, including the high volume and complexity of transactions, wide geographical spread of the banks’ network, diverse range of products and services offered, extensive use of technology, and strict vigilance by the banking regulator. These factors make the task of statutory auditors of banks quite challenging, particularly in maintaining the quality of audits in bank audits.
ICAI’s Guidance Note on Bank Audit (2024)
B. Appendices to Section A of Guidance Note (Central Audit)
The appendices to Section A of the “Guidance Note on Bank Audit (2024): Statutory Central Audit of Banks as a whole” are as follows:
i) Appendix I: Illustrative Format of Report of the Auditor on the Standalone Financial Statements of a Nationalised Bank
ii) Appendix II: Illustrative Format of Report of the Auditor on the Standalone Financial Statements of Banking Company
iii) Appendix III: Illustrative Format of Report of the Auditor on the Consolidated Financial Statements of a Nationalised Bank
iv) Appendix IV: Illustrative Format of Engagement Letter in case of a Nationalised Bank
v) Appendix V: Illustrative Format of Engagement Letter in case of a Nationalised Bank (Separate only for Audit of Internal Financial Controls Over Financial Reporting)
vi) Appendix VI: Illustrative Format of Engagement Letter to be sent to the Appointing Authority of the Banking Company
vii) Appendix VII: Illustrative Format of Engagement Letter to be sent to the Appointing Authority of the Banking Company (Separate only for Audit of Internal Financial Controls over Financial Reporting under Section 143(3)(i) of Companies Act, 2013);
viii) Appendix VIII: Illustrative Format of Management Representation Letter to be obtained from Bank Management in case of Statutory Central Audit; and
ix) Appendix IX: Illustrative Format of Management Representation Letter to be obtained from Bank Management in connection with the Limited Review.
Appendices to Section A of the Guidance Note on Central Statutory Audit of Banks as a Whole (2024)
C. Appendices to Section B of Guidance Note (Branch Audit)
The Appendices to Section B of the “Guidance Note on Bank Audit (2024): Statutory Branch Audit of Banks” are as follows:
i) Appendix I: Text of Section 6 of the Banking Regulation Act, 1949;
ii) Appendix II: The Third Schedule to the Banking Regulation Act, 1949;
iii) Appendix III: Illustrative Format of Report of the Branch Auditor of a Nationalised Bank;
iv) Appendix IV: Illustrative Format of Report of the Branch Auditor of a Banking Company;
v) Appendix V: Illustrative Format of Engagement Letter to be sent to the Appointing Authority of the Nationalised Bank by Branch Auditor;
vi) Appendix VI: Illustrative Format of Engagement Letter to be sent to the Appointing Authority of the Nationalised Bank by Branch Auditor (Separate only for Audit of Internal Financial Controls Over Financial Reporting);
vii) Appendix VII: Illustrative Format of Written Representation Letter to be obtained from the Branch Management;
viii) Appendix VIII: Suggested Abbreviations used in the Banking Industry;
ix) Appendix IX: Illustrative Bank Branch Audit Programme for the Year ended 31/03/2024;
x) Appendix X: Typical reasons observed for the divergence in asset classification (large accounts) during Supervisory Cycle 2023-24 (FY 2022-23), during Capital Assessment Exercise;
xi) Appendix XI: Advisory for Statutory Bank Branch Auditors w.r.t. Specific Considerations while conducting Distance Audit/ Remote Audit/ Online Audit of Bank Branch under current Covid-19 situation issued on 06/05/2020; and
xii) Appendix XII: Additional Guidance on Advances (Refer Chapter 11 “Reporting for Advances”).
Appendices to Section B of Guidance Note on Branch Statutory Audit of Banks (2024)
Besides, Members can also refer other relevant information from the ICAI website, as under:
D. Master Circulars Issued by RBI
E. Master Directions issued by RBI
F. Relevant Notifications, FAQs and General Circulars
Further, ICAI has advised the Members to read this Guidance Note in conjunction with two other publications, i.e. Technical Guide on Audit of Internal Financial Controls in Case of Public Sector Banks (2021) and Technical Guide on Revised Formats of Long Form Audit Report (2021) issued by AASB.
ICAI has also advised its members that the guidance note on bank audit has been updated with relevant directions/circulars issued by the Reserve Bank of India until January 31, 2024. Members are therefore encouraged to monitor legislative/regulatory developments, such as circulars issued by the Reserve Bank of India after the aforementioned date, which may affect the statutory audit of banks or their branches for the year ended March 31, 2024.
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