ICAI’s Revised Guidance Note on Bank/ Branch Audit (2022)

ICAI has released the revised/ updated ‘Guidance Note on Bank Audits (2022 Edition)’ along with illustrative formats of relevant reports, certificates, audit programme, etc., which shall be quite useful for conducting the Audit of the Banks and their Branches in respect of FY 2021-22. This guidance note is divided into various parts, as summarised here-under:

A. Guidance Note on Bank Audit (2022)

The ICAI publication “Guidance Note on Audit of Banks 2022” is meant to provide detailed guidance to the members conducting audits of banks and their branches, in view of the fact that statutory audit of banks/ branches involves a number of peculiarities due to unique features of working of banks and banking operations e.g. huge volumes and complexity of transactions, wide geographical spread of banks’ network, large range of products and services offered, extensive use of technology, strict vigilance by the banking regulator, etc. All these factors make the task of statutory auditors of banks quite challenging in maintaining quality of audits in bank audits.

ICAI’s Guidance Note on Audit of Banks, 2022 edition

ICAI's Revised Guidance Note on Bank/ Branch Audit

B. Appendices to Section A of Guidance Note on Bank Audit (2022): Statutory Central Audit of Banks as a whole

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 Engagement Letter in case of a Nationalised Bank

iv) Appendix IV: Illustrative Format of Engagement Letter in case of a Nationalised Bank (Separate only for Audit of Internal Financial Controls Over Financial Reporting)

v) Appendix V: Illustrative Format of Engagement Letter to be sent to the Appointing Authority of the Banking Company

vi) Appendix VI: 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)

vii) Appendix VII: Illustrative Format of Management Representation Letter to be obtained from Bank Management in case of Statutory Central Audit

viii) Appendix VIII: Illustrative Format of Management Representation Letter to be obtained from Bank Management in connection with the Limited Review

Appendices to Section A of Guidance Note on Bank Audit (2022): Statutory Central Audit of Banks as a whole

C. Appendices to Section B of Guidance Note on Bank Audit (2022): Statutory Branch Audit of Banks

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 31/03/2022

x) Appendix X: Typical reasons observed for the divergence in asset classification (large accounts) during Supervisory Cycle 2021-22 (FY 2020-21), 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

xii) Appendix XII: Additional Guidance on Advances (Refer Chapter 11 “Reporting for Advances”)

Appendices to Section B of Guidance Note on Bank Audit (2022): Statutory Branch Audit

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.

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