ICAI’s Guidance Note on Bank Audit (Revised Edition: Jan. 2019)
AASB of ICAI has issued the ‘Guidance Note on Bank Audits’ (Revised Edition: Jan. 2019) meant for detailed guidance of members on various important items of financial statements of banks, disclosure requirements, prudential norms of RBI, audit procedures, LFAR reporting, Ghosh and Jilani, special purpose reports and certificates, etc.
The statutory audit of banks forms an integral and important part of control mechanism of the regulators, like RBI. It provides the stakeholders including the Regulators, a comfort with regard to credibility of the financial information that a bank generates at every year end. Given the nature, scope and volume of transactions undertaken by banks in India, coupled with their geographical spread and the various regulatory directions to which they are subject, audit of the financial statements of banks indeed becomes very challenging for their auditors
For quality bank audits, it is essential that the statutory auditors are well equipped in terms of knowledge of the banking sector and keep themselves abreast with the latest developments. The Guidance Note on Bank Audit 2019 edition is an important resource that provides detailed guidance to the bank auditors on the basic tenets of a bank audit, for the benefit of members.
This Guidance Note is updated every year by AASB of ICAI to reflect the important developments that have taken place in the banking sector, warranting attention of the statutory auditors, for example, RBI’s master circulars, general circulars of relevance, consequential updation of guidance for the auditors, where required, various pronouncements of ICAI, etc.
Members’ attention is invited to relevant directions/ circulars issued by the Reserve Bank of India up to January 1, 2019 included in a Pen Drive/ CD accompanying this Guidance Note for ease of use and reference. Members are advised to keep track of legislative/regulatory developments, for example, circulars of the Reserve Bank of India, issued subsequent to the aforementioned date and having a bearing on the statutory audit of banks/bank branches for the year ended March 31, 2019.
For benefit of the members, the pen drive/ CD accompanying the Guidance Note contains Illustrative formats of engagement letter, illustrative formats of auditor’s report both in case of nationalized banks and banking companies, illustrative formats of management representation letter, Illustrative list of special purpose/ exception reports in CBS, Illustrative audit checklist for capital adequacy, Illustrative checklist on audit considerations in a CIS Environment, Features of the Gold Monetization Scheme, Suggested Abbreviations used in the Banking Industry, Basis of Selection of Advances Accounts in case of bank branch audit, updated bank branch audit programme for the year 2018-19, Verification of the aspects of the Treasury/ Investments of the Bank in Statutory Audit, Flow Charts for Use of Core Banking Solution software in case of Bank Branch Audit, the text of Master Directions, Master Circulars and other relevant Circulars issued by RBI. Readers may note that this edition of the Guidance Note has been divided in three separate sections as follows:
i) Section A: Statutory Central Audit.
ii) Section B: Foreign Exchange Transactions and Integrated Treasury.
iii) Section C: Bank Branch Audit other than Foreign Exchange Transactions.
Index of Contents of ICAI’s Guidance Note on Bank Audit 2019