Bank Concurrent Audit

Bank Concurrent Audit is a kind of internal audit where auditor responsibility is to review and correct assign bank branch internal control system.

However compare to other internal audit, concurrent audit is little different; in concurrent audit auditor seats in branch for whole month (either himself/herself or his/her assistant) like any other branch employee, bank also allots a separate PC to them for their work. However like other employee he doesn’t report to Branch Manager since he recruited by HO hence work with Branch Manager.

Most important challenges to any auditor in concurrent audit is, he seats in branches do audit of branch books, identify branch employee mistakes, ask them to rectify even if they are not directly liable to do so and with all this maintain good relation with bank employees.

We must note that this is very routine job until and unless you are highly interested in banking sector and want to learn and grow in banking sector, in that case this is an excellent platform, it might not be very remunerative at begging but learning is unlimited if you really want to learn since you have access of all area of any bank branch like any other internal auditor there is no limitation in your scope as a concurrent audit.

Some Important information about Bank concurrent Audit

Attendance schedule
Senior Partner attendance – 8 to 10 Days
Audit assistant – 20 to 25 Day

Payments
Normally varies from 8 to 16 Thousand per Branch depend on size of Branch.
However you may get extra incentive as rewards, if you identify some fraud in bank and let Zonal office and HO management to aware of this.
Auditor may also get some work as other assignment to identify fraud in other banks etc.

Important point to checks

I. Revenue Leakages
Objective of this is to identify and review area of revenue leakages on day to day basis. Most of auditors limit this area as checking of charges for cheque returns either inwards or outwards, DD charges, penalty and interest for not making interest payment on time in case of CC or OD, not submitting of stock statements.

However in most of the cases auditor doesn’t check month on month interest calculations with believe that since it is system generated it will be true, even if during new loan & advances review he found some differences in his calculation and system generated interest calculations. In this case he accept that his calculation is wrong, however I will suggest we must go ahead and escalate this issue to HO, in 90 % of the cases we may be wrong even if, it will improve our understanding about interest calculation and we will not make such mistake in future, but suppose our observation lie in 10 % of the cases where we are right what can be the benefits.

From bank point View
1) If interest is under calculated
a. Bank will able to save crors of Rs
2) If it is over calculated
a. Bank will able to save its goodwill in market which may lose if some outsiders identify this case (By this bank can eliminate most of legal audit, compliance etc before arising which may arise if some outsider identify this satiation). In this case bank will be most benefited.

From Auditor point of View
1) Auditor will get professional recognition which increases his firm goodwill and he may get some more excellent remunerative work either from same bank of from others.
2) He may get handsome money by way of rewards


II. KYC Norms
It is Know Your Customer means looking for all bank compliance before giving any loan or opening any Deposit accounts. Some important document to be checked is

1) Photo Identification proof
2) Address proof
3) Guarantor having account with bank
4) Income proof mainly in advances
5) Attached attested photograph of customer in account opening form.

III. Cash management
It includes at least once in a month cash physical verification
Identifying reasons of keeping cash in access of retention limit

IV. House keeping
It includes
1) Discrepancies, if any observed during physical verification (Cash, Foreign Currency, Security forms i.e. blank draft cheques etc):
2) Accounts with RBI/SBI have been reconciled
3) Accounts showed Debit balances
4) Balancing of books
5) Reconciliation of Clearing Accounts.
6) TDS deduction in area of salary/Interest on deposits
7) Service tax matter if any
8) Any other irregularity the Auditors desire to mention including Computer Deficiencies:
9) Locker rent
10) Total account open and close during the month

V. Foreign exchange transaction if any
An FX transaction may be useful in managing the currency risk associated with importing or exporting goods and services denominated in foreign currency, investing or borrowing overseas, repatriating profits, converting foreign currency denominated dividends, or settling other foreign currency contractual arrangements.

On the contract date the contract amount must be exchanged with your FX provider at the contract rate, irrespective of where the foreign exchange rate is at the time.

How does your FX provider determine your contract rate?

It is the agreed exchange rate at which the currency pair will be exchanged on the date of maturity. Your currency provider determines the contract rate, taking several factors into account including:

• the currency pair and the time zone you choose to trade in
• the maturity date set by you
• inter-bank spot foreign exchange rates
• the contract amount, and your currency providers ability to trade small amounts on the inter-bank market
• market volatility
• inter-bank interest rates of the countries of the currency pair.

VI. Advances
Important area to check
1) Non Submission of Stock Statement
2) Inadequate / Non Insurance of Stock
3) CC Accounts Due for Review as at end of Month
4) Branch manager Visit to HNW customer place
5) Cases of Overdrawing in CC/OD Accounts
6) Cases of Overdrawing in Term Loan Accounts
7) Irregularities / Defects in documentation / Non-Compliance of Terms – this require through checking of all document start from KYC till assurance of loan amount and payment of installment on time
8) NPA Position on month on month basis
9) List of Potential NPA

VII. Deposit
Other then KYC we need to check all transaction over and above Rs 10 Lakh objective is to identify any abnormal transaction.
Debit balance in deposit account.

I thing I have cover most of important area that we need to look during bank concurrent audit, however this list is not exclusive but it is inclusive as I discussed at the begging of this post that bank concurrent audit is like internal audit and as we know internal audit is like ocean which have no limitation.

I hope you will like this information about bank concurrent audit and it will help you in your assignment