Call to review Bank Branch Audit Norms
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The Narendra Modi-led Government should review the existing bank branch audit norms, K Raghu, President of the CA Institute, has said.
All bank branches in the country should be subjected to financial audit, Raghu suggested to the Finance Minister during an event here to markthe Chartered Accountants’ Day celebrations.
At present, certain segments of bank branches — those with advances less than ₹20 crore — are not subjected to annual independent audit, Raghu said, adding that this position needs to be changed.
“A robust audit mechanism is required for bank branches,” he said and added that the issue was also taken up with the Reserve Bank of India Governor Raghuram Rajan.
Story so far
The UPA Government had from 2012-13 stipulated that all bank branches with advances of less than ₹20 crore need not have an annual independent audit.
Only a fifth of such branches need to have an independent financial audit. This decision had upset the audit profession regulator, the CA Institute, which sought a re-think of the issue.
Earlier limit
The advance limit for mandatory bank branch audit was earlier pegged at ₹6 crore for 2011-12. From 2006 to 2010-11, the threshold limit for branch statutory audit was pegged at advances of ₹3 crore.
With the BJP gaining absolute majority in the recent general elections, the CA Institute has renewed its attempts to get the bank branch audit norms changed.
Business mix
Amarjit Chopra, a former president of the CA Institute, told Business Line that the criterion for bank branch audit should be “business mix” and not advances provided by the branch.
Also, at least a third and not a fifth of the branches with less than ₹20 crore business mix should be audited each financial year, Chopra added.
The contention of the CA Institute members are that banks are guided by their overall aggregate exposure in branches with advances of below ₹20 crore, and feel that it may not be material enough to warrant a statutory audit every year. (The Hindu Business Line)
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CA.Subhash Chandra Podder
04-Jul-2014 , 12:11:49 pmNeed to be audited at least 80% of PSU Banks irrespective of advances . Advances of PSU banks below 20 crores or 10 crores need to be audited as per last practice . Fraud / Bad sanction of loan are being done though un audited branches . Internal audit , concurrent audit, revenue audit is not effective in banks as per my experience in the profession since more than four decades. local Psu banks ar