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Banks are essential pillars of the country’s budgetary framework on the grounds that, by getting stores and conveying advances, they circle cash. This makes reliable and productive banks fundamental to the economy. Bank auditing is the process of reviewing the services and procedures adopted by banks and other financial institutions. It is a regular process that all financial services entities must be subjected in order to ensure that they are in compliance with industry standards and jurisdictional regulations. Bank or credit union audits may be internal audits or external audits.
The focus of a bank audit is on compliance. Its purpose is to discover if the institution’s financial activities are complete, legitimate and accurate. Its basic goal is to provide an independent evaluation of the bank’s activities, controls, and information systems. Tests are executed on the systems, findings are generated, and auditors recommend corrective actions the bank needs to take.
Procedure of Bank Auditing
One of their primary duties of bank auditors is to focus on the accuracy, completeness and legitimacy of the bank’s financial activities. This procedure is same as of official auditing reports that companies must file therefore it is not a procedure that will cause alarm for banks requiring an audit. Many of banks and financial institutions find the bank auditing procedure a strenuous experience; still it is one of the most essential procedures that must be completed periodically.
Some of the procedures and services reviewed in the bank audit are as follows; however this list is not exhaustive:
The principle focus of the bank auditing procedure is to ensure that the bank or financial entity is operating in compliance with all jurisdictional regulations. Also, this procedure enables the bank to review all the services they offer and make sure that their records are up to date.
Types of audit taking place in Banks
Preliminary Check
Banks are vested with the responsibility of administer a preliminary check of all the accounts prior to considering the project for evaluation. A statutory audit must examine the documents below for evaluating the bank’s preliminary process.
Important Audit Checks
(Term/Saving /Current /FCNR/NRE/NRNR)
Banks are the pillars of our economy. They handle large amounts of public deposits and savings, so that they have to be closely monitored and examined. A bank audit is one of essential process of this monitoring.
In Bank Audit, Auditor issued a Long-Form Audit Report (LFAR)
LFAR report is issued by an auditor in addition to statutory audit as the statutory audit report doesn’t express all the functioning of a bank that’s why an additional report called as LFAR report is required in addition to statutory audit report. Long Form Audit Report (LFAR), a detailed questionnaire prepared by Reserve Bank of India (RBI), has been in use since 1992–93. It was updated in consultation with ICAI and some selected banks’ representatives to reflect changes in supervisory or regulatory framework of banks as also the augment role of statutory auditors who are currently required to include certain additional certification/validations in their audit report.
At AJSH, we assist our clients in dealing with various corporate matters (Company incorporations, statutory audits, ROC Compliances, Company winding up), ITR Filings, TDS Compliance, and related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about Bank audits, kindly contact us.
