Page 284 - CA Final PARAM Digital Book.

o Borrowings from abroad by banks in India needs to be considered as
‘liabilities to other’ and thus, needs to be considered at gross level unlike
‘liabilities towards banking system in India’, which are permitted to be
netted off against ‘assets towards banking system in India’. Thus, the
adverse balances in Nostro Mirror Account needs to be considered as
‘Liabilities to other’
o The reconciliation of Nostro accounts (with Nostro Mirror Accounts)
needs to be scrutinized carefully to analyze and ascertain if any inwards
remittances are received on behalf of the customers / constituents of the
bank and have remained unaccounted and / or any other debit (inward)
entries have remained unaccounted and are pertaining to any liabilities
for the bank.
• Examine whether the consolidations prepared by the bank include the relevant
information in respect of all the branches.
• It may be noted that, even though interest accrues on a daily basis, it is recorded in the
books only at periodic intervals. Thus, examine whether such interest accrued but not
accounted for in books is included in the computation of DTL.
• The auditor at the central level should apply the audit procedures listed above to the
overall consolidation prepared for the bank as a whole. Where such procedure is followed,
the central auditor should adequately describe the same in his report.
• Test check the relevant records maintained by the bank in respect of investments to
verify the amount of approved securities held by the bank on the dates selected by him
Examine whether the valuation of approved securities has been done by the bank is in
accordance with the guidelines prescribed by the RBI.
• While reporting on compliance with SLR requirements, the auditor should specify
the number of unaudited branches and state that he has relied on the returns
received from the unaudited branches in forming his opinion.

QNO Concurrent Audit(Scope)- Old Course – (N06E, M09R, SM17, PM17, SM21)
478.010 TITANIUM CNO—BA.680 New Course – (SM23)
Explain the scope of concurrent audit of a bank with reference to Reserve Bank of India guidelines.

Answer ➢ Scope of Concurrent Audit
• The detailed scope of the concurrent audit should be clearly and uniformly determined for

the Bank as a whole by the Banks Inspector and Audit Department in consultation with the
Banks Audit Committee of the Board of Directors (ACB).
• In determining the scope, importance should be given to checking high-risk transactions
having large financial implications as opposed to transactions involving small amounts.
• While the detailed scope of the concurrent audit may be determined and approved by the
ACB.
Further, the guidelines issued by the RBI coverall the key areas of activities of the branch which is
under concurrent audit. Most banks have prepared an Audit Manual for this purpose. Broadly
stated, the following areas are covered by these guidelines:

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