Page 264 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
- Comparison of receipt and payment scrolls with the cash column of the Day-Book by independent persons.
Clearings
1. Cheque Handling Procedures:
- The RBI's Cheque Truncation System (CTS) allows for electronic transmission of cheque images, along with
necessary details, to the paying branch. This process reduces costs and speeds up collection time by removing
the need for physical cheque movement.
2. Communication and Compliance:
- For cheques amounting to Rs 5 lakh and above, the branch must contact the customer via call or email, as per
RBI rules. Compliance can be verified by the Auditor on a sample basis.
- The Auditor should ensure that the cheque drawer's signature is confirmed by the bank staff, preventing
potential bank liability.
- Unpaid cheques from outward clearings must be sent back to customers or they should be notified to pick
them up from the bank.
Bills for Collection
Documentation: A responsible officer should manage and verify all documents accompanying bills during
both receipt and dispatch.
Account Crediting: Only credit customer accounts after bill collection or upon receiving a collection advice
from the respective bank branch or agent.
Duplication Prevention: Ensure bills sent between branches aren't accounted for twice in the consolidated
balance sheet; receiving branches should reverse such entries at year-end.
Bills Purchased
Verification: Ensure all title documents are correctly assigned to the bank during bill purchases.
Margin: Maintain an adequate margin when purchasing or discounting bills to safeguard against security
value fluctuations.
Apportionment: Properly distribute the discount received on year-end outstanding bills between the two
years.
Recovery: If a bill isn't collected by its due date, initiate immediate actions to recover the amount using the
provided security.
Reporting: Notify the Head Office about any irregular outstanding accounts.
Loans and Advances
Creditworthiness and Sanction: Ensure borrowers' creditworthiness and get proper bank authority sanction
before advances.
Documentation Before Advances: Execute all necessary documents, including agreements and promissory
notes, prior to advancing.
Margin Against Securities: Maintain sufficient margins against securities in line with Reserve Bank directives,
determined by bank authorities.
Handling of Securities: Securities should be managed by responsible officers and kept in joint custody.
Registration of Securities: Register securities in the bank's name or provide adequate documentation for the
bank's title.
Account Limit Adherence: Stay within the drawing power and sanctioned limit. Temporary increases are
allowed up to 20% for 90 days.
Annual Review of Operations: Review each advance account operation at least annually.
Reporting Irregularities: Report accounts that exceed limits or have irregularities to the Management/Head
Office.
Demand Drafts
Role of Receiving branch: Ensure immediate advice is sent to the paying branch for every demand draft
issued.
Role of Paying Branch: Cross-check signatures on demand drafts using the Signature Book. If a paying
branch doesn't receive proper confirmation or account credit, promptly investigate the reasons.
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