Page 265 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Inter Branch Accounts
Accounting: Adjust accounts solely based on advices received from other branches, not just statement entries.
Action: Ensure swift action, preferably by a central authority, for unresponded entries, especially debit ones,
within a reasonable timeframe.
Credit Card Operations
Storage: Implement strict control over card storage and issuance.
Credit Assessment: Ensure effective and thorough screening of card applications based on credit assessments.
Available Card Limit: Establish a system for merchants to verify the remaining credit card limit with the
bank, especially if a purchase exceeds a certain percentage of the cardholder's total limit.
Settlement Confirmation: Merchants should promptly report all credit card settlements they accept.
Reimbursement: Before reimbursing merchants, verify the legitimacy of their card acceptance.
Charge to Customer: Charge the customer's account immediately with the gross reimbursement amount.
Statements: Regularly and promptly send out account statements to customers.
Monitoring
• Continuously monitor and follow up on customer payments.
• Periodically review credit card holder accounts, adjusting limits as needed and identifying any doubtful
amounts for provision.
• Identify and address overdue payments promptly. If payments are overdue beyond an acceptable timeframe,
inform merchants and halt credit to minimize potential losses.

(CNO-BA.280) Compliance with CRR And SLR Requirements
Cash Reserve Ratio (CRR)
Definition: Cash Reserve Ratio (CRR) is a specified fraction of customer deposits that commercial banks must
hold as reserves. CRR ensures banks maintain a minimum cash reserve for stability and liquidity.
Legislation: For banking companies, the CRR requirement is in the Banking Regulation Act, 1949, while for
scheduled banks, it's in the Reserve Bank of India Act, 1934. The RBI periodically reviews and adjusts the CRR
based on the liquidity situation. Auditors should refer to the master circular issued periodically to ensure banks
comply with CRR requirements.
Statutory Liquidity Ratio (SLR) Requirements
Definition: Statutory Liquidity Ratio (SLR) mandates scheduled commercial banks in India to maintain
specific liquid assets like gold, cash, and government-approved securities. The purpose of SLR is to ensure
banks have liquid assets to meet sudden depositors' demands.
Section 24: SLR maintenance and the correctness of the DTL position are governed by section 24 of the
Banking Regulation Act.
12 Odd dates: Reserve Bank of India requires statutory central auditors of banks to verify the compliance with
SLR requirements of 12 odd dates in different months of a fiscal year not being Fridays. After verification,
the resultant report is submitted to the bank's top management and the Reserve Bank.

(CNO-BA.300) Audit Approach and Procedure:
Compliance with CRR and SLR requirements
RBI Requirements: Obtain an understanding of the relevant circulars/ instructions (Requirements) of the RBI,
particularly regarding composition of items of DTL.
Role of Branch Auditors: Require the branch to send their weekly trial balance as on Friday and these are
consolidated at the head office. Based on this consolidation, the DTL position is determined for every reporting
Friday. The statutory central auditor should request the branch auditors to verify the correctness of the trial
balances relevant to the dates selected by him. The branch auditors should also be specifically requested to
examine the cash balance at the branch on the selected dates.
Unaudited Branches: Review the relevant returns received from un-audited branches to identify any obvious

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