Page 266 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
errors or omissions or inconsistencies.
Examine Consolidation on Test Basis
• Examine whether the consolidations prepared by the bank include the relevant information in respect of all
the branches.
• Examine, on a test basis, the consolidations regarding DTL position prepared by the bank with reference to
the related returns received from branches.
• The auditor at the central level should apply the audit procedures listed 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 the report.
Exclusions: While examining the computation of DTL, specifically examine that the following items have
been excluded from liabilities-
Shortcut: - RIL ka PM so excluded from liabilities
• Part amounts of Recoveries from the borrowers in respect of debts considered bad and doubtful of
recovery.
(Recovery of Bad Debts is not a liability)
• Amounts received in Indian currency against import bills and held in sundry deposits pending receipts of
final rates.
(Such money is not in nature of returnable deposit)
• Un-adjusted deposits/balances lying in Link branches for agency business like dividend warrants, interest
warrants, refund of application money, etc., in respect of shares/debentures to the extent of payment made
by other branches but not adjusted by the link branches.
(Link branch of bank deals with RBI and other Banks, if money is received by such branches but not yet used or
adjusted)
• Paid up capital, reserve, any credit balance in profit & loss account of bank, amount of loan taken from
RBI and amount of refinance taken from EXIM bank, NHB, SIDBI and NABARD
• Margins held and kept in sundry deposits for funded facilities.
(Money deposited in bank before giving loan)
Inclusions
Shortcut: - New CBI order included many items.
Similarly, specifically examine that the following items have been included in liabilities
• 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.
• Net Credit balance in branch adjustment accounts including those relating to foreign branches
• 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’
• It may be noted that, even though Interest accrues daily, 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.
Valuation of Securities: The auditor should examine whether the valuation of securities done by the bank is
in accordance with the guidelines prescribed by the RBI.
Reporting
• Unaudited Branches: While reporting on compliance with SLR requirements, the auditor should specify
the number of unaudited branches and state that he/she has relied on the returns received from the
unaudited branches in forming an opinion
• Automated Data Flow: Recently, there has been introduction of Automated Data Flow (ADF) for CRR &

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