Page 267 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
SLR reporting and the auditors should develop necessary audit procedures around this.

(CNO-BA.320) Verification of Assets
Before beginning verification of assets and balances, the auditor should obtain an accurate schedule of
accounts in the prescribed format. The following are the steps involved in verification of assets and balances. -

(CNO-BA.340) Cash, Bank Balances and Money at Call and Short Notice -
Audit Procedures:

Cash
Physical Verification: Conduct physical verification of all forms of cash (domestic, foreign, ATM, and cash
deposit machines) near the balance sheet date.
Balance Reconciliation: Ensure the physically verified cash balance matches with the cash register or CBS
(Core Banking System) balance.
Balance with Reserve Bank of India
Ledger Verification: Confirm ledger balances in each account using bank confirmation certificates and year-
end reconciliation statements.
Reconciliation Review: Examine reconciliation statements, focusing on:
• Responded cash transactions.
• Revenue items needing adjustments/write-offs.
• Unresponded credit and debit entries from RBI for over 15 days.
Balance with Other Banks (Other than Reserve Bank of India)
Reconciliation Review: Similar to RBI balances, scrutinize reconciliation statements with added focus on:
• Outstanding debit charges or credit interests
• Outstanding cheques in clearing.
• Bills or outstation cheques sent for collection and pending credit
• Large inter-bank transactions for window-dressing, especially near year-end.
Foreign Balances: Verify balances with banks outside India using the same procedures and convert to Indian
currency at the prevailing exchange rates on the balance sheet date.
Money at Call and Short Notice
Authorization Review: Examine the system for general or specific authorization for lending money at call or
short notice. Check compliance with head office guidelines, including lending limits in the inter-bank call
money market.
Loan Verification: Confirm call loans using borrowers' certificates and the bank's call loan receipts.
Balance Reconciliation: Ensure the aggregate balances in the relevant register match with the control
accounts in the general ledger.
Subsequent Repayments: Review repayments received post-year-end to verify year-end balances. Note that
call loans made cannot be netted-off against call loans received.
Interest Accrual: Verify that interest on year-end outstanding balances of call/short notice money has been
accurately accrued and accounted for.

(CNO-BA.360) Investments
Audit approach:
Review of Investment Policy
• Review the investment policy of the bank to ascertain that the policy conforms, in all material respects,
to the RBI’s guidelines as well as to any statutory provisions applicable to the bank.
• It should clearly outline the broad investment objectives separately for the investments on its own
account and investments on behalf of customers.
Separation of Investment Functions

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