Page 270 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Review and Renewal Systems: Verify adherence to bank's systems for advance reviews and renewals.
Drawing Power Calculation: Ensure correct drawing power calculations based on received borrower
statements.
Substantive Audit Procedures
Analytical Procedures: Carry out appropriate analytical procedures.
Verification of Master Data:
• Verify correctness of master data of loan accounts updated in CBS. Check parameters like instalments, EMI,
rate of interest, tenure of loans, etc.
• Verify that each customer of the bank is tagged under a single customer id in respect of all its accounts,
including those in which credit facilities are granted.
• Verify completeness and accuracy of interest being charged.
Examination of Specific Types of Accounts:
• Examine all large advances while other advances may be examined on a sample basis.
• Examine accounts identified to be problem accounts but which have not yet slipped into NPA category.
Obtain a list of SMA1 and SMA2 borrowers from the bank for selection of problematic accounts.
• Examine those accounts which have been adversely commented upon by concurrent auditors/bank’s internal
inspection/RBI inspection team.
• Examine list of restructured accounts to ensure that restructure is as per RBI guidelines. Note that
restructured account portfolios require additional provisioning.
• Examine quick/early mortality accounts. Any advance slippage to NPA within 12 months of its sanction is
termed a quick/early mortality case.
Recoverability of Advances
Review of Periodic Statements: Review periodic statements submitted by the borrowers indicating the extent
of compliance with terms and conditions.
Review of Financial Statements: Review latest financial statements of borrowers.
Review of Auditor’s Reports: Review auditor’s reports in case of borrowers having credit facilities from the
banking system beyond a cut-off limit fixed by board of directors of bank.
Inspection of Security Reports: Review reports on inspection of security.

(CNO-BA.400) Verification of asset classification, income recognition and Provision for Non-performing
assets:
NPA Classification

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