Page 275 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
• any recovery in respect of an NPA purchased from other banks is first adjusted against its acquisition cost
and only the recovered amount in excess of the acquisition cost has been recognised as profit.
• for the purpose of capital adequacy, banks have assigned 100% risk weights to the NPAs purchased from
other banks.

(CNO-BA.420) Fixed Assets

• Section 9 of the Banking Regulation Act, 1949, prohibits a banking company from holding any
immovable property, howsoever acquired (i.e., whether acquired by way of satisfaction of claims or
otherwise), for a period exceeding seven years from the date of acquisition, except such as is required for
its own use.
• Audit Approach: In most of the banks, fixed assets are generally purchased by the head office or
regional/zonal offices. Statutory branch auditor has to ascertain the procedure followed and plan
accordingly. In most of the banks, maintenance of records is centralized at head office level. In some of the
banks, information relating to purchase, sale of fixed assets is accounted for with help of Fixed asset
management software. The audit procedures have to be designed accordingly.
• Audit Procedures: Fixed assets are not major part of bank’s balance sheet, so we have not covered it’s
audit procedure given in ICAI module, if question comes by chance, then write answer as per CA Inter
knowledge.

(CNO-BA.440) Other Assets
The auditor may carry out the audit of various items appearing under the head ‘other assets’ in the following
manner:
Audit Procedures

Inter-Office Adjustments
1. Reconciliation of Inter-branch Accounts: Examine whether Inter-branch accounts are normally reconciled
at the central level. The auditor should report on the year-end status of inter-branch accounts indicating the
dates up to which all or any segments of the accounts have been reconciled.
2. Outstanding Entries in Inter-branch Accounts: The auditor should also indicate the number and amount
of outstanding entries in the inter branch accounts, giving the relevant information separately for debit and
credit entries.

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