Page 286 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
for purchase and sale of foreign currency. Ensure that they are duly authorised, and necessary charges have
been recovered.
• Foreign Bill Negotiation: Check foreign bills negotiated under letters of credit. (Exporter come to bank
with all documents of export & letter of credit issued by foreign customer, on the basis of these documents
exporter gets advance receipt, this is called foreign bill negotiation)
• Accounting of Remittances: Check whether inward/outward remittance have been properly accounted
for.
• Nostro Account
o Balance within Limits: Ensure that balances in Nostro accounts in different foreign currencies are
within the limit as prescribed by the RBI.
o Reconciliation: Ensure verification/reconciliation of Nostro and Vostro account transactions/balances.
• Foreign Exchange Trading
o Dealing Room Operations: Ensure adherence to the guidelines issued by RBI/HO of the bank about
dealing room operations.
o Reasonable Position: Ensure that the overbought/oversold position maintained in different currencies
is reasonable taking into account the foreign exchange operations.
House Keeping
(Shortcut: RIP-CRR-SLR Maintenance)
Reconciliation: Early reconciliation of outstanding entries in inter-branch, inter-bank, and various special
accounts like Suspense, Sundry Deposits, and Drafts Accounts.
Income Debits: Verify that debits in income accounts are authorized by competent authorities.
Percentage Checks: Carry out checks on calculations of interest, discount, commission, and exchange rates.
Clearing Differences: Examine the day book for adjustments made for differences in clearing.
Returned Instruments: Verify the register for returned cheques and bills, and investigate the reasons for their
return.
Revenue Leakages: Detect and prevent revenue leakages through close examination of income and
expenditure accounts.
Staff Accounts: Review transactions in staff accounts.
Large Value Adjustments: Timely adjustment of large value entries.
Remittances: Check the accuracy of inward and outward remittances, including Demand Drafts (DDs), Mail
Transfers (MTs), and Telegraphic Transfers (TTs).
Account Maintenance: Ensure proper maintenance and balancing of accounts, ledgers, and registers,
including clean cash.

(CNO-BA.720) Appointment of Concurrent Auditors and Accountability
Discretion – Own Staff Vs External Auditors: The option to consider whether concurrent audit should be
done by bank’s own staff or external auditors is left to the discretion of individual banks.
Own Officials: In case the bank has engaged its own officials, they should be experienced, well trained and
sufficiently senior. The staff engaged on concurrent audit must be independent of the branch where
concurrent audit is conducted.
External Audit Firm
• Appointment: Appointment of an external audit firm may be initially for one year and extended up to
three years - after which an auditor could be shifted to another branch subject to satisfactory performance.
• Removal: If external firms are appointed and any serious acts of omissions or commissions are noticed in
their working their appointments may be cancelled and the fact may be reported to RBI & ICAI.

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