Page 287 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
(CNO-BA.740) Reporting Systems
Structured Format: There should be proper reporting of the findings of the concurrent auditors. For this
purpose, each bank should prepare a structured format. The major deficiencies/ aberrations noticed during
audit should be highlighted in a special note and given immediately to the bank’s branch/controlling offices. A
quarterly review containing important features brought out during the concurrent audits should be placed
before the ACB.
Treatment of Minor Vs Serious Irregularities: Minor irregularities pointed out by the concurrent auditors
are to be rectified on the spot. Serious irregularities should be straightaway reported to the controlling offices/
Head Offices for immediate action.
Treatment for Frauds: Whenever fraudulent transactions are detected, they should immediately be reported to
Inspection & Audit Department (Head Office) as also the Chief Vigilance Officer as well as Branch Managers
concerned (unless the branch manager is involved).
Branch wise Vs Zone wise: Concurrent auditors should be attached to the branches and not the zonal offices.
Reporting to ACB Zone wise: There should be zone-wise reporting of the findings of the concurrent audit to
ACB (Audit Committee of Board of Directors) and an annual appraisal/report of the audit system should be
placed before the ACB.
Follow-up Action: Follow-up action on the concurrent audit reports should be given high priority by the
controlling office/Inspection and Audit Department and rectification of the features done without any loss of
time.

(CNO-BA.760) Audit Committee
Committee Formation: Banks must establish an Audit Committee of the Board (ACB) as per RBI guidelines.
The ACB provides direction and oversight for the bank's total audit function, including internal and
concurrent audits. The ACB reviews the quality and effectiveness of the internal inspection/audit function,
with a focus on system follow-up.
Auditor Management: The ACB reviews the system for appointing and remunerating concurrent auditors.
Periodic Meetings: Regular meetings between the ACB and both concurrent and statutory auditors help the
committee oversee the bank's total audit function.

Audit of NBFCs

Case Study - CA Sachet
Importance of NBFCs
NBFCs (Non-Banking Financial Companies) play a crucial role in India's financial system, especially in
promoting inclusive growth. They cater to both rural and urban areas and are particularly important for
segments of society that cannot meet the stringent lending criteria of traditional banks.
Services Offered
NBFCs are involved in various sectors including housing finance, commercial vehicle financing, microfinance,
and the MSME sector.
Regulatory Framework
NBFCs are strictly regulated by the Reserve Bank of India (RBI). They must obtain a certificate of registration
to operate and adhere to various norms related to public deposits, capital adequacy, and risk exposure.
Financial Reporting
NBFCs are required to follow specific accounting standards (Ind-AS) and prepare their financial statements in
accordance with Division III of Schedule III of the Companies Act, 2013.
Scale-Based Regulations
RBI has introduced "scale-based" regulations that classify NBFCs into four layers based on their size, activity,
and riskiness: base layer, middle layer, upper layer, and top layer. The upper layer has enhanced regulatory

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