Reading: Revenue Audit of Banks
Pre commencement of audit:- 1. Study the relevant circulars pertaining to service charges given by depository financial institution, [ Go through the Format of Audit Report & Annexure attached to the audit report card ( If any ). ] 2. Get Some Basic theme about branch ’ randomness banking software ( i.e. Putting A/c No, Period of Audit ) therefore as to facilitate easy view of customer daybook. During audit time:- 1. Don’t forget to carry Audit engagement letter given by head office. . 2. Auditors are advised to keep in mind the period of audit.
First of all ask the Bank coach to make available the follow details. Brief of Some Important accounts- ¨ · List of Total Cash Credit and Overdraft Accounts of Branch. · list of Ad-hoc restrict sanctioned during the period. · List of Guaranties issued during the period. ¨ ¨ · Top 20 Current Accounts ¨ · Top 20 Depositors of trust. ¨ ¨ ¨ · List of NPA Accounts of ramify and Recoveries made during audit menstruation against them. tilt of areas to be covered & procedure for its audit are as under : – ¨ Incomes of Bank : – a ) interest Earned On Advances. boron ) Processing/Renewal charges. speed of light ) inspection charges. five hundred ) documentation charges. einsteinium ) Commitment charges (Important). degree fahrenheit ) equitable mortgage charges. gravitational constant ) CIBIL charges. planck’s constant ) Ledger leaf charges. i ) Locker rent. joule ) Penal Interest on Overdue installments & On late submission of stock statement. – ( broadly 1 % topic to maximal of 2 % ) 1.Interest Earned On Advances. Ø See that interest is charged in accordance with latest circulars of RBI. Ø Check the Interest calculation on selective footing. Ø See that for special canonic interest is charged according to sanction letter. Ø Check that revised interest rates are by rights applied in system from relevant date of applicability.
2. Processing/Renewal charges. (A) Processing Fees:- Processing fees is by and large charged by the branch on following fresh advances sanctioned during the audit period- Term Loans, Housing Loans, Personal Loans, Vehicle Loans, Cash Credits facility, Overdraft facility, Bank Guarantee etc.
Scrutinize ledger of every sanction during the audit period & affirm that serve charges are debited accordingly to borrower ’ randomness ledger as per circular of charges. read Sanction Letter for any especial sanctions from controlling authorities & verify that charges mentioned in Sanction Letter are debited to borrower ’ sulfur account consequently. If not debited accordingly than it tax income escape of the bank.
(B) Renewal Charges:- Cash Credit/OD limits and condition loans should be renewed every year as per the Banking regulations. So you have to verify that in every CC/OD/Term loan Account, Renewal Charges are debited or not. reclamation Charges are calculated on basis relevant service charges round of the bank.
note : – There is a threshold limit for calculating renewal charges that you have to be keep in cognition and select the accounts that ’ mho loan measure is more than doorway limit. If any discrepancy observed that should be noted.
3. Inspection charges. inspection Charges are charged on the accounts for which have the security of stock and current assets, ( generally CC and OD limits ). branch officials should carry out inspection of borrower ’ s standard and early current assets at least once in a quarter and debit the charges consequently as per service charges circular. Verify that the charges are by rights debited in borrower ’ second ledger ( At least 4 times in a year ) as per circular of charges on footing of per inspection carried out. If any discrepancy observed that should be noted. 4. Documentation charges. documentation charges is debited in sexual intercourse to execution of security system documents by deposit So, Documentation charges should be debited in each sanction during the audit period as per the circular of charges. And in every Cash credit/ OD limit at the time of enhancement of limit. software documentation Charges is to be charged once in 3 years besides. If any discrepancy observed that should be noted. 5. Commitment charges (Important). commitment charges is charged by the depository financial institution if any borrower has not utilized the approve specify. It is charged on the un-utilized helping. Since the measure is not utilized by the borrower, bank can ’ t gain matter to upon un-utilized share and bank has it ’ s opportunity cost. then bank levy the charge. 7. Equitable Mortgage charges.