What we do
Our work in this practice group is structured around the records, deadlines, and decisions involved:
- Independent examination of banking transactions and financial records.
- Review of loan and advance accounts and relevant supporting documentation.
- Identification of irregularities, documentation gaps, and control weaknesses.
- Verification of securities, stock statements, and other relevant borrower information.
- Review of interest calculations and applicable banking records.
- Improved monitoring of credit and operational risks.
- Clear reporting of significant audit observations and compliance matters.
How the engagement works
Bank audit requirements depend on the nature of the engagement and the applicable regulatory, statutory, and institutional framework. Audits of banks and banking activities may involve requirements under the Banking Regulation Act, Reserve Bank of India directions and circulars, applicable accounting and auditing standards, and the policies and audit instructions of the concerned bank. The exact audit procedures and reporting requirements depend on the type of bank audit, branch or function being audited, and the terms of the engagement.
Scenario 1: A bank requires an independent examination of branch operations, loan accounts, advances, and related documentation.
Scenario 2: A financial institution wants to review borrower accounts, securities, stock statements, and repayment conduct as part of its credit monitoring process.
Scenario 3: A bank requires verification of documentation and compliance relating to loan and advance accounts.
Scenario 4: Management wants to identify operational control weaknesses, irregular transactions, or documentation gaps within banking operations.
Scenario 5: A bank requires audit support for financial reporting, regulatory compliance, or specific areas identified as higher risk.
Banking Operations Review
We examine relevant banking processes, transactions, records, and operational controls within the scope of the assigned audit.
Loan & Advances Audit
We review loan and advance accounts, repayment conduct, interest calculations, documentation, security details, and other relevant credit information.
Borrower & Security Verification
Where included in the engagement scope, we examine borrower records, stock statements, financial information, securities, and other supporting documentation.
Interest & Account Verification
We verify applicable interest calculations, account balances, credits, debits, overdue amounts, and other relevant account information.
Compliance & Internal Control Review
We review relevant processes and controls against applicable regulatory requirements, bank policies, and engagement instructions and identify significant gaps or exceptions.
Audit Reporting
We document audit findings, exceptions, irregularities, and other significant observations and prepare the applicable audit report in accordance with the engagement requirements.
Step-by-step process
Step 1: Engagement & Scope Understanding
We understand the nature of the bank audit, branch or function being audited, applicable instructions, reporting requirements, and key risk areas.
Step 2: Records & Control Review
We review relevant banking records, systems, processes, loan documentation, account information, and internal controls based on the agreed audit scope.
Step 3: Transaction & Account Verification
We perform appropriate verification procedures on selected transactions, loan accounts, advances, interest calculations, securities, and supporting documentation.
Step 4: Compliance & Exception Analysis
We identify significant exceptions, documentation gaps, control weaknesses, irregularities, and other matters requiring attention.
Step 5: Reporting & Audit Closure
We discuss significant observations with the relevant personnel, complete the audit documentation, and prepare the applicable audit report and recommendations.
Key deliverables & outputs
General questions
01What is a bank audit?
A bank audit is an independent examination of specified banking operations, financial records, loan accounts, advances, controls, and compliance matters based on the applicable statutory, regulatory, and engagement requirements.
02What is checked during a bank audit?
Depending on the scope, a bank audit may cover loan and advance accounts, documentation, security, interest calculations, account conduct, transactions, internal controls, compliance, and other banking records.
03Do bank audits include loan accounts?
Yes. Where loan and advances are included in the engagement scope, audit procedures may cover account balances, repayment conduct, documentation, securities, interest calculations, overdue amounts, and other relevant credit information.
04What documents are reviewed during a bank audit?
Documents may include loan files, sanction letters, security documents, borrower financial statements, stock statements, account statements, repayment records, interest calculations, internal reports, and other records relevant to the audit scope.
05Can a bank audit identify control weaknesses?
Yes. Audit procedures may identify significant control gaps, documentation deficiencies, irregular transactions, process weaknesses, and other exceptions requiring management attention, depending on the scope of the audit.
06Are bank audits governed by RBI requirements?
Bank audits may be subject to applicable Reserve Bank of India directions and other statutory, regulatory, accounting, auditing, and institutional requirements. The exact framework depends on the type and scope of the audit.
07Do you provide audit reports after completing the bank audit?
Yes. The applicable audit report and supporting documentation are prepared based on the agreed engagement scope, reporting format, and applicable regulatory or institutional requirements.