Introduction: The Lok Sabha, on December 4, 2023, raised crucial questions regarding the engagement of Chartered Accountancy (CA) firms in Public Sector Banks (PSBs). This article delves into the government’s stance on the matter, RBI directives, and the total number of CA firms involved over the last three years.
Government’s Role:
- The government clarified that it does not engage CA firms for Concurrent Audit, Internal Audit, and Stock Audits in PSBs.
- RBI, through a Circular dated September 18, 2019, emphasized the need for banks to have their board-approved policies for concurrent audits. PSBs have individual policies on the scope and applicability of internal and stock audits.
RBI’s Directive on Turnover: The RBI clarified that it has not issued any instruction advising PSBs against having concurrent audits for banks with a turnover of less than Rs. 40 crore per year.
Number of CA Firms Engaged:
- The data received from RBI outlines the total number of CA firms engaged by PSBs in the last three years, both as Statutory Central Auditors (SCAs) and Statutory Branch Auditors (SBAs).
- The table provides a bank-wise and year-wise breakdown, showcasing the evolving trends in CA firm engagement.
Conclusion: The government’s clarification on not engaging CA firms for specific audits in PSBs reflects a commitment to transparency and effective banking practices. RBI’s directives regarding board-approved policies signify a move towards more robust internal audit frameworks within banks.
The absence of specific instructions against concurrent audits for banks with turnovers below Rs. 40 crore per year indicates flexibility in the application of audit practices, allowing for tailored approaches based on individual bank characteristics.
The annexed data provides insights into the dynamic landscape of CA firm engagement. Banks like State Bank of India and Bank of Baroda consistently engage a significant number of firms, reflecting their complex operations and extensive networks.
In conclusion, understanding the government’s approach, RBI directives, and the evolving trends in CA firm engagement sheds light on the efforts to ensure accountability, transparency, and efficiency in the functioning of PSBs. As the banking sector continues to adapt to changing dynamics, these insights are crucial for stakeholders and the public alike.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINACIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO-227
ANSWERED ON MONDAY, DECEMBER 4, 2023/AGRAHAYANA 13, 1945 (SAKA)
CA FIRMS
277. SHRI D.M. KATHIR ANAND
Will the Minister of FINANCE be pleased to state:-
(a) whether the Government has reduced the engaging of CA firms doing Concurrent Audit, Internal Audit and stock Audits in Nationalised Banks across the country and if so, the details thereof;
(b) whether the Reserve Bank and Public Sector Banks have decided not to have concurrent audit for Banks having turnover of less than Rs. 40 crore per year and if so, the details thereof; and
(c) the total number of CA firms engaged by the PSBs in the last 3 years, year-wise and Bank-wise?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(DR. BHAGWAT KARAD)
(a) The Government does not engage CA firms for doing Concurrent Audit, Internal Audit and stock Audits in Public Sector Banks.
In respect of concurrent audit, Reserve bank of India (RBI) vide it’s Circular dated September 18, 2019, has prescribed that banks should have their own Board approved policy covering sections, including, inter-alia, the scope of work to be entrusted to concurrent auditors, coverage of business/branches etc. Accordingly, banks are having their own board approved policy for concurrent audit. Further, Public Sector Banks (PSBs) are having their own board approved policy on scope and applicability of internal and stock audit.
(b) RBI has apprised that, they have not issued any instruction advising the PSBs not to have concurrent audit for Banks having turnover of less than Rs. 40 crore per year.
(c) As per information received from RBI, Year-wise and PSBs-wise details of the total number of CA firms engaged as Statutory Central Auditors (SCA) and Statutory Branch Auditors (SBAs), in the last 3 years are annexed:
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Annex
Lok Sabha Unstarred question no. 227, regarding CA Firms
Number of CA firms engaged by Public Sector Banks in the last 3 years
| Sl. No. | Name of the bank | FY 2020-21 | FY 2021-22 | FY 2022-23 | |||
| No. of SCAs |
No. of SBAs |
No. of SCAs | No. of SBAs |
No. of SCAs | No. of SBAs |
||
| 1. | Bank of Baroda | 5 | 2115 | 5 | 1702 | 5 | 1186 |
| 2. | Bank of India | 3 | 1372 | 3 | 1442 | 3 | 1820 |
| 3. | Bank of Maharashtra | 4 | 413 | 4 | 387 | 4 | 299 |
| 4. | Canara Bank | 4 | 2128 | 5 | 1783 | 5 | 1417 |
| 5. | Central Bank of India | 4 | 903 | 4 | 993 | 4 | 816 |
| 6. | Indian Bank | 5 | 1148 | 5 | 1051 | 5 | 901 |
| 7. | Indian Overseas Bank | 4 | 666 | 4 | 588 | 4 | 439 |
| 8. | Punjab National Bank | 5 | 2146 | 5 | 1875 | 5 | 894 |
| 9. | Punjab & Sind Bank | 4 | 401 | 4 | 371 | 4 | 371 |
| 10. | State Bank of India | 14 | 4856 | 12 | 4006 | 12 | 3171 |
| 11. | UCO Bank | 5 | 604 | 4 | 504 | 4 | 377 |
| 12. | Union Bank of India | 6 | 2069 | 6 | 1701 | 6 | 1362 |
Source: RBI
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