The banking industry in India has a huge canvas of history, which covers the traditional banking practices from the time of Britishers to the reforms period, nationalization to privatization of banks and now increasing numbers of foreign banks in India. Therefore, the banking industry in India has been through a long journey and has also achieved new heights with the changing times. The use of technology brought a major revolution in the working system of the banks. Nevertheless, the fundamental aspects of banking i.e. trust and confidence of the people on the institution remains the same, which comes on the back of strong quality of audit system and practices in place.
In the backdrop of the global economic slowdown that has gripped the world economy, the banking industry in India is witnessing declining asset quality, thereby declining profitability and risk of capital erosion, stricter lending norms on account of downgrading of borrowers, higher lending rates on account of enhanced default risk, ….. and so on.
Auditors’ role in such challenging times is not only to lend credibility to the financial statements but also help to strengthen the governance practices in the banking industry to come/perform upto the expectation of all the stakeholders, viz. Government, regulator, society, investor, etc.
Standard on Auditing (SAs) are a pre-requisite to ensure audit quality. Compliance with SAs not only helps ensure quality in audits, it also helps audits transform from a more statutory compliance into a real value-add function. Specifically, as mentioned in the Standard on Auditing (SA) 580 (Revised) Written Representations, you may obtain a management representation letter stating and clarifying all the issues as discussed with the branch manager which should be dated as near as practicable to, but not after, the date of the auditor’s report on the financial statements.
Continuing our strive to give best possible timely guidance to our members, Institute through Auditing and Assurance Standards Board (AASB) has already come out of the revised Guidance Note on Audit of Banks – 2014. With this instant communication, I am pleased to share with you that ICAI has come out with ebook on above guidance note that enables you to get updated with the latest information on the move. This e-book has been developed in easy to read e-magazine format giving a feeling of original book. Moreover, you can put bookmarks and save important pages. I am sure you will make best use of this ebook during the course of audit.
Further, Professional Development Committee (PDC) along with AASB supported branches in organizing programmes on statutory audit of banks to create awareness about burning issues and other related matters. We have also constituted an online support to our members from 24th March to 20th April, 2014 for fast resolution of queries pertaining to bank branch audit for the year ended 31st March, 2014. The queries can be sent at firstname.lastname@example.org
With warm regards,
(CA. K. Raghu)