CA Nitesh  More

PRESENT APPOINTMENT SYSTEM:

A) Every year, ICAI forward the Bank Branch Auditors’ Panel to Reserve Bank of India. The said panel was classified into following three lists by RBI:-

i. List of auditors stationed at cooling period (applicable to 33 centres viz., Mumbai, Kolapur, Pune, Solapur, Thane, Kolkata, Chennai, Coimbatore, Delhi/New Delhi, Ajmer, Bikaner, Jaipur, Kota, Udaipur, Ahmedabad, Vadodara, Surat, Hyderabad, Chandigarh, Raipur, Faridabad, Gurgaon, Panchkula, Panipat, Sonipat, Bangalore, Ernakulam, Indore, Nagpur, Ludhiana, Jodhpur, Bhilwara and Ghaziabad.) of two years after completion of their cycle of 4 years of branch statutory audit – this list was not forwarded to any of the banks.

ii. List of continuing auditors who have yet to complete their cycle of 4 years of allotment of bank branch statutory audit – this list was forwarded by RBI to respective banks.

iii. List containing balance names has been forwarded to all the Public Sector Banks to select their branch statutory auditors. This implies that such applicants have got an equal chance of selection as branch statutory auditor with all the 25 public sector banks.

B).RBI forward these list to every Banks.

C) The statutory branch auditors are selected by the respective banks.

PROBLEMS IN PRESENT SYSTEM & THEIR SOLUTIONS

A) PROBLEM: Category IV) CA firms gets very less proportion of bank audit. Many CATEGORY II) / III) Firms are not getting appointments even after 4-5 years. Many Firms are not getting appointments even after 6-7 years.

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SOLUTION:  i) Bank Branch audit can be equally allotted on the basis of principal of “One Firm, One Bank Branch Audit based on size of bank branch & size of firm” or other similar principal (As discussed below under head “suggestions by CA Nitesh More” point 1 to 5) or

ii) BANKS SHOULD BE GIVEN SMALL LIST as discussed in point 6 below under head “suggestions by CA Nitesh More”.

B) PROBLEM: There is communication from members that GANGS take considerations for getting appointments (without proof).There is communication from members that Bank staffs take considerations for getting appointments (without proof). (Kindly note that I do not certify this problem. I do not take any responsibility for communication of this problem. Kindly further investigate the problem).

SOLUTION: BANKS SHOULD BE GIVEN SMALL LIST as discussed in point 6 below.If bank is given list of CAs according to their requirements, than Bank staffs will have to appoint the auditor in that list. This will automatically reduce the chances of corruption prevailing in the system, if any.

C) PROBLEM: Practically auditors have comparatively less time to audit, say 7-8 days. Large distance of auditor & bank branch results loss of valuable time of auditor as well as loss of money of bank in transportation. More than 20 to 100 Crore’s of rupees are expended in transportation cost by bank which has no value, neither to auditor nor to banks. In some cases, CAs are being alleged for not able to identify NPAs, which arises due to less time given for Bank Branch Audit.

SOLUTIONS: APPOINTMENTS BY TAKING “MAPPING TECHNOLOGY” as discussed in point 7 below.

SUGGESTIONS

1) NO OF BANK BRANCHES & CA FIRMS: There are about 25,400 eligible CA Firms for Bank branch audit (Total no of CA Firms: 31000, out of which about 5,600 are not eligible) & there are about 32,000 bank branch, which require audit.

2) DIVISION OF BRANCHES ON THE BASIS OF SIZE: All branches should be divided into category I, II, III & IV on the basis of sizes.

3)  ALLOTMENT OF AUDIT ON THE BASIS OF SIZES: Audit for Category l branch should be allotted to Category I CA firm & so on. Under existing system, category IV CA Firm has less chance to get bank audit.

4)  NO COOLING PERIOD: There should not be cooling period on the basis of place, as many firm shift to non cooling place during cooling period.

5) PRINCIPAL OF ALLOTMENTS: Bank Branch audit can be equally divided among all firms so that all firms get bank audit, may be on the basis of principal of “One Firm, One Bank Branch Audit on the basis of size of bank branch & CA Firm” or other similar principal.

6)  BANKS SHOULD BE GIVEN SMALL LIST: Banks should be sent list on the basis of its requirements. Suppose, if a Bank has 100 total branches which require audit: CATEGORY I BRANCH: 30, CATEGORY II BRANCH: 20, CATEGORY III BRANCH: 10, & CATEGORY IV BRANCH: 40. Such bank should not be sent whole list, but a small list, say list of 100 Firms according to size of CA Firms & branch size. This will reduce the discretion of Bank to allot audit. This discretion has created so many problems under existing system, WHICH CAN BE CONTROLLED BY IMPLEMENTING THIS SINGLE SUGGESTIONS.

7)  APPOINTMENTS BY TAKING “MAPPING TECHNOLOGY”:  IT Technology can be used to appoint auditors. MAPPING COCEPT CAN BE USED TO SAVE THE TRANSPORTATION COST AS WELL AS TIME OF AUDITOR. By using mapping technology, the auditor who is near to the branch, can be appointed as branch auditor. Distance can be known in terms of km. easily & with less cost. With expenditure of even 1 Lakh, 20 to 100 crores of rupees expended by bank can be saved.

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0 responses to “How to improve Bank Audit Appointment System?”

  1. CA. Subhash Chandra Podder says:

    Scrap all audit in public Sector Banks , huge scope of fraud and scam ?

  2. Sathyanarayana says:

    The following news on Bank fraud which are recently come to the notice of public. But violation of banking rules, mismanagement, inefficiency and negligence in doing the business etc., can be controlled only by audit. If audit is not taken seriously all financial illiterates who are in power will be made bufoons.

    News »
    Online banking thefts soar in Japan, prompt compensation rethink TOI 2014-05-31 22:52:00
    In April there were 50 cases of theft from online accounts held by Japanese businesses with nearly 200 million yen stolen.
    Branch manager dupes bank of Rs 9 lakh TOI 2014-05-29 09:04:00
    Duggipar police booked the branch manager of Bank of Maharashtra, Saundad, Laxman Dhakate, for duping the banking of over Rs 9.9 lakh between December 2011 and February 2014.
    State Bank of Hyderabad branch manager gets 3-year RI for cheating bank TOI 2014-04-11 08:31:00
    The second additional special judge for CBI cases in Visakhapatnam, N Ananda Rao, on Thursday convicted three persons to rigorous imprisonment of three years along with fine in a bank fraud case.
    Fraud: Retired bank manager among three held TOI 2014-05-04 12:22:00
    Assistant police inspector Sardar Nale of Sonegaon police station stated that the fraud came to fore when the company’s auditors and others scanned through the accounts.
    Manager, jeweller held for Rs 1.8cr bank fraud TOI 2014-03-24 10:17:00
    A cheque clearing officer of a nationalized bank has been arrested for siphoning off over Rs1.8 crore from the bank to buy gold ornaments.
    Former SBH manager among 11 convicted in six bank fraud cases TOI 2014-03-29 06:03:00
    The Second Additional Special Judge for CBI cases at Vizag, N Ananda Rao, convicted six persons in six bank fraud cases here on Friday.
    World Bank bans 2 Indian entities over fraud TOI 2014-05-12 06:56:00
    World Bank has banned two Indian entities for violating its fraud and corruption guidelines, making them ineligible to participate in any projects financed by the global lender for certain period.
    Retired manager loses Rs 64k to ‘bank official’ in online fraud TOI 2014-05-07 08:11:00
    A 61-year-old retired manager of a credit co-operative society fell prey to an online fraud after he found that Rs 64,881 was withdrawn from his bank account.
    Online bank fraud money trail shows strong UP-Jharkhand link TOI 2014-06-05 10:16:00
    Sources at the Hazratganj-based cyber crime cell confirm there is strong connection between UP and Jharkhand when it comes to online bank frauds.
    State Bank of Mysore denies pollution cobtrol board’s version of deposit fraud TOI 2014-06-01 10:11:00
    SBM said KSPCB had availed of a loan on May 30, 2013 of Rs 9 crore against fixed deposits of Rs 10 crore.

  3. Sathyanarayana says:

    RIGHT SAID MR. BSK RAO AND MANDEEP SINGH,

    THE RBI SHOULD SCRAP AUDIT BECAUSE CC CAMERAS IN BANKS AND SECURITY GAURDS IN ATMS ARE REAL WATCH DOGS WHY THIS CA WATCH DOGS?
    THE BANKS SHOULD IMPLEMENT BUFFET SYSTEM IN BANKING SERVICES THAT WHO WANTS LOAN OR WANTS TO DRAW CASH FROM THE BANK CAN TAKE HOW MUCH HE LIKES AS PER HIS CAPACITY. WITH THIS BUFFET BANKING THE GOVERNMENT CAN REMOVE EVEN THE EMPLOYEES IN THE BANKS AND REDUCE 90% OF BANKING COST!!!!!!!!!! THEREBY BANKS WILL MAKE MORE PROFIT, GOVERNMENT WILL GET MORE TAX AND SHAREHOLDERS GET MORE DIVIDEND.

    IF ANY FRAUD OR MISAPPROPRIATION HAPPENS POLICE AND LAWYERS WILL TAKE CARE OF THIS (CAS CAN BECOME FINANCIAL AND TAX LAWYERS)

  4. S P ANANDAKUMAR AND CO says:

    EVERY YEAR, REASON FOR NOT ALLOTING BRANCH AUDIT HAS TO BE INTIMATED TO THE FIRM : BEING COOLING PERIOD AS PER NORMS , ETC.,

  5. CA MANOJ GUPTA says:

    WE have been applying for allottment since 1999 but did not get a single bank audit allotted till date.

  6. MANDEEP SINGH says:

    In computer era no need of bank branch audits. It is an extra financial burden on bank, which results more expenses on account holders. Due to core bank there is no much role branches. All deposits & payments controlled online.
    ONE DAY WILL COME, WHEN OUR GOVT. WILL SAY BYE TO THESE AUDITS.

  7. subhashchandrapodder says:

    To answer of B.S.K.Rao, who told you BRI has scrapped Branch audit in view of Core banking system ? There are much scope to sanction bad loan though the branch , non recovery also perforated though these unaudited branches . Best known to ICAI, RBI and other regulators .

  8. subhashchandrapodder says:

    our firm was in cooling period of two years for the year 2011-2012 & 2012-2013 , We have been empaneled with ICAI ” MEF ” for the year 2013-2014 , still we have not been allotted any bank branch audit for the year 2013- 2014 , reason remain unknown to Us / rather best known to the Central Council of ICAI.
    CA. Subhash Chandra Podder , FCA
    Kolkata
    13/06/2014

  9. CA S.P.MAHESHWARI says:

    In 2013-14 RBi has selected the name of our firm after cooling period of two years as per ICAI but no Bank has information about allotment of Bank Branch audit.This is mis management and negligence of RBI and ICAI and both bodies have no time to settler the issue with CA

    M/S R S MAHESHWARI & ASSOCIATES, HYDERABAD
    mOBILE 919391000508

  10. CA Suresh Ameria says:

    Had these suggestions forwarded to RBI ?

  11. B.S.K.RAO says:

    IN VIEW OF CORE BANKING PREVAILING ON DATE, BANK BRANCH AUDIT IS A COST BURDEN TO BANKS. THEREFORE, MINISTRY OF FINANCE SHOULD SCRAP AUDIT OF BANK BRANCHES. THIS IS ALSO IN THE INTEREST OF PUBLIC, INVESTOR & GOVT.

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