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In case of bank during audit, if auditor find anything which having impact on financial statement, entry of these changes passes through Memorandum of changes “MOC”. All material changes that impact final accounts are incorporates by MOC.

Memorandum of changes is an important document enclosed with the Bank Audit Report whenever the auditor observes material changes.

Memorandum of changes can be of following nature: –

1. In respect of Balance Sheet.

2. In respect of Income

3. In respect of expenses

4. In respect of changes in advances of the bank

5. In respect of outstanding balance of the advances

6. In relation to provisions made during the year

7. Changes suggested for Fixed Assets

8. In relation to reconciliation of accounts

9. Other items (if any)

Before giving MOC and auditor should take care the following point: –

1. The format of MOC in most banks will have both sides like a trial balance. It should be ensured that total of changes suggested in financial statement is tallied on both accounts.

2. There should be justification for each suggested change.

3. The reclassification of advances should be correctly reflected in the Memorandum of Change (Secured, unsecured, guaranteed, sector-wise etc.)

4. If MOC is suggested as per prudential norms on income recognition, the impact, if any on the provision of the assets is also to be taken care.

Memorandum of Changes (MOC) Bank Audit

5. If there are no changes to report, a NIL MOC must be forwarded with report.

6. Branch manager is required to provide input on each item mentioned in the MOC.

The format of MOC is provided along with other supporting material sent by bank to the respective auditors. Before giving a Memorandum of Changes auditor must ensures transparency and accuracy in financial statement.

The following is a summary of “Memorandum of Changes” submitted by auditor to the branch management.

Memorandum of Changes (Summary)

No. Increase Decrease
(a) In respect of Income
(b) In respect of expenditure
(c) In respect of Assets
(d) In respect of Liabilities
(e) In respect of Gross NPAs
(f) In respect of Provision on NPAs
(g) In respect of Classification of Advances
(h) In respect of Risk Weighted Assets
(i) Other items (if any)

Conclusion: The Memorandum of Changes (MOC) in bank audits summarizes material alterations impacting financial statements. Auditors must maintain transparency and accuracy while preparing MOCs, ensuring adherence to format and justifying suggested changes.


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April 2024