PART II Domain of Concurrent Audit - Chapter 5 - Checklists
5.1 For effective concurrent audit, it is essential that the audit programme is detail and preplanned. Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit. The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking.
5.2 The essence of the periodicity of checking and checklist is based on suggested item of coverage as per RBI guidelines as reproduced in the earlier chapter. Considering this checklist of various items with periodicity are given below.
Checklist – Daily Cash of Bank Concurrent Audit
Checklist – Daily Cash
i. Verifying daily cash transactions with particular reference to any abnormal receipts and payments.
ii. Verifying whether proper accounting of inward and outward cash remittances with the prescribed security measures adhered to and noting made in Cash Movement Register.
iii. Verification of Cash Movement Register.
iv. Verifying whether the Branch is habitually holding cash balance beyond the cash retention limit or is there a need for it at the branch? Is it fixed rationally?
v. Verifying whether exchange of cash between cashiers is made after making entry in the register.
vi. verifying cash scroll and the token book with cashier's summary and Cash Abstract.
vii. Verifying expenses incurred by cash payment involving a sizeable amount (vouchers of high value of Rs.50,000/- and above).
viii. Verifying whether Cash Remittance in Transit Account is reversed on the same day by debit to a proper head of account designated for it after receipt of proper acknowledgement/receipt where cash is remitted to a branch/Bank.
ix. Verifying whether accounting of currency chest transactions and their reporting to RBI is done promptly.
Clearing of Bank Concurrent Audit
i. Proper accounting of inward and outward clearing on daily basis.
ii. proper accounting of counter returns, inward and outward. In respect of cheques returned by other banks whether respective customer's account are debited.
iii. Whether clearing difference arose genuinely and is duly adjusted?
iv. Whether safeguards are observed to ensure proper handling and custody including returned instruments?
v. If the branch is independently handling clearing, whether the clearing account is brought to nil every day, if not, comments to be noted down.
vi. Whether service charges/incidental charges as prescribed are charged for the cheques returned in clearing.
vii. Whether drawings are allowed against unclear cheques. Whether such cheques are referred through prescribed register and passed by the Controlling Officer, if the drawings exceed the prescribed limit whether these are reported to the Controlling Authority. Examine whether interest was charged and report such omission for rectification.
Deposits of Bank Concurrent Audit
Deposits of Bank Concurrent Audit
i. Verifying whether proper introduction has been obtained on new accounts opened and credentials of introducer(s) verified.
ii. Verifying whether all relevant documents are obtained at the time of opening of accounts viz. Partnership Deed, Articles & Memorandum of Association, Trust Deed and Bye-laws etc.
iii. Verifying whether photographs of account holders are obtained, attested and pasted/ stapled to the Account Opening Form.
iv. Verifying whether the payment of Term Deposit beyond Rs.20, 000/- is done through the credit of Current/Savings Bank A/c. or by Manager's cheque.
v. Verifying all interest payments above cutoff amount say Rs. 3000/- of the previous day with regard to its accuracy.
vi. Verifying whether service charges for the return of cheques, issue of cheque books, carrying out standing instructions and minimum balance charges are levied as per prescribed norm.
Remittances / Bills for Collection – Inward & Outward
Remittances/Bills for Collection – Inward & Outward
i. Verifying whether proper accounting of inward and outward remittance transactions is done.
ii. Verifying whether DDs/TTs/MTs of Rs.50,000/- and above are issued through accounts and not against cash.
iii. Verifying whether prescribed service charges by way of exchange, commission, out of pocket expenses, interest, overdue interest in respect of all remittances, bills purchased and collection items are recovered.
iv. Verifying whether IBCNs (Inter Branch Credit Note) are prepared and sent promptly.
v. Verifying physically the inward bills on hand and post parcels tally with records.
vi. Verifying whether returned bills are debited to "Past Due & Dishonoured Bills" and followed up as per guidelines.
vii. Verifying whether documents of title viz, Transport Receipts, Railway Receipts are obtained in favour of the Bank and whether transporters are on the IBA approved list.
Advances of Bank Concurrent Audit
i. Verifying that disbursals are allowed against proper sanction, within sanctioned limits and drawing power.
ii. Verifying that in case of advances disbursed beyond the discretionary powers of the Controlling Officer, prior permission has been obtained from the competent authority. In case competent authority could not be contacted and emergency powers have been exercised/drawings in excess of sanctioned limits have been allowed in exigency, verify whether weekly returns are being submitted without exception to the controlling authority and/or ratification sought subsequently.
iii. Verifying whether the permanent incumbent confirms the decisions of the officiating Manager.
iv. Verifying whether EMI in loan accounts has been correctly calculated.
v. Verifying interest received vouchers in respect of loan/advance accounts closed on the previous day.
vi. Verifying whether bills are purchased as per terms of sanction and proper margin is maintained as per sanction.
vii. Verifying whether pre-sanction verification is done before sanction of BP limits.
viii. Verifying whether clean bills/cheques purchased are not in the nature of accommodation bills.
Meaning of Foreign Exchange
i. Verifying that L/C and Bank Guarantee are issued as per terms of sanction and charges are recovered as per FEDAI Rules / HO Guidelines.
ii. Verifying that packing credit released is backed by L/C or confirmed order, ECGC cover is available and the ECGC terms are complied with. In case of running packing credit accounts, whether RBI guidelines are complied with.
iii. Whether in case of discounting of Bills under L/C, prescribed procedure like verification of signatures of the Issuing Bank have been followed and scrutiny report issued.
House Keeping - Bank Concurrent Audit
i. Verifying whether the branch head authorizes all debits in the Suspense Account.
ii. Verifying whether tear off sheets for controlling office/HO Balances and IBR are prepared correctly and sent promptly.
iii. Listing out the Book/Register/Ledger/General Ledger Account heads not checked and/or not balanced. Latest balances taken, amount of balances short! excess, balances differences freeze out, if any, with remarks and actions taken.
iv. Verifying day-to-day writing, posting and checking of:
a. Supplementary Book
b. Day Book
c. General Ledger
d. Progressive Register/Transaction sheet
e. Exceptional Transaction report
v. Checking sum generated by computers.
vi. Scrutiny of daily vouchers with more emphasis on high value transaction. There should not be any debit to the Sundry Credit and if any debit has to be made voucher of these must be signed by the in charge of the branch.
Checklist Weekly of Bank Concurrent Audit
Checklist – Weekly
i. Verifying whether keys to Strong Room, Cash Safe, and Almirah for Security Printing Books are in joint custody of the authorized officials?
ii. Verifying whether there is any entry outstanding in Cash Remittance in Transit Account for more than 3 days.
iii. Verifying whether the branch remits all its excess cash to link branch or Currency Chest.
iv. Verifying whether the branch remits its surplus balance with other banks regularly to the designated RBI centre.
i. Verifying whether credit for realized cheques are received promptly.
ii. Verifying entries which remain outstanding for more 2 days and checking for action taken for their disposal.
iii. Verifying whether account with the Main Branch is reconciled every week.
i. Verifying that letters of thanks are being sent to the new depositors as well as to the introducers in case they cannot come to the branch.
ii. Verifying that stop payment instructions are being recorded properly.
iii. Verifying that lien on Term Deposits is properly noted whenever Receipts are held duly discharged by the Depositors.
iv. Whether the prescribed safety measures and guidelines for issue of cheque books/loose leaves are observed.
v. Verify whether the branch is following the guidelines issued by RBI and other statutory authorities with regard to all account opening forms obtained during the period including abstention of declaration of staff accounts should be verified.
vi. Scrutiny of staff accounts to detect any abnormal transaction.
Verifying whether accounts with local branches of the Bank, SBI, and other Banks are reconciled.
TTs Issued and Paid
i. Examining whether there is non-dispatch/non receipt of confirmation.
ii. Verifying whether there is follow up for receipt of confirmation?
iii. Whether there is any remittance in transit outstanding beyond 30 days? Whether relevant returns are sent?
iv. Whether telegram/telex are sent on same day.
v. Whether branch claimed interest from other banks where there was delay and followed up the claim for receipt.
Checklist – Monthly of Bank Concurrent Audit
Checklist – Monthly
i. Conducting a surprise physical verification of cash in hand, foreign currencies, and foreign travelers' cheques on any day during the month.
ii. Verifying whether currency notes are sorted, stitched and bundled properly. As per latest RBI guidelines notes bundle is not to be stitched now.
iii. Verifying whether cut/mutilated notes are kept separately as per the RBI norms and disposed off.
iv. Verifying the number of times the branch exceeded the Cash Retention Limit and action taken by the branch to dispose of surplus cash.
v. Verifying if there is a large accumulation of soiled notes and steps taken by the branch for the disposal of soiled notes.
vi. Verifying whether the receipt and delivery of Security Printing Books are properly recorded under joint signatures.
vii. Verifying whether physical verification of the Security Printing Books and tallying with the balance.
i) Date of verification of Cash
ii) Amount of cash held as on the date of verification.
iii) Cash retention limit of the branch
iv) No. of days when cash retention limit exceeded during the month/ quarter and by which amount
v) What is the percentage of cut notes/coil out of total cash held as on date of surprise verification of cash.
vi) Actual amount of cut notes held.
vii) Whether cut notes are kept separately.
viii) Whether "Cash discrepancy register" maintained and Excess/ Shortages reported to higher authorities promptly.
ix) Whether surprise verification of cash done by officer other than joint custodian officer/manager.
x) Whether cash movement register is maintained as per guidelines.
xi) Whether the branch is maintaining records/registers relating to inward/ outward cash remittances to currency chest properly and proper insurance cover has been obtained.
xii) Whether currency chest transactions are properly accounted and reported to RBI?
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