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'Scope of Bank Audits Complex, Diverse than Company Audits'

Published: 20th March 2016 04:17 AM  |   Last Updated: 20th March 2016 04:17 AM   |  A+A-

THIRUVANANTHAPURAM: Bank audits are under sharp focus after the recent asset quality review exercise by the Reserve Bank of India (RBI) and spike in NPA levels across the banking system, said S Adikesavan, chief general manager of State Bank of Travancore (SBT).He was speaking after inaugurating a seminar on bank audit organised by the Trivandrum chapter of the Institute of Chartered Accountants of India.Adikesavan said the scope of bank audit is more complex and diverse than that of regular company audits.

“Public sector banks, for instance, are not covered under the Companies Act 2013 and the basic regulation is the Banking Regulation Act of 1949. Even though Section 29 of this Act states that the requirements relating to the preparation of balance sheet and P&L accounts of a company shall apply to banks, there are variations in the applicability of CompaniesAct to different banks,” he said.

He opined that section 55 of State Bank of India Subsidiary Banks Act expressly states that Companies Act will not apply to subsidiary banks like the SBT.

The regulation and the applicable statutes are complex, he said. The closer monitoring of Asset Quality by RBI through ‘moral suasion’ and specific circulars has only added to the complexity of the problem. Balance Sheet management of banks is currently a highly specialised task requiring constant attention to evolving regulations, the progressive implementation of Basel III norms, and heightened stakeholder and public expectations, he said.There has to be congruence in the approvals of statutory auditors and the bank’s top management in ensuring full and fair disclosures strictly conforming to RBI norms. “In fact, a spike of `1 lakh crore of NPA in quarter one is a sad comment on the systemic oversight and audit coverage,” he said.

Technical session on ‘bank branch audit’ was handled by CA Naganathan, ‘audit under core banking concept’ by CA Premnath Degala and ‘tax audit of bank branches’ by CA Pattabhiram.ICAI Trivandrum chapter chairman R Srinivasan welcomed the gathering and secretary R Roopesh proposed a vote of thanks.



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