SAJIVE ASSOCIATES
CHARTERED ACCOUNTANTS
STATUTORY AUDIT
Statutory Audit is an audit which is prescribed by the different statute like Reserve Bank of India, Income Tax, Companies Act, etc. A Chartered Accountant need to conduct many audits as per the different statute requirement.
Statutory Audit of banks is mandatory. Statutory Auditors are appointed by RBI in association with the ICAI. Every year after the end of the previous financial year, in every branch of the banks, a very rigorous audit is conducted.
Besides the normal audit report as per the statutory requirements, the terms of the public, private & foreign sector banks requires the auditors to furnish an LFAR. The matters which the banks want the auditors to check is been prescribed by RBI.
The time limit for submission of LFAR is 30th June. An auditor should plan the audit for timely submission of LFAR. An auditor can give an executive summary of the LFAR is they feel its required.
THE PROCESS TO CONDUCT A STATUTORY AUDIT
The Statutory Auditors should ensure that the audit report issued by them complies with the requirements of Revised SA 700 – Forming an Opinion and reporting on financial statements, SA 705 – Modifications to the opinion in the Independent Auditor’s Report & SA 706 – Emphasis of matter paragraphs and other matter paragraphs in the Independent Auditor’s Report.
Nowadays, all statutory auditors are given a time frame in which they have to undertake the audit of the branches that are allotted to them. An auditor should immediately accept the appointment send a formal communication to the branch management and all other information that he would require in his audit.
The auditor will have to ensure that their report should include the quantification of advances, deposits, interest income and interest expenses. The important elements to check in the statutory audit of banks are:
A. Cash Verification Procedure
B. Tax-Related Items
C. Verification of Loan Accounts
AUDIT REPORT
After conducting the through audit, an auditor has to give an audit report for the same. An auditor is required to make a report as mentioned in the engagement letter in which he has to state the following:
i. Whether the balance sheet is showing true and fair view containing all the necessary particulars to exhibit a true and fair view of the affairs of the banks
ii. Whether the profit and loss account shows a true balance for the period covered by such account
iii. Whether any transaction has been carried by the branch which was not within the powers of the branch
iv. Any other matter which the auditor considers to be brought to the notice of the Statutory Central Auditor
