Indore (Madhya Pradesh): CA Manoj P Gupta said here on Tuesday that the auditor should declare those loan accounts as non-performing assets (NPA), in which interest for three installments or three months could not be recovered.
It should also be seen that the loan was not being repaid by giving a new loan. While auditing, the guidelines given in the Master Circular issued by the Reserve Bank of India (RBI) last year on April 2 should be followed and accounts showing suspicious behaviour should be red-flagged.
Gupta was addressing a workshop on bank audit organized jointly by the Tax Practitioners Association (TPA) and Indore CA Branch on Tuesday.
Necessary document should be sent to the bank
CA Samkit Bhandari said that before going for audit, a demand for necessary documents should be sent to the bank. If any mistakes were found, a memorandum of changes should be filled. Compliance with the bank’s closing circular should be ensured and dormant accounts activated during the audit year should be 100% checked.
CA Manoj Rathi said that in the report (Long Form Audit Report, which is known as LFAR), the auditor should examine all the loan documents given by the bank such as loan application form, sanction letter, legal search valuation report etc. and mention their information and the deficiencies found in compliance as per the instructions given by the RBI.
During the bank audit, it was advised to check the documents related to matching of cash deposits of the bank and deposits in other banks.
Calculation of interest should be checked
The auditor should also check the calculation of interest charged by the system, he said, adding it was often seen that due to wrong entry of interest rate in the system, the amount of interest was also wrong. The auditor should also take information about the complaints made by the customer so that the mistakes being made in the bank could be corrected in the financial statement, if necessary, during the audit.
CA Abhay Sharma, TPA Secretary, said that just as it was written outside the cockpit of the flight that piloting was a serious profession, similarly auditing was also a serious profession. Through bank audit, the government ensured the safety of the public’s deposited capital.
CA Hitesh Mehta, CA Vikram Gupta, CA Udesh Dasani, CA Yogesh Talwar, CA Tejendra Singh, CA Akhilesh Neema ands others were also present.
