Statutory Audit of Banks | Chartered Accountant | Bangalore | Certicom

Statutory Audit – Meaning & Applicability

Statutory Audits are audits determined by different laws such as the Reserve Bank of India, Income Taxes, Company Laws, etc. Chartered accountants need to conduct many audits in accordance with the provisions of different laws.

The Process to Conduct a Statutory Audit

Auditors must ensure that their reports must include quantification of advances, deposits, interest income and interest costs. Important elements for checking the mandatory bank audits are:

A. Cash Verification Procedure

B. Tax Related Items

C. Verification of Loan Accounts

Audit Report

After conducting an audit, the auditor must provide an audit report for the same thing. An auditor is required to make a report as stated in the engagement letter where he must state the following:

I. Does the balance sheet show a true and fair view that contains all the things needed to show a true and fair view of the bank’s business

ii. Whether profit and loss accounts show the actual balance for the period covered by the account

iii.  whether the transactions made by branches that are not in branch power

The Content of Audit Report

Heading	Brief of contents
The title	should mention that it is an ‘Independent Auditor’s Report’.
Addressee	Should mention clearly as to whom the report is being given to. For example Members of the company, Board of Directors
Management’s Responsibility for Financial Statements	Mentions that it is the Management’s responsibility to Prepare the Financial Statements.
Auditor’s Responsibility	Mention that responsibility of the Auditor is to express an unbiased opinion on the financial statements and issue an audit report.
Opinion	Should mention the overall impression obtained from the audit of financial statements. For example Modified Opinion, Unmodified Opinion
The basis of the Opinion	States the basis on which the opinion as reported has been achieved. Facts of the basis should be mentioned.
Other Reporting Responsibility	If any other reporting responsibility exists, the same should be mentioned. For example Report on Legal or Regulatory requirements
Signature of the Auditor	The engagement partner (auditor) shall sign the audit report.
Place of Signature	The city in which audit report is signed.
Date of Audit Report	Date on which the audit report is signed.

Long Form Audit Report (LFAR)
Audit reports in accordance with Statutory Requirements, the Requirements of Public, Private & Foreign Sector Banks require Auditors to provide LFAR. The things that the bank wants the auditor to examine have been prescribed by the RBI.