What. Are the special points to be looked while auditing a banking company?
Answers
General:
1. He should, first of all, confirm that his appointment is in order.
2. He should see that Annual Accounts of the banking company have been prepared in proper form.
3. He should examine the system of internal check and control and ascertain whether such a system is adequate or not. Generally, banks have a separate audit department for the examination of day-to-day transactions. The efficacy of such a system should be examined.
4. He should visit the bank on the last working day of the year to count the cash himself. If the money has been kept with the Reserve Bank of India or any other bank, he should obtain a certificate confirming the deposit.
5. He should specially check the receipt of drafts, cheques, etc., on the last working day which has not been entered in the books.
Income:
6. He should verify investments and income there from. It should be seen that investments have been properly valued.
7. He should vouch the interest on loans and advances and ensure that irrecoverable interest is adequately provided for.
8. He should verify bills discounted and also discount received in respect of such bills. It is to be ascertained that the rebate on bills discounted and unmetered bills has been carried forward.
9. Sometimes, a banking company gets a commission from its customers for services rendered to them. If so, such a commission received should be vouched by proper vouchers.
10. He should verify the securities deposited with bank for safe custody purpose and see that income in respect thereof has been properly accounted for.
Expenditure:
11. He should see that capital expenditure has been properly dealt with in the books and proper distinction has been made between capital and revenue.