AUDIT OF BANKS - Where are we headed to?

Dear Sheshadri Nandan,

You have informed us about Indian bank. Its just in row. P NB & PSB has reported back to ICAI that they are going to implement the policy soon. Recently i got a circular of RBI dated 2nd July 2012, POLICY for Concurrent Audit for Cooperative banks. The policy states that the policy is having a recommendation of  the representatives of  ICAI.The said policy says;

With a view to standardising the scope of the concurrent audit system, an informal group set up by the Reserve Bank of India comprising senior officers of some large commercial banks and the representatives from the Institute of Chartered Accountants of India examined the various aspects connected with the system. The aspects covered are enumerated below:

1.2.1 Scope of concurrent audit.

1.2.2 Types of branches to be covered.

1.2.3 Types of activities to be covered.

1.2.4 Agency to carry out the concurrent audit.

1.2.5 Periodicity of reporting and follow up of the findings of the concurrent auditors.

1.2.6 Remuneration payable to external auditors and related matters.

1.2.7 Accountability aspect.

This is to mention that the said policy do not grant a monopoly to the Chartered Accountants for concurrent audit. It also talk about the retired officers. Lets see,

5. Appointment and Remuneration of Auditor

5.1 The option to consider whether the concurrent audit should be done by the external auditors (professionally qualified Chartered Accountants) or its own staff may be left to the individual banks. In case bank decides to appoint external auditors for the purpose, the terms of their appointment and remuneration to be paid may be fixed by the banks within the broad guidelines approved by the Board and/or by the Registrar of Co-operative Societies of the State concerned.

5.2 The audit firms will be responsible for any omissions or commissions in respect of transactions seen by them. In case any serious act of omission or commission is noticed in the working of the concurrent auditors (external), the bank may consider terminating their appointment and a report may be made to the Institute of Chartered Accountants of India for such action as they deem fit under intimation to RBI/RCS.

5.3 In case the bank prefers to entrust the audit to its own officers, the bank has to ensure that these officers are well experienced and of sufficient seniority in order to exercise necessary independence and objectivity while conducting concurrent audit. It would be desirable and necessary to rotate the auditors, whether internal or external, periodically. Progressively, it may be considered whether reliance on external auditors may be reduced as soon as requisite skills for audit work are developed by the proper selection and training of officers from within.

A million dollar question , why the representatives of ICAI have become part of any document which deteriorates our position or put as at par with the retired Banking Officer.so all the happenings are there because of some of irresponsible people. Their irresponsibility is changing the direction of the CA profession and we are looking towards them like an helpless child who look his parents fighting and arguing each other. His mental state and sadness can not be defined by words.Here 100000 practicing Chartered Accountants are looking towards our leaders to act upon and to raise the vital question of auditing in the banking sector of this country.
CA AMRESH VASHISHT, FCA, LLB,DISA(ICAI)