effective concurrent audit/ concurrent audit reporting
DESCRIPTION
Effective Concurrent Audit/ Concurrent Audit Reporting. By CA.R.Sivaraman Partner, M.Anandam & Co, Seunderabad. Why do we talk about that. Audit is evolving Shift towards client orientation More focus on concurrent audit Stake holder expectation Branch Controlling offices - PowerPoint PPT PresentationTRANSCRIPT
Effective Concurrent Audit/ Concurrent Audit Reporting
ByCA.R.Sivaraman
Partner, M.Anandam & Co,Seunderabad
Why do we talk about thatAudit is evolvingShift towards client orientationMore focus on concurrent auditStake holder expectation
BranchControlling officesStatutory auditorsReserve Bank of IndiaDepositorsBorrowersGeneral public
How do we achieve that?Quality of delivery
StaffingUpdating knowledge – Industry knowledge -
product knowledge – latest developmentsCA vs Articles vs Retd Banker
Timely deliveryUnderstand the need of the consumerBe a professional and not a salesman
I See an opportunity
I See an opportunityRetirement of senior officersInduction of fresh graduatesInadequate trainingTurnover of employeesEver changing RBI guidelinesYour CA backgroundOpportunity as well as risk for concurrent
auditors
Effective Concurrent AuditThere is no shortcut to success
Proper PlanningProper ExecutionClear Reporting
Planning ProcessFirst time AuditU need to understandBusiness profile of the branchProduct mix of the branchStaff complementFeatures of CBSControl mechanism in placeHELPS U TO UNDERSTAND THE RISK LEVEL U HAVE TO ADDRESS
Planning ProcessFirst time AuditReview various documents like Product manuals, Circulars, Delegation of powers, Credit policy etc.,
HELPS TO U TO PREPARE AUDIT PROGRAMME
Planning ProcessDefined by the managementAudit universe, Objective and Scope
Identify the skills required to perform the audit.In case of skill gaps train them to bring up the skill levels.
Planning ProcessDivide the audit programme into daily,
weekly, fortnightly and monthly.Allocate activities for each team member.
From second month onwards Review circulars issued during previous
monthRevise your audit programme based on the
circulars
Execution processHave a audit briefing meeting (entire audit
team with key members of auditee)Team leader to review the observations on a
daily basis.Team to discuss audit observations on a daily
basis with the auditee.Deliver the audit observations to the
concerned on a daily basis and obtain their signature.(or send thro email)
Follow up for compliance.
Execution processDo not step into shoes of the branch
management.Dispute resolution through team leader.Partner in-charge to visit the branch and
review the work done atleast once in a week
Effective ReportingPresent state of affairsAudit Manuals are provided by the BanksReporting Formats are provided by the BankReporting Frequency is fixed by the BankLittle scope for the auditors to modify the
format.Limited scope for bringing in any innovationUnder these restrictions auditors have to
achieve maximum effectiveness
Effective ReportingWhy report is important?It determines the value of your workIt is a database of observations which will
help tacking of compliance.Protects auditor from future disputesReport will talk about your capabilities with
the Bank management.
Effective ReportingPoints to be kept in mind while drafting reportsObservations should be specific not genericObservations should be informative but short
and crisp.Draft the observation immediately and do not
keep it for the last day.Allocate sufficient time for report draftingPlanning/ execution/ reporting should be 25-
50-25
Effective ReportingPoints to be kept in mind while drafting reportsMind your language; No offensive language;
but pinpoint the observation.No use of using adjectives
Two main ingredientsReport becomes effective when it
Adds Value for the auditeeProtects auditor’s interests
How to add value for the auditeeAdhere to the audit scope, frequency and
time norms prescribedFollow the format provided by the auditeeFor all observations try and give circular
reference or manual reference.This makes auditee staff not to dispute over
the observation.Stray observations if rectified may be
dropped.
How to add value for the auditeeSeries of observations even after rectification
may be highlighted as a system failure.Serious irregularities/ Frauds should be
brought to the next higher authority immediately.
Flash/ Special reports may be issued for serious irregularities.
Such Flash/ Special reports should be given a cross reference in the final report.
Highlight the violation to internal/ RBI guidelines.
How to add value for the auditeeRoot cause for deviations may be highlighted.Management response to be obtained for all
observationsIn case auditor is not convinced with the
response given by the branch management, auditor can put a note explaining his stand beneath management response.
Do not copy simply copy paste CBS reports. Try to analyse the reports and add value to those reports.
How to add value for the auditeeImplications of deviations may be
highlightedRepeated observations may be highlightedPending observations of earlier reports
may be grouped at one place.Persons responsible for lapses, persons
responsible for rectification and timeline for rectification may be highlighted.
Protect Auditor’s interestFollow SIA 4Features of a good reportClearFactualSpecificConciseUnambigousTimely
Protect Auditor’s interestCompliance to generally accepted audit
procedureDisclose the Limitation on scopeRestriction on usageObservation should be brought out in right
perspective.
Layout suggested by SIA 4TitleAddresseeReport Distribution ListPeriod of coverage of the ReportIntroductory paragraphObjectives paragraphScope paragraphExecutive summary
Layout suggested by SIA 4Observations, findings and recommendationsComments from the local managementAction taken reportDate of the reportPlace of signatureInternal auditor’s signature with membership
number
Examples of ObservationsLet the observation be specific Few account opening forms are incompleteIn 10 out 0f 52 account opening forms Period
of deposit has not been mentioned (provide the list of 10 instances)
Avoid hypothetical observation This could have resulted in revenue leakageThis has resulted in revenue leakage of
Rs.10,200/-
Examples of ObservationsLet the actual deficiency be highlighted In 50 instances the Account Opening Forms
are not signed by the Branch Manager.The Account Opening was not authorised by
the Branch Manager in 50 instances.In 50 instances Branch has opened the
accounts without the approval of the Branch Manager.
THANK YOU