Dear Friends,
Please Note the following facts in regard to Bank Branch Audits:
1. Never in the last 10 years one branch auditor has ever reported any fraud which he/she unearthed during statutory audit. More over Statutory Audit is not an assurance against fraud as ICAI itself proclaims. On the contrary many frauds have to come to light after the audit was completed and the Statutory Auditors have given 'clean' report. So it is a myth to say that increase in limit of advances from 6 Cr to 20.00 Cr will result in huge frauds in banking sector.
2. With the increase in limit to 20 Crores advances most of the banks find that the total advances covered under audit is more or less 95% which means what is left out is hardly 5% of advances only. So how banks or RBI or Governement will lower the limit just to accommodate a Few small CAs?
3. The banks are becoming more cost concious with decrease in margins and by a study of comparing cost to the benefit the banks have made a presentation showing to Finance Ministry taht by increasing the advance limit for bank audit they save almost 40% or more on bank audit fees resulting in Crores of Rupees saving to banks.So it would be impossible to convince any one to lower the limit especially at RBI or Finance Ministry.
4. We must accept the fact that we Chartered Accountans are to be blamed for the bad name earned for the profession as a whole. There are many instances where auditors have NOT EVEN visited the branch and signed the reports from their offices situated miles away!! Many auditors have claimed bogus travel expenses or inflated their travel bills and there are instances where the taxi bills were found to be produced from non existing taxi operators. Though this could be a few CAs, certainly this has affected the image of the profession as a whole and theer is not many people who supports CAs cause.
5. We all must be prepared for the reality that soon the concept of Barnch Audit will disappear with both RBI and Ministry canvassing that as Core Banking, According to them will enable audit from Head Office. So all banks will have only One set of Central Statutory Auditors. This can happen in next few years.
6. The ICAI has lsot its relevance and is not enjoying the confidence of the regulators or Ministry as Most Central Council Members want some personal favours and are willing to comromise any value for their benefit. So DO NOT expect Council members of ICAI doing anything in this regard.
So hard fact is NO MORE BANK BRANCH AUDITS and BE READY.
S.MOHAN-
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