Dear Annaji,
Thanks for Comments.
I would add something. During the course of our education , we were given Subject of Essay of any thing , During B Com Graduation also we were taught Audit Programs . What is that ? It give you a touch of midas inherently . You are given time to think properly. All backgrounds are being kept alive in your mind. That is what required at every step in out Audit field. Every day is a new day while and during conducting the Audit .
Every minute you are always student. You have to learn from all side .
This also reminds me of my First Audit of Bank Audit after Nationalization of Banks. We had to conduct three Branches . we started Auditing from a small Branch , to little high big branch and then Local head Branch where every segment of Banking transaction was covered. This raised to Audit each and every aspect of Bank Audit. It should be accepted as a challenge. If you do not know any thing ask the other person in the organization and learn how to take it in Audit Steps. You will be absolutely a master in that subject in the meantime.
How to apply our education and experience in life this is most important at every step.
God Bless You.
Regards,
Shah D J
On Saturday, 31 January 2015 4:07 AM, "Ramachandran Mahadevan ramachandran.mahadevan@gmail.com [ICAI_CIRC_MEERUT_CA]" <ICAI_CIRC_MEERUT_CA@yahoogroups.com> wrote:
The external auditor provides an opinion on a company's annual fi nancial statements and, in many cases, an opinion on the effectiveness of the entity's internal control over fi nancial reporting. External auditors are engaged by and report directly to the audit committee, but have regular contact with management across a company's operations. While not a component of a company's system of internal control over fi nancial reporting, the accumulated general knowledge external auditors bring from working across multiple organizations can be a resource for boards, management, and audit committees. Professional standards require the external auditor at a minimum to understand the company's system of internal control over fi nancial reporting as part of its risk assessment process during the planning of a fi nancial statement audit. This includes consideration of the company's tone at the top and corporate culture, and incentives or pressures that may drive an employee to commit fi nancial reporting fraud. When developing the audit plan, the auditor should consider such factors as management's philosophy and operating style (including the integrity and ethical values practiced by management), the nature of the board and audit committee's oversight, and the company's human resource policies and practices, with a particular focus on its compensation arrangements. Auditing standards require external auditors to exercise "professional skepticism," which means they need to be alert for information suggesting material misstatements of fi nancial statements, and to be critical when evaluating audit evidence. Auditing standards defi ne professional skepticism as "an attitude that includes a questioning mind and a critical assessment of audit evidence."3 External auditors must apply professional skepticism when considering the risk that management may override internal controls, and take that risk into account when formulating judgments about the nature, timing, and extent of audit testing. External auditors should also be aware of judgment biases that can affect the exercise of an effective level of professional skepticism in the conduct of the audit.Source ANTI FRAUD COLLABORATION REPORT JANUARY 2015On Fri, Jan 30, 2015 at 12:39 AM, Dipak Shah djshah1944@yahoo.com [ICAI_CIRC_MEERUT_CA] <ICAI_CIRC_MEERUT_CA@yahoogroups.com> wrote:Dearest Shafi saab,I have full respect to you.I would say it depends upon the persons perceptions, intelligence, knowledge to grasp the situation , banking environment , Banking Experience and also skills .This reminds me of my own experience in two Organization when I joined , on the same date within 1 hour or so I found fraud in the books of account!!!!!!!I had never gone through the Books of account. It was only interrogation with the employees only!!!In one case Cash embezzlement by Accountant , debtors realization was done well back 5 years, outstanding for years !!! The transaction wise in the Fisheries Market, like Matka Bazar etc. There is no gone a way by any merchant like bookie!! All the merchants pay the money on due date only. No delay in making payment !!!!Second case was cash embezzlement for last more than one year. There were no transaction when actual cash was counted. Cashier was given sufficient time to adjust the Cash in the meantime. One week was given by indication of suspicion .!!This fact was not known to the Higher Management at all for years !!!Even it was handled during all the period of earlier with under the CA also!!!When professional enters in the Filed he should be at least fully conversant as Professional only and fully.With due all care if the things are taken with fully as professional and expert every thing is possible.This also reminds me of one case of End utilization of Banking funds. I went through Records of Physical Inventory , books , stock statement and all. Then I found the stock was submitted very over than it was. Machinery purchased was used for Stock Statement submission!!! There was a recovery of Rs 135000 for over drawal!!! Bank pays us the money , fees. It should always be a relevant but not measured correctly in terms of time and Fees equally. Fees were Rs 35000 / time I spent was Just Five days!!!! But should work as professionally , completely.In the same way I found Fraud in accounts of Ratnamani Engineering Limited 31.03.1994 without going through the actual books of account!!! All You Know.With due regards to Shafi Saab,Shah D JOn Thursday, 29 January 2015 6:08 AM, "mohamed shafi shafi78647@yahoo.com [ICAI_CIRC_MEERUT_CA]" <ICAI_CIRC_MEERUT_CA@yahoogroups.com> wrote:
RBI Dy, Governor S s Mundra said...." if RBI inspectors are able to identify these divergences in the limited time-frame that they are on-site, why the banks' auditors are not able to do so…Is it a question of efficiency of the auditors or is there a much deeper issue - something to do with the transparency of the process itself?," he asked while addressing members of the Audit Committee of the Boards (ACB) of ICICI Bank subsidiaries & other bank employees."What is the limited time frame for RBI inspectors ???"limited time period" c is very vague termMohamed Shafi
From: "Nitesh More moreassociate@gmail.com [ThaneCAs]" <ThaneCAs@yahoogroups.com>
To: ThaneCAs@yahoogroups.com
Sent: Wednesday, 28 January 2015 10:03 AM
Subject: [Thane CAs] RBI on Bank Auditors:If RBI inspectors can identify fraud,why banks' auditors not?:RBI Comments on Bank Auditors [1 Attachment]
[Attachment(s) from Nitesh More moreassociate@gmail.com [ThaneCAs] included below]If RBI inspectors identify fraud in limited time,why banks' auditors not?:RBI Comments on Bank AuditorsPointing to the gaps in the auditors' work, the Reserve Bank of India (RBI) has asked banks to adopt a more stringent auditing process to ensure that review of financial results and identification of fraud is done more promptly.
RBI Deputy Governor S S Mundra said there is a greater need to take a closer look into the asset quality, instances of restructuring of advances, provisioning held, etc. to ensure that there was no divergence with regard to asset classifications and provisions held.
"The point I am trying to make is thatif RBI inspectors are able to identify these divergences in the limited time-frame that they are on-site, why the banks' auditors are not able to do so…Is it a question of efficiency of the auditors or is there a much deeper issue - something to do with the transparency of the process itself?," he asked while addressing members of the Audit Committee of the Boards (ACB) of ICICI Bank subsidiaries & other bank employees.
With regards to provisions, he told banks that adequate provisions should be made for post-retirement benefits like pension, gratuity and leave encashment, etc. and the auditors should ask more pertinent questions to the banks with regards to provisioning requirements
"It is important that the ACB asks the right questions to the management about various underlying assumptions that go into computation of the required provisions such as life expectancy, discount rate, expected return on investments, etc. I urge the ACBs to ask uncomfortable questions," he said in his speech.
In light of instances of know-your-customer (KYC) norms violation Mundra has urged auditors to be stricter with the process of background check. Last month, RBI had imposed penalties on ICICI Bank and Bank of Baroda for flouting KYC and anti money laundering norms.
"I believe that the absence of an appropriate punitive mechanism in the banks for lapses has also contributed to their recurrence. Therefore, our expectations from the ACBs would be to closely focus on reasons for such regulatory penalties/sanctions and seek a root-cause analysis for preventing recurrence," he added.
RBI has also been cautioning consumers against the rising case of credit card and other frauds. Mundra called upon greater sensitivity and increased focus from auditors with regards to having appropriate measures in place to prevent instances of fraud.
"In our recently concluded scrutiny into fixed deposit related frauds in some banks, it emerged that even the caution advices issued by RBI in respect of certain individuals had not percolated down to the branch officials quickly enough to enable appropriate preventive measures… I would say that ACBs should take upon themselves to monitor the trend of frauds, assimilate key learnings and ensure that mitigation measures are put in place by the management," he added.Source: BS
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Posted by: Dipak Shah <djshah1944@yahoo.com>
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