KYC checking:

For New account

1)      Name of the account holder

2)      Type of a/c saving/current/time/advance

3)      A/c no

4)      A copy of verified Identity proof

5)      A copy of verified residential address proof

6)      Verification of introducer’s signature

7)      Whether letter of thanks is send or not to the introducer as well as to new depositor.

8)      Signature of authorized signatory obtained

9)      Check Certificate of incorporation/MOA/AOA, board resolution, Copy of PAN, power of attorney

10)   Cross check no of a/c opening forms with a/c opened in the system

11)  Ensure photograph of the a/c holder is obtained and fixed or stapled on the a/c opening form.

For  Transaction 

           Records/register to be maintained for all cash transaction of the value more than Rs. 10 lacs or  

           its equivalent in foreign currency.

           Records for cash transaction to be maintained for 10 years from the date of cessation of 

           transaction between bank and customer.

           Identification of customer through PAN for Rs.10000 and above transaction

Loan Files checking:

1)   Verify rate of interest with rate circulars

2)   Compare rate of interest and calculate EMI on calculator

3)             Check title of clearance in respect of Housing or any other property loan and whether it is authorized by bank’s approved advocates.

4)      Where immovable properties are held as security by way of deposit of title deeds, verify title deeds register to see whether narration is written for additional limits and all formalities complied with.

5)   In the case of company, Whether common seal affixed on the relevant document.

6)   Check valuation of assets as per govt authorized valuer.

7)   For education loan check receipt or fees payment sleep and confirm it with the college/institution

8)   Check the person’s other loan and installment amount. If total installment amount is more than 60% of its net income, then loan cannot be issued.

9)   Confirm proper insurance coverage for loan asset or mortgaged asset and their renewal.

10)Check ,Are all documents correctly executed in the latest revised prints of  

     prescribed formats and properly stamped wherever necessary in terms of Stamp  

     Act as per manual on documentation and as per circulars on the subject

11)Check requirement of Letter of acknowledgement of debt(LAD). If loan  

     agreement is there then no need to take LAD. If once taken then it is   

     compulsory to review before 3 years.

12)Ensure maintenance of Insurance register

13)Submission of Tax audit report for all CC a/c

14)Submission of CMA data

15)Check crisil credit rating

16)Submission of monthly Stock statement for C.C. a/c and stock statement  

              register

17)Ensure regular quarterly stock audit for C.C

18)Compute loan rate in case of LABOD by adding 1.5% to average rate of  

              all F.D.

19)Physical verification of loan asset

20)Verify whether credit limits are reviewed or not.

21)Verify whether security documents are held with the bank vis-à-vis  

              stipulation on the sanctioning documents.

22)Verify whether the advances have been classified as per RBI guidelines.

23)Check whether the letters of credit issued by the branch are within the  

              delegated power and ensure that they are for genuine trade transactions

24)Check the Bank guarantees issued, whether they have been properly  

              worded and recorded in the register of the Bank. Whether they have been  

              promptly renewed on the due date.

25)Ensure proper follow up of overdue bills of exchange.

26)Verify whether the submission of claims to DICGC and ECGC are in  

              time.

27)Registration of charges with Registrar of Companies and Resolution  

              passed by appropriate authorities. (By filing Form 8)

28)Withdrawal within limit/ Advance Value (Drawing Power Limit) (D/P)

29)Check Processing fees, stamp duty at the time of sanctioning new  

              advances.

30)Report excess drawing over D.P. (For CC and temporary O.D.)

31)Whether Select Operational Data and Quarterly Information System (now  

              FRS) Statements in respect of big borrowers have been received  

              promptly? Whether penal rate of interest@ 1% is being charged for  

              delayed submission/non-submission?

32)Verify whether the branch has charged lead Bank charges in respect of  

              advances under consortium norms.

33)Check folio charges

34)Check  Penal interest for delayed/non-submission of returns, financial  

              statement required to be submitted

35)Check  Penal interest on advances in respect of lapsed sanction/limit.

36)Check Penal interest on excess over limit.

37)Check Overdue interest on all types of bills, loans and packing credits  

               for overdue period.

38)Check Commitment fee for unutilized limit is collected as per rules.

39)Check Commission of letter of credit, letter of guarantee and charges for  

               safe custody etc.

40)Check Standing information charges.

41)Check stop payment charges. (For all accounts)

Cash:

1)   Verifying whether exchange of cash between cashiers is made after making entry in the register.

2)   Ensure dual control system for cash safe/counting of bundles.

3)   verifying cash scroll and the token book with cashier's summary and Cash Abstract.

4)   Verifying whether Cash Remittance in Transit Account is reversed on the same day by debit to a proper head of account designated for it after receipt of proper acknowledgement/receipt where cash is remitted to a branch/Bank.

5)   Verifying whether accounting of currency chest transactions and their reporting to RBI is done promptly

6)   Ensure cash is retained as per cash retention limit of the branch. Report if the cash is retained in excess of the cash retention limit with the reasons thereof.

7)   Verify expense incurred by cash payment involving a sizable amount.

8)    Verifying whether keys to Strong Room, Cash Safe, and Almirah for Security Printing Books are in joint custody of the authorized officials?

9)   Verifying whether there is any entry outstanding in Cash Remittance in Transit Account for more than 3 days

10)Verifying whether the branch remits all its excess cash to link branch or  

               Currency Chest.

11)Verifying whether the branch remits its surplus balance with other banks

              regularly to the designated RBI centre

12)Conducting a surprise physical verification of cash in hand , foreign  

              currencies, and foreign travelers' cheques on any day during the month

13)Verifying whether the receipt and delivery of Security Printing Books are  

              properly recorded under joint signatures

14)Verifying whether physical verification of the Security Printing Books  

              and tallying with the balance.

15)Whether surprise verification of cash done by officer other than joint  

              custodian officer/manager.

Clearing:

16)If the branch is independently handling clearing, whether the clearing

              account is brought to nil every day, if not, comments to be noted down.

17)Whether safeguards are observed to ensure proper handling and custody  

              including returned instruments?

18)Whether service charges/incidental charges as prescribed are charged for  

              the cheques returned in clearing.

19)Whether drawings are allowed against unclear cheques.Whether such  

              cheques are referred through prescribed register and passed by the  

              Controlling Officer, if the drawings exceed the prescribed limit whether  

              these are reported to the Controlling Authority. Examine whether interest  

              was charged and report such omission for rectification.

20)Verifying entries which remain outstanding for more 2 days and checking   

              for action taken for their disposal

21)Verifying whether account with the Main Branch is reconciled every  

              week

Other:

22)Check cheques returned/bills returned register and look into reasons for  

              return of those instruments.

23)In case of difference in clearing, there is a tendency to book it in an  

              intermediary suspense account instead of locating the difference.  

              Examine the day book to verify as to how the difference in clearing has  

              been adjusted.

24)Such instances should be reported to Controlling Office in case the

              difference persists.

25)Check whether debits in income account have been permitted by the  

              competent authorities. Check the transactions of staff members.

26)Study internal inspection/audit reports and ensure that the branch gives

              proper compliance thereto.

27)Verifying whether the deduction of tax at source (TDS) from interest

              income on Term Deposits is done as per laid down procedure. Or Form  

              15H/15G received or not.

28)Verifying whether Form No. 60 where the depositor does not have PAN is

                 held on record and the same are submitted as per laid procedure (For  

                deposit accounts)

29)Verify if inoperative accounts ledger and Specimen Signatures are kept  

              under the custody of Manager/Asst.Manager and access thereto is  

              controlled. (For deposit accounts)

30)Whether dormant/inoperative accounts are transferred to inoperative  

              ledger. If not, it should be noted in the register and they should be  

              transferred. (For deposit accounts)

31)Verify that all transactions relating to inoperative ledgers are allowed

              under the written authorization of the Manager.

32)Check Incidental charges and service charges in Saving Bank Account

              (including inoperative) having balance below prescribed limit.

33)Check Destruction of old records as per time schedule prescribed.

34)Check Locker rent.

35)30% scrutiny of transactions relating to the payment of pension..

36)Whether the prescribed certificates - Life, Re-employment, Re marriage

               etc. obtained, wherever required, in all pension accounts.

37)Physical checking of Govt. and other securities held on behalf of  

                   Investment Department and timely collection of interest thereon and their  

                   maturity proceeds.

Records to be maintained by concurrent auditor:

Permanent File:

1)                   Letter of engagement, undertaking/comment by the firm to the Bank

2)                   Communication to previous Auditor (NOC)

3)                   Audit checklist

4)                   Information regarding branch business, data, nodal officer,status of branch, whether computerized/parallel category of branch, etc.

5)                   Performance of monthly, quarterly, annual report revenue report

6)                   Correspondence with the Bank for any matter

Current File/Working paper File:

1)   Branch Audit Programme

2)   Branch’s statement as on the data of the report on which basis it is prepared

3)   Periodic correspondence with the concerned departmental officer

4)   Irregularities intimated to the Controlling Officer 

5)   Discussion of the audit report

6)   Particulars of big borrowers, depositors etc

7)   Circulars received from head office of the auditee Bank

8)   Reporting to branch head in the below format

Reporting:

Demand Deposit includes

1)   Credit balance in overdrafts & Cash Credit accounts

2)   Deposits payable at call

3)   Overdue deposits

4)   Inoperative current accounts

5)   Matured term deposits and cash certificates

6)   Certificates of deposits, etc

7)   The cash credit account would be included if the balance is showing credit balance. The current accounts are also payable on demand. The outstanding telegraphic and mail transfer demand drafts are also to be included under the demand deposit head.

Term deposit includes

1)   All deposits repayable after a specified term

2)   Fixed deposits

3)   Cumulative and recurring deposits

4)   Cash certificates

5)   Certificates of deposits

6)   Annuity deposits

7)   Deposits mobilized under various schemes

8)   Ordinary staff deposits

9)   Foreign currency

10) Non-resident deposit accounts, etc

Thanks

With Regards

Isha Marfatia- CA Inter