AUDITING UNDER COMPUTARISED ENVIRONMENT CHECKPOINTS & PROCEDURES 17 TH NOVEMBER, 2012 AT WIRC BY CA ARVIND JOSHI

Transcription

1 AUDITING UNDER COMPUTARISED ENVIRONMENT CHECKPOINTS & PROCEDURES 17 TH NOVEMBER, 2012 AT WIRC BY CA ARVIND JOSHI Many of us are in Bank Audit since many years. Some of us may be new entrants in this filed. Concurrent Audits are also now a settled form of Audit in the Banks. The audit is conducted as per the guidelines of RBI as well as there is a specific format/ checklist of every bank specific to its own requirements. Since the concurrent Auditor has to conduct the Audit on day to day basis & that to of the voluminous transactions. Almost all the Banks are now Computerised & most of them are on CBS platform. There are still few Banks/ Branches which are under TBM platform i.e. standalone platform where each branch has its own server & maintains own database. Whatever the form of computerization, Computerised Environment can make the work of Auditors easy. The Auditors need not have any technical knowledge for the same. There are various menus of any application which are useful in generating useful information, which can in turn be used to analyse or there are some reports which itself will provide the reporting material. Auditor has to make himself accustomed with the Application the Bank is using for its operations. Initially he has to spend some time with the Bank officials to understand different menus, how to surf the information, how to generate & from where to generate various information & reports from the Application. Different Banks use different applications. Some information may not be easily available but we can request EDP Dept. to get the information by putting SQL query. Sample testing of few transactions is sufficient because that which is correct for some transactions is correct for all transactions due to use of Software applications, it will give same results unless basic information fed to the system is wrong e.g Interest application, levy of different charges. In the computerized systems what is most important is that the Parameters fed to the system should be correct. Most of the processing is done on the basis of these parameters. Get an access to the system from the system administrator. Note that the access given to the Auditor should have browse option only. It should not have edit/ modify or entry option. Different Applications have different types of MENUS. The auditor has to understand the application software used by the Bank. Spare some time & take a round of all the MENUS available in the system on your own. That will appraise the Auditor various kinds of reports available on the system which can be used by him for the purpose of Audit.

2 The reports generated are only guiding factor. We have to understand how to use the same for analysis purpose & effectively use for our Audit. Concurrent Audit in computerized environment is not a IS Audit. Considering this factor, we will discuss the reports normally available on most of the applications & understand how the same can be used to address various checkpoints under concurrent Audit. However the nomenclature & view of the report may differ from system to system. VARIOUS CHECK POINTS & PROCEDURES TO VERIFY THE SAME CHECKPOINT REPORT AVAILABLE USE OF REPORT Cash & ATM balance Cash Summary & ATM To know balance of Cash & ATM cash summary Cash Gives denomination wise summary Excess Cash holding Report To find out whether cash holding has exceeded the retention limit Total number of days excess holding Average excess cash holding Average cash holding during the period Maximum amount of excess cash on a particular day Counters summary & JP rolls For ATM cash verification with denominations of cash in each counters Matching the online & offline transactions to reconcile balance in ATM Deposits New Accounts opened It is a list of all the new accounts opened during the period. Useful for verification of A/Cs opened during the period with documentary evidence Accounts closed List of premature closure. Unscanned Report signature it is a list of accounts closed during the period Useful for verification of A/Cs closed during the period with documentary evidence To check premature closures of Deposits It is the list of all the accounts where signature is not scanned in

3 Abnormal transactions in newly opened A/Cs Correctness of interest Application Interest is applied to all accounts Cash payment of Term deposits above `20,000/- Accounts modified but not authorized listing Exceptional transactions report Interest Applied Report Summery / Error Report Customer Master search for all A/Cs of the customers Many banks rout payment of FDs through a separate A/C. Find out from the A/C those paid by cash. Customer Unification Search for Customer Number the system Useful at the time of verification of A/C opening formalities. It gives details of all the account masters modified during the period but have not been authorizes by the officer. One of the report gives operations in newly opened A/Cs upto 6 months from opening of A/C We have to select transactions for verification by using judgment. To verify Interest applied To verify basis of interest application, penal interest etc. Calculation of penal interest by the system as per bank policy over due installments, excess drawal etc. Trial Application of Interest - Whether system calculates interest from the period starting after the latest interest application i.e from date should be by default date after last interest applied date & to date should not be later than last date of the current month. Interest run programme helps to check whether any accounts are skipped by the system for application of interest. Shows all deposit & other A/Cs of a particular customer as on a given date. Can verify if total deposits as on the date of payment of any deposit by cash, exceeded `20,000/- It helps identify whether system allows different customer number for same customer.

4 Loans & Advances Loans disbursed during the period Accounts opened / jotting of loan A/Cs List gives Loans Accounts opened during the period List of Loans outstanding as on given date with full details. Also offset rate entered in system can be verified from the A/C master under this module. Security held against loan Security Master It shows the details of all the security held against loan. List of post dated cheques taken on record can also be determined from PDC module. Inspection / Visit module is also available under this head. It is the information of inspection or visit carried out related to the loan. Renewal of Limits for CC/OD/PRFIN Jotting of CC/OD Sanction Limit expiry Listing Drawing Power monitoring DP under Advances menu Report on DP Expired It shows sanction limit, date, expiry date, closing balance (as on date of report) and disbursement date. The list shows A/Cs where limit has expired as well as A/Cs which have been renewed during the period Verify the Stock/ Drs & Crs actually fed in the system To verify the Statements not received for any of the CC A/cs Grace period for submission of Stock Statements. Advances Masters Grace period should never exceed 10 days. Insurance monitoring Policy expired listing It is a list of all the expired insurance policies expired during the period. It gives details such as account number, name of insurer, policy amount, policy number and expiry date. Overdrawn CC/OD A/Cs Excess drawl report To know how many times the account has been overdrawn

5 Temporary O/D or Enhancement for limited period History of changes in limits is available in the advances menu. Adhoc limit Report during a particular period. To know the amount of excess drawl in the account. To check expiry of drawing power. To know sanction limit, date and expiry. Maximum amount of excess withdrawal Verify the monitoring of TODs / enhancements by the branch Monitoring of CC A/Cs Turnover report Verify whether the turnover is in consonance with the limit sanctioned. Where the limit not utilized properly, commitment charges are recovered as per the Banks policy. Pledged Gold Parcels Jotting of Gold Loans as on date Physical verification of Gold Parcels to be done considering the A/Cs o/s as on the date as per the jotting. Bills Purchased Any day balance of bills It is a listing of all the bills outstanding as on date along with details such as date, amount account number etc. Out word Bills for Collection Income Recognition & Classification of Advances O/W biils for collection Report Defaulter List with number of Installments Unapplied interest A/C wise Mostly in case of CC A/Cs interest receivable is put in this A/C It is the list all the outward bills for collection that are pending along with name, amount etc. Report gives list of all defaulters across all category of advances (except CC A/Cs) Take a listing of defaulters from zero installments & above. Examine border line cases in depth. For CC A/Cs individual A/Cs has to be verified as the reports for different parameters are generally not available from the system.

6 Bank Guarantee / Letter of Credit (Inland & FLCs) Debit balance in SB & CD Jotting/ Balancing Report of Bank Guarantees/ LCs Statement of debit balance during the period Compare the list with last year s NPA List. Understand accounting system followed. Those followed in Co- Op Banks & Nationalised Banks differs. Don t just have a focus on the list but also verify other weaknesses by scrutinizing the A/C Unapplied interest on CC A/Cs, whether interest has been accounted manually whenever there is a recovery in the account. In case of Nationalised Banks Accounting system for interest on NPA A/Cs is different that Coop Banks. Verify accordingly on the basis of system generated / Manual records available. Court cases / legal suits module contains details of such information related to the account. The list gives details of Customer, Beneficiary, date of issue, date of expiry & amount of BG/LC. Identify those issued during the year & verify the documents for the same. Identify those which have expired but not reversed in the books. Can verify recovery of commission & deferment thereof in the accounts. It shows the accounts (SB & CD) along with date on which it had debit balance and also the amount. Verify whether the debits allowed are within the powers of Manager. Scrutinise the account to see

7 FDs lien marked in system General Ledger & Profit & Loss A/C View specific lien marking from the specific menu on lien marking in the Advances menu Report on Lien Marking Report of lien marking expired Report of Profit & Loss A/C & Balance Sheet as on date from the system. Dead Stock/ Fixed Assets Statement of Account category wise Vouching of transactions above specified limit Cash scroll Cash transaction Report Transaction listing for all the batches Transaction above specified limit whether the accounts are frequently having debit balances. May confirm that lien is marked on the system on the FDs/ RDs kept as security. Verify whether the FDs which are lien marked have expired. May prompt corrective action. TD Interest Transfer account number module helps to determine whether transfer of interest of the lien marked FDs is done to respective loan account. Helps in understanding the nature of Accounts at the branch. Can identify ledger A/C s to be scrutinized. Can identify the pattern of income & expenses. The statement of account can be viewed. It gives the voucher number. The respective voucher can be accordingly browsed from the browse voucher option. Statement gives details of category of Asset, description of Asset, date of purchase, date put to use, rate of Depreciation, date of sale/ discarding, depreciation charged & WDV. The statement is available only when the Asset module is activated inn the system. Can be used to select the transactions for which vouching to be done. Can understand the transaction & accordingly verify the vouchers. Stop Payment verification Stop payment listing To identify the stop payments recorded in the system. Verify with the letter received by the branch

8 Return of cheques Minimum balance in SB and CD Inoperative A/Cs Unauthorized issue of cheque books Charges not recovered Frequent cheques return report Minimum balance in SB and CD Listing of inoperative A/Cs Unauthorized cheque books issue report Oustanding charges report available in day s control reports Charges recovery can be verified for the respective A/Cs No. of times cheques returned on financial ground. If maximum number of times the instrument has returned proper reporting has to be done. Recovery of charges can be verified for respective A/Cs It is the list of all the accounts in which minimum balance was not maintained during the period. Application of minimum balance charges can be verified. Listing available on the system only when proper parameters are fed in the system & the system automatically marks the inoperative A/Cs. In some applications inoperative A/Cs are periodically marked in the system. Exception report gives details of transactions in inoperative A/Cs. Such transactions needs to be scrutanised in detail. It is a list of all the cheque books that are issued but not authorized by officer. It gives details of account number, cheque book series and date of issue. It helps determine how long the Cheque book is issued and for how much time it is pending authorization. Gives listing of accounts for which charges were not debited as there was no balance in the account at the time of levy of charges through system. This module has to be run on daily basis to ensure that

9 Verification of Stock of sensitive items Report on stock of stationery (the report is available only where there is a system to enter the stocks received & issued in the system) whenever there is a balance in the account, the charges are debited to the account & recovered. Charges application module makes available list of various charges applied through the Application Software. Physical stock can be verified & reconciled with the report. The report gives details of stock in hand, received during the period & issued at the counters during the period. Pay orders pending Pending P.O It is a list of unreconciled pay orders i.e. pay orders issued but not paid/ cleared till date. IBT Inter Branch Transactions Whether all the accounts are balanced & there is no difference in the accounts Rent overdue of the lockers Reconciliation report All OK Report or Balancing report for each category of Loans and Deposits Locker Rent overdue listing Total number of entries in IBT & amount Difference in IBT statement, if any. Unresponded entries for a longer period of time may be verified in detail. To determine if there is difference between GL balance and jotting balance This report will be available only where locker module has been activated. It is the list of all the lockers where rent is overdue. It gives details as to locker number, name of account holder, amount of rent o/s. Available lockers Locker availability listing It is a listing of all the lockers along with locker type, total number available, total lockers utilized and unutilized rent amount. Customer Keys of such unissued lockers can be verified.

10 Recovery of locker rent can also be verified from the list. Exception report Exception report It gives the details of any abnormal transactions Different parameters available. Have to select proper parameters & verify the transactions accordingly. Managers are supposed to take print outs of the same on daily basis, verify the same & sign & preserve the reports. Also helps to identify whether duplication of cheque numbers are detected by the system. Helps to detect whether system automatically identifies the cheques received for clearing with cheque numbers stored in data base. List of active logins branch Active Login It displays the user id, name, designation of all the logins that are active at the branch as at particular date. Verify the list with the muster to confirm that all those having active logins are present & on roll at the branch. IDs of those who are on longer leave should be suspended. Linking Shares specifically in case of Co-op banks Verify the Share suspense A/C Where share module is activated may view shares subscribed by particular borrower. Every borrower has to be a share holder for Co-op Banks. Linking shares is a must as the only option available for raising Capital. Relaxation given for certain Banks for linking shares having healthy CAR WISH YOU ALL A SMOOTH CONCURRENT AUDIT!!