Objective of Concurrent Audit

1. To ensure compliance of laid down systems and procedures scrupulously.

2. To ascertain whether sanction for advances and expenditures is taken from competent authority.
3. To examine books of accounts, records and registers to ensure that they are maintained in
accordance with the prescribed systems.
4. To ensure adequate measures are being taken in advance to prevent future frauds, etc., to avoid
difficulties, which may arise.
5. To check cash, securities, etc. to ensure that they are in due order and in agreement with books.
6. To detect and arrest any leakage of income, if any. Evaluating the quality of customer services
provided and giving useful suggestions.
7. To assess overall performance of the branch while assessing productivity and profitability and
to offer useful comments on the basis of audit conducted. Restriction of matter discussed on the
spot with the help of concerned official.
8. To report any inefficiency in any operational level.
9. To report any irregularity in working which may result in financial or other loss to branch.
10. To reporting to appropriate levels of management for appropriate actions for remedial measures.
11. To scrutinize the completeness of documents submitted for availing advances and other
facilities and physical checking of stocks and other assets at relevant places.
12. To follow up with authorities to ensure timely rectification of irregularities reported which were
not rectified on the spot. Verify prompt timely and regular submission of the periodical and
statutory returns.

Scope and functions of the Concurrent Audit is as follows:

a) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Expenses incurred by cash payment involving sizeable amount.

b) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made, including calculation of interest
on large deposits, and
(iii) Check new accounts opened. Operations in new Current/Savings Bank accounts may be
verified in the initial period itself to see whether there are any unusual operations. Also
examine whether the formalities connected with the opening of new accounts have been
followed as per RBI instructions.
(iv) Complete check of KYC documents and authentication
(v) Ensure Risk categorization of accounts completed in accordance with PMLA guidelines.

c) Advances
(i) Ensure that loans and advances have been sanctioned properly (i.e. after due scrutiny and at
the appropriate level).
(ii) Verify whether the sanctions are in accordance with delegated authorities and accounts
sanctioned at branch are noted by C.A.O.
(iii) Ensure
 There is no revenue leakage i.e. processing charges are recovered in full.
 That securities and documents as per sanction letter have been received and properly
stamped, executed and charged/registered.
  Ensure that documentation has been vetted by concerned authorities and charges
registered with CERSAI.
 Insurance cover taken as stipulated
 End use of funds.
(iv) Ensure that post disbursement, supervision and follow-up is proper, such as
 Scrutiny of transactions in the account
 Repayments
 Movement of stocks
 Whether business is running
 Whether inspection of the primary and collateral security is conducted by the branch
 Receipt of stock/book debts statement and fixation of drawing power
 Renewals of limits, insurance, etc.
(v) Verify whether there is any misutilisation of the loans and whether there are instances
indicative of diversion of funds.
(vi) Verify interest calculations/recovery of interest and principal during closure of NPA accounts.
(vii) Check whether the letters of credit issued by the branch are within the delegated power and
ensure that they are for genuine trade transactions.
(viii) 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 dates.
(ix) Ensure proper follow-up of overdue bills of exchange.
(x) Verify whether the classification of advances has been done as per RBI guidelines.
(xi) Verify whether the submission of claims to DICGC and ECGC is in time.
(xii) Verify that instances of exceeding delegated powers have been promptly reported to
controlling/Head Office/Board by the branch and have been got confirmed or ratified at the
required level, and
(xiii) Verify the frequency and genuineness of such exercise of authority beyond the delegated
powers by the concerned officials.

d) Foreign Exchange Transactions

(i) Cash verification (Foreign currencies & Travellers Cheques).
(ii) Maintenance of records with respect to foreign exchange.
(iii) Purchase / Sale / Surrender of Travellers cheques.
(iv) Purchase/Sale of Foreign Currency.
(v) Check foreign bills negotiated under letters of credit.
(vi) Check FCNR and other non-resident accounts, whether the debits and credits are permissible
under the rules.
(vii) Check whether inward/outward remittances have been Properly accounted for.
(viii) Examine extension and cancellation of forward contracts for purchase and sale of foreign
currency. Ensure that they are duly authorized and necessary charges have been recovered.
(ix) Ensure that balances in Nostro accounts in different foreign currencies are within the limit as
prescribed by the bank.
(x) Ensure that the overbought/oversold position maintained in different currencies is reasonable
taking into account the foreign exchange operations.
(xi) Ensure adherence to the guidelines issued by RBI/HO of the bank about dealing room
operations.

e) Depository Services
(i) To check whether account opening formalities are properly complied as per KYC norms.
(ii) Demat request are sent within 7 days of receipt.
 (iii) Delivery instructions are entered correctly and stamped by branch officials on receipt.
(iv) Checking whether Delivery instruction issue register is maintained and updated on receipt of
instruction.
(v) Checking whether pledge/hypothecation and release followed systematically.
(vi) To ensure that there are no revenue leakages.
(vii) To ensure that all procedures & guidelines have been followed as per NSDL.

f) Franking Services
(i) To check whether Services charges are being recovered.
(ii) Loading of codes is done as per procedures laid down.
(iii) All registers are maintained and updated and signed by the authorised officials
(iv) Checking whether any malfunction / paper jam / Wrong/incomplete franking impressions
have occurred. To check whether there are any losses on account of paper jam.
(v) Backup of entire day’s transactions to be taken at day end and kept offsite. To check whether
record of backup being taken is maintained.
(vi) Accounting and utilization of codes is promptly done in the system and report instances of
codes lying unutilised.

g) Housekeeping
(i) Ensure that the maintenance and balancing of accounts, Ledgers and registers including
clean cash and general ledger is proper.
(ii) Ensure prompt reconciliation of entries outstanding in the inter-branch and inter-bank
accounts, Suspense Accounts, Sundry Deposits Account, Draft Accounts, etc. Ensure
early adjustment of large value entries.
(iii) Carryout a percentage check of calculations of Interest, discount, commission and
exchange.
(iv) Check whether debits in income account have been permitted by the competent
authorities.
(v) Check the transactions of staff accounts.
(vi) 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 differences in clearing have been adjusted. Such instances should be reported to
Head Office/Board of Directors in case the difference persists.
(vii) Detection and prevention of revenue leakages through close examination of income and
expenditure accounts/transactions.
(viii) Check cheques returned/bills returned register and look into reasons for return of those
instruments and
(ix) Checking of inward and outward remittances (DDs, MTs and TTs)
(x) Checking the daily exceptional transaction reports for any serious irregularities and
pointing them out to the management.

h) ATM Machines
(i) Ensure that the physical cash tallies with the journal cash and the GL balance.
(ii) Ensure adherence to dual custodianship.
(iii) Ensure maintenance of registers for ATM key, change of custodian, vault access
register, daily loading register, maintenance call register and timely updation.
(iv) Ensure that the camera at the ATM is functioning and retention of recordings for one
month.
(v) Ensure that all ATM transactions are correctly accounted for and reports printed.
i) Anywhere Branch Banking (ABB)
(i) Ensure that there are no entries pending reconciliation in ABB reports and transaction
settled at originating branch, destination branch and Head Office books.
(ii) Ensure correct accounting of such transactions and authentication for the transaction.

j) Accounts
(i) Ensure expenses are booked appropriately i.e. matching nature of expenses to the
appropriate Account Head as per Chart of Accounts
(ii) Ensure appropriate authorization of expense in line with the delegated powers & verify
documentary evidence for the expense.
(iii) Verify purpose of the expenses, especially large amounts and record reasons for the
same.
(iv) Ensure efficiency / propriety of the expenses.
(v) Check the existence of proper internal controls and adherence to Bank’s policies &
procedures in this regard.
(vi) Check appropriate provisioning & prepaid element based on the accounting year.
(vii) Check the classification of the expenses under appropriate heads / suggest changes /
modifications in the chart of accounts & presentation on the P&L.
(viii) Verification of statements, HO returns, statutory returns.

Any other point which the Bank/ Auditor may feel relevant during the course of the tenure.

As per the Circular the Reporting System to be followed:

i) The concurrent auditors may report the minor irregularities, wrong calculations etc. to the Branch
Manager/Officer for an on-the-spot rectification and reporting compliance.
ii) If these irregularities are not rectified within a reasonable period of time say a week, these may be
reported to the Audit Department. If the auditors observe any serious irregularities, these should be
straight away reported to Audit Department immediately.

Kindly Note: The Concurrent audit report is undergoing revision to incorporate an exhaustive
checklist.