Bank Audit — A Specialised Engagement
Bank audit engagements are governed by the Reserve Bank of India's Master Directions, the Banking Regulation Act 1949, and the auditing standards under the Standards on Auditing (SA 200-705) framework. Our practice covers Statutory Branch Audit, Concurrent Audit, Stock Audit, Revenue Audit, and Forensic Audit assignments for public-sector banks, private-sector banks, and NBFCs.
Statutory Branch Audit
The Statutory Branch Audit covers IRAC (Income Recognition and Asset Classification) compliance, NPA classification accuracy, provisioning under prudential norms, KYC/AML compliance, advances classification, deposits reconciliation, fixed asset verification, and the Long Form Audit Report (LFAR). The audit must be completed within the timeline set by the bank's central statutory auditor — typically March 1 to April 15 — with strict reporting discipline. Empanelment with the Comptroller & Auditor General (C&AG) for PSU bank audits and with private sector banks is a multi-year qualification process.
Concurrent Audit
Concurrent audit is a continuous review — typically monthly — of high-volume bank branches and high-risk operations. The scope covers: cash management, vault operations, advances disbursement, document verification, NPA-tracking, deposits, foreign exchange transactions, and exception reporting. Concurrent auditors file monthly reports to bank management with observations on operational lapses, control weaknesses, and recovery actions.
Stock Audit and Drawing-Power Verification
For working-capital-financed corporate borrowers, banks require quarterly or half-yearly stock audits. The audit verifies physical inventory (raw materials, WIP, finished goods, stores), reconciles to the borrower's accounting records, computes the Drawing Power (DP) under the bank's hypothecation policy, and certifies the limit utilisation. Our stock audit reports are accepted by leading consortium-bank arrangements.
Forensic Audit and Fraud Investigation
Where IRAC classification, account conduct, or end-use of funds is in question, forensic audit under RBI Master Directions on Frauds is required. Our CFE-led forensic team is empanelled with multiple banks for forensic audit assignments. The forensic audit report addresses end-use verification, fund-flow tracking, related-party transaction analysis, and the existence of preferential or undervalued transactions. Reports are designed for use under the IBC, prevention-of-corruption proceedings, and SARFAESI/recovery-court litigation.
Empanelment and Engagement
We are empanelled with leading public-sector and private-sector banks for branch audit, concurrent audit, stock audit, and forensic audit assignments. Engagement scoping is on fixed-fee basis with detailed timelines, deliverable specs, and named partner ownership. Free 30-minute consultation: +91 99622 60333.
Frequently Asked Questions
How do CA firms get empanelled for bank audit?
Firms apply each year through the ICAI's Professional Development Committee portal for the RBI/PSU bank panel; eligibility is based on the firm's category (partners, FCA count, experience, staff) under the RBI norms. Private banks and concurrent audits are appointed directly by each bank, usually through their own empanelment process.
What is LFAR in bank audit?
The Long Form Audit Report is a detailed questionnaire-based report prescribed by the RBI that the statutory auditor of a bank branch submits alongside the main audit report. It covers advances, deposits, cash, investments, housekeeping, IT controls and compliance, and feeds into the bank's central statutory audit.
What is the difference between statutory and concurrent bank audit?
A statutory branch audit is an annual, year-end audit appointed under the Banking Regulation Act and RBI norms, reporting on the branch's financial statements and LFAR. A concurrent audit is a continuous, usually monthly, check of transactions as they happen, appointed by the bank's management as part of its internal control system.
What are the RBI guidelines for bank auditors?
The specific requirements, documents, and procedures are detailed in the relevant regulatory provisions. Virtual Auditor provides comprehensive support including documentation, filing, representation, and follow-up. Our multi-credential team ensures nothing is missed across regulatory intersections.
How much do bank audits pay?
Statutory branch audit fees for public sector banks follow the RBI/IBA fee schedule, which is slabbed by the branch's advances; concurrent audit fees are fixed by each bank's policy. The figures are revised periodically, so we quote them engagement by engagement.
Which audit or review applies, and what will the work actually cover?
Every company needs a statutory audit of its financial statements by a chartered accountant appointed under section 139 of the Companies Act, reporting under section 143 and, where it applies, the CARO 2020 order and on internal financial controls. An LLP needs an audit when its turnover exceeds ₹40 lakh or its contribution exceeds ₹25 lakh. A tax audit is needed when business turnover or professional receipts cross the income-tax limits. An internal audit is required for prescribed classes of companies (section 138). A statutory auditor cannot also provide certain other services to the same company (section 144). We confirm which audits apply, agree the scope and timetable in an engagement letter, and list the records needed.