{"id":18628,"date":"2023-03-24T17:04:19","date_gmt":"2023-03-24T11:34:19","guid":{"rendered":"https:\/\/gstguntur.com\/?p=18628"},"modified":"2023-05-10T15:24:46","modified_gmt":"2023-05-10T09:54:46","slug":"audit-of-banks-ca-final-audit-question-bank","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/audit-of-banks-ca-final-audit-question-bank\/","title":{"rendered":"Audit of Banks \u2013 CA Final Audit Question Bank"},"content":{"rendered":"

Audit of Banks \u2013 CA Final Audit Question Bank<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Audit of Banks \u2013 CA Final Audit Question Bank<\/h2>\n

Question 1.
\nWrite a short note on – Principal Enactments Governing Bank Audit.
\nAnswer:
\nPrincipal Enactments governing Bank Audit:<\/p>\n

    \n
  1. Banking Regulation Act, 1949;<\/li>\n
  2. Reserve Bank of india Act, 1934;<\/li>\n
  3. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970;<\/li>\n
  4. State Bank of India Act, 1955;<\/li>\n
  5. State Bank of India (Subsidiary Banks) Act, 1959;<\/li>\n
  6. Regional Rural Banks Act, 1976;<\/li>\n
  7. Companies Act, 2013;<\/li>\n
  8. Cooperative Societies Act, 1912 or the relevant State Cooperative Societies Acts;<\/li>\n
  9. Information Technology Act, 2000;<\/li>\n
  10. Prevention of Money Laundering Act, 2002;<\/li>\n
  11. Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002;<\/li>\n
  12. Credit Information Companies Regulation Act, 2005; and<\/li>\n
  13. Payment and Settlement systems Act, 2007.<\/li>\n<\/ol>\n

    Question 2.
    \nStatutory Central Auditors of a Bank have to furnish a number of reports\/certificates in addition ! to their main report. List such reports\/certificates.
    \nAnswer:
    \nReports\/Certificates to be furnished by Statutory Central Auditors:
    \nIn addition to main audit report, SCAs are required to issue the following reports\/certificates:<\/p>\n

      \n
    1. Report on adequacy and operating effectiveness of Internal Controls Over Financial Reporting in case of banks which are registered as companies under the Companies Act in terms of Section 143(3)(i) of the Companies Act, 2013.<\/li>\n
    2. Long form audit report (LFAR).<\/li>\n
    3. Report on compliance with SLR requirements.<\/li>\n
    4. Report on whether the treasury operations of the bank have been conducted in accordance with the instructions issued by the RBI from time to time.<\/li>\n
    5. Certificate on reconciliation of securities by the bank (both on its own investment account as well as PMS Banks\u2019 account).<\/li>\n
    6. Certificate on compliance by the bank in key areas of prudential and other guidelines relating to such transactions issued by the RBI.<\/li>\n
    7. Report on whether the income recognition, asset classification and provisioning have been made as per the guidelines issued by the RBI.<\/li>\n
    8. Report on whether any serious irregularity was noticed in the working of the bank which requires immediate attention.<\/li>\n
    9. Certificate in respect of custody of unused Bank Receipt forms and their utilisation.<\/li>\n
    10. Authentication of capital adequacy ratio, including disclosure requirements and other ratios reported in the notes on accounts.<\/li>\n
    11. Certificate in respect of DICGC claims.<\/li>\n
    12. Report on status of the compliance by the bank with regard to the implementation of recommendations of the Ghosh Committee relating to frauds and malpractices and of the recommendations of Jilani Committee on internal control and inspection\/credit system.<\/li>\n
    13. Report on instances of adverse credit-deposit ratio in the rural areas.<\/li>\n
    14. Asset liability management.<\/li>\n
    15. Certificate on Corporate Governance in case of banks listed on Stock Exchange. In some banks this certification may not be got done by the central auditors.<\/li>\n
    16. Certification on claim of various interest subsidies and interest subvention.<\/li>\n<\/ol>\n

      \"Audit<\/p>\n

      Question 3.
      \nManagement develops controls and uses performance indicators to aid in managing key business and financial risks. Explain in this reference the requirements of an effective risk management system in a bank.
      \nOr
      \nWrite short note on: Requirements of a Risk Management Process\/System in a bank. [Nov. 16 (4 Marks)]
      \nAnswer:
      \nRequirements of a Risk Management Process\/System in a Bank:<\/p>\n

      1. Involvement of TCWG: Risk Management policies should be approved by TCWG. While approving the policies, TCWG should ensure that the policies should be consistent with the bank\u2019s business objectives and strategies, capital strength, management expertise, regulatory requirements and the types and amounts of risk it regards as acceptable.<\/p>\n

      2. Identification, measurement & monitoring of risks: Risks that may significantly affect the achievement of bank\u2019s goals and objectives should be identified, measured and monitored against pre-approved limits and criteria.<\/p>\n

      3. Control activities: Banks must have appropriate controls to manage its risks, including the following:<\/p>\n