ICAI Guidance Note on Audit of Banks-2018 Edition released

ICAI Guidance Note on Audit of Banks-2018 Edition

The Auditing and Assurance Standards Board (AASB) of the ICAI has issued the Guidance Note on Audit of Banks 2018 edition.

The Guidance Note on Audit of Banks which is issued by the AASB of ICAI every year is an important resource providing detailed guidance to the chartered accountants on various aspects governing the statutory bank audits. 

ICAI Guidance Note on Audit of Banks-2018 Edition

The role of the Guidance note assumes more importance in view of the recent scam unearthed in Punjab National Bank. As per the Note, auditors are expected understand the Bank’s Accounting Process, which produces financial and operational information and pivotal to the internal control. Transactions flow automated across CBS with external systems including international payment gateways, SWIFT and INFINET etc should be properly understood by the auditor.

The Guidance Note also contains a typical flow of transaction of Buyer’s Credit with import through LC transaction where the Letter of Comfort is issued by Indian bank to the foreign bank on approval of terms and conditions through SWIFT message for the proposed Buyers Credit, the foreign Bank remits funds to the NOSTRO Account of Indian bank which is handling import transaction, on the strength of the Letter of Comfort (LoC)/ Letter of Undertaking (LoU) which is issued by the Indian bank in its favour after which the Indian bank remits the funds to foreign supplier. 

The Guidance Note include detailed instructions on special Considerations requiring attention in a Computer Information Systems Environment

The directions/circulars issued by the Reserve Bank of India up to February, 2018 have been included (in a CD accompanying this Guidance Note). However, RBI circulars issued subsequent to Feb-2018 which have a bearing on the statutory audit of banks/bank branches for the year ended March 31, 2018 should also be taken care of.

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