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Monday, 3 October 2011

As an auditor which points you should take into consideration during the audit of banking company

AUDIT OF BANK :-
Audit and accounts of bank are maintained according the corn panics ordinance 1962. Auditor should pay proper attention to the following points while auditing the accounts of bank :

1. Internal Check :-
Auditor has to rely on the internal check system of the bank. He should take the written statement about the well organized system of internal check.

2. Check The Bank Balance :-
Auditor should check the balances of various accounts like profit and loss account, fixed and current accounts with the schedules. The total of each account should agree with the relative schedule.

3. Verify The Loans And Advances :-
Auditor should verify the list of loans and advance with the ledgers. He should compare the total of each schedule with general ledger.

4. Balance With Other Banks :-
Auditor should obtain the certificate from the state bank for the balances with other banks.

5. Internal Audit Checking :-
Internal audit staff of the bank complete the audit of bank record thoroughly. Independent auditor should examine the audit work performed by the internal audit staff.

6. White The Cash In Hand :-
Auditor should check the cash in hand on the date of the balance sheet.

7. Interest Payable :-
Auditor should verify that all outstanding interest on various deposits has been provided or not?

8. Checking Of Foreign Currency :-
Auditor should check the foreign currency transactions and profit and loss created on it.

9. Verify The Bank Powers :-
In case of company transactions auditor should check that these are within the powers of the bank.

10. Verify Dividends :-
Auditor should verify the dividends paid. He should see that no dividend is paid until the intangible assets have been written off.

11. Examine The Secret Reserves :-
Auditor should;d verify that the entries affecting the secret reserves which may be in existence.

12. Inspection Of Securities :-
Auditor should examine the market values of securities held against the loan. He should also check that loans are covered by such securities or not?

13. Inspection Of Reserve Fund :-
Auditor should check that 20% of the profit amount is transferred to the reserve fund until it becomes equal to the paid up capital of the bank.

14. Verify The Bank Liability :-
Auditor should also verify the bank liability in respect of acceptance and endorsement on behalf of the customers.

15. Verify The Travelers Cheques :-
Auditor should count all the travelers cheques in hand and verify with the register of vouchers.

16. Inspect The Bad Debts :-
Auditor should verify all the bad debts written off and doubtful debts provided for in the books of accounts.

17. Verify The Breach Return :-
Auditor should examine that branch return is duly certified and properly incorporated in the books available in head office.

18. Inspection Of Investment :-
Auditor should examine the investment of the bank. The schedule investment must be show the book value and the market price on the day of the balance sheet.

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