Bank Branch Audit – Effective Audit Planning & Documentation

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Once the appointment of the Statutory branch Auditor (SBA) is completed, the planning of the audit will be executed by the Statuary bank Auditor. Below mentioned are the points to be kept in mind by SBA for planning the bank branch audit and list of key documents to be kept while preparing audit documentation file.

1. Understanding the Business of Bank Branch

The SBA shall consider the requirements specified under SA 315 “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment” by understanding the nature of activities carried out at the bank branch. Understanding not just the core business of banks of accepting deposits and sanctioning advances, but newer banking products should also be taken into consideration e.g. Digital Loans etc.

2. Documenting Audit Plan

The auditor should conduct a preliminary enquiry to know the nature, size and category of the bank branch to be audited and based on the above assess the risk involved in the branch being audited. The SBA should document the audit plans accordingly.

3. Internal Financial Controls over Financial Reporting (IFCoFR)

If the branch allotted to SBA is selected for testing of IFCoFR then SBA would be required to report on IFCoFR of that Branch. In case the branch has been identified for reporting on IFCoFR under statutory audit, then the SBA should include procedures to test the IFCoFR controls along with the regular branch audit procedure on selected areas

4. Audit Procedures/Understanding Forms and Content of Financial Statements/Reporting

SBA should understand the objective of various closing forms and certificates which are to be certified by the statutory auditors. Final audit report and Long form Audit Report are two documents that are issued by the statutory auditor to the bank management along with reporting on IFCoFR, in case the branch is selected for verification of IFCoFR.

5. Key Audit Documentation

The SBA should also prepare a tracker to list down the queries raised, responses received from the branch management, further queries and responses (if any), the final conclusion of the SBA. SBA should maintain audit documentation in such a way that will serve as satisfactory evidence that the audit was planned and performed in accordance with SAs.

An Illustrative list of documents to be maintained in the bank branch audit file is given in the story.

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