CA.

Pankaj Gupta
FCA, B. Com (H), L.LB, DISA(ICAI), DIRM (ICAI)

Long Form Audit Report

Jallandhar Branch of NIRC of ICAI

25.03.2021
S. No Ask yourself
1 Whether LFAR has any importance as compared to main audit report
2 What needs to be done – before the start of audit / during the audit/after completion of audit
3 How much time is required to complete for LFAR out of 7-10 days available for audit.
4 Whether LFAR is a yes / no report or detailed information is required to be included.
5 Whether any documentation is required to be maintained in support of LFAR.
6 Do we copy and paste from last years report.
7 Can we plan LFAR before the actual start of the audit.
8 What are the important documents that we can ask before the start of the audit.
9 Is there a difference between Main audit report / ICOFR / LFAR
10 Is there any checklist that we can refer before start of audit
11 Can changes be made in the Format of LFAR
 Long Form Audit Report

Annexure 1 Annexure II Annexure III

Statutory Central Branch Auditors Large/Irregular/Crit

Auditor ical Accounts for
Branch Auditors
Appendix for
Specialised
Branches
 ASSETS LIABILITIES PROFIT & GENERAL
LOSS A/C

• Cash • Deposits • Interest/Discount/Com • Gold/Bullion/Security

• Balances with Reserve • Other Liabilities - Bills mission Items
Bank of India, State Payable, Sundry • Income Recognition • Books and Records
Bank of India and other Deposits, etc. Norms • Inter-Branch Accounts
banks (For branches • Contingent Liabilities • Trend in Income and • Frauds
with Treasury Expenditure • Implementation of
Operations) KYC/AML guidelines
• Money at Call and • Management
Short Notice Information System
• Investments (for • Miscellaneous
branches outside India)
• Advances
• Other Assets
1. Cash
(a) Does the system ensure that cash maintained is in
effective joint custody of two or more officials, as
per the instructions of the controlling authorities
of the bank?
(b) Have the cash balances at the branch/ATMs been ATM word added
checked at periodic intervals as per the procedure
prescribed by the controlling authorities of the
bank?
(c) (i) Does the branch generally maintain / carry
cash balances, which vary significantly from the
limits fixed by the controlling authorities of the
bank?
(ii) Does the figure of the balance in the branch New Clause inserted
books in respect of cash with its ATM(s) tally with
the amounts of balances with the respective
ATMs, based on the year end scrolls generated by
the ATMs? If there is any difference, same should
be reported.
1. Cash
(d) Whether the insurance cover available with
the branch adequately meets the requirement
to cover the cash-in hand and cash-in transit?

Important Points relating to Cash

1. Cash retention limit should be considered including Foreign Currency
2. ATM cash certification and verification needs to be done.
3. Verify joint custody of the cash
4. Insurance Policy of the Cash at Branch and in Transit.
2. Balances with Reserve Bank of India, State
Bank of India and other banks (For branches
with Treasury Operations)
(a) Were balance confirmation certificates
obtained in respect of outstanding balances as
at the year-end and whether the aforesaid
balances have been reconciled? The nature
and extent of differences should be reported.
(b) Observations on the reconciliation statements
may be reported in the following manner:
(i) Cash transactions remaining un-responded
(give details)
(ii) Revenue items requiring adjustments / write-
off (give details)
(iIi) Other credit and debit entries originated in New Clause
the statements provided by RBI/other banks,
remaining un-responded for more than 15
days:
2. Balances with Reserve Bank of India, State
Bank of India and other banks (For branches
with Treasury Operations) contd:
(iv) Where the branch maintains an account with New Clause
RBI, the following additional matter may be
reported:
Entries originated prior to, but communicated
/ recorded after the year end in relation to
currency chest operations at the branch/other
link branches, involving deposits
into/withdrawals from the currency chest
attached to such branches (Give details)
(c) In case, any matter deserves special attention
of the management, the same may be
reported.
Important Points
1. Generally, there will be no bank account in the branch
2. Obtain reconciliation Statement. Should not contain the reconciliation entries.
3. Obtain list of pending entries as on March 31, 2021
4. Exception report
3. Money at Call and Short Notice
(a) Has the branch kept money-at-call and short
notice during the year?
(b) Has the year-end balance been duly confirmed New Clause
and reconciled?
(c) Has interest accrued up to the year-end been New Clause
properly recorded?
(d) Whether instructions/guidelines, if any, laid
down by the controlling authorities of the
bank have been complied with?

Important Points relating to Money at Call and Short Notice

1. Generally, taken care by Treasury Branch
2. Under call money market, funds are transacted on an overnight basis and under notice money market,
funds are transacted for a period between 2 days and 14 days.
3. Balance Certificate
4. Investments (for branches outside India)
(a) In respect of purchase and sale of investments, has the branch acted within its
delegated authority, having regard to the instructions/ guidelines in this behalf
issued by the controlling authorities of the bank?
(b) Have the investments held by the branch whether on its own account or on behalf of
the Head Office/other branches been made available for physical verification? Where
the investments are not in the possession of the branch, whether evidences with
regard to their physical verification have been produced?
(c) Is the mode of valuation of investments in accordance with the RBI guidelines or the
norms prescribed by the relevant regulatory authority of the country in which the
branch is located whichever are more stringent?
(d) Whether there are any matured or overdue investments which have not been
encashed and / or has not been serviced? If so, give details?
5. Advances
(a) List of accounts examined for audit list of the accounts examined is
required to be given in format
prescribed by RBI

List of Accounts examined for audit

S. No. Account No. Account Name Balance as at Year Balance as at Year Total
End- Funded End- Non-Funded
1
2
3
4
5
6
7
Total A B C=A+B
Total Outstanding of the Branch X Y Z=X+Y
Percentage examined A as % of X B as % of Y C as % of Z
 Definition of Large Advance
Earlier LFAR New LFAR
Large advances are those in respect of which the Large advances are those in respect of which the
• outstanding amount is in excess of 5% of the • outstanding amount is in excess of 10% of
aggregate advances of the branch or outstanding aggregate balance of fund based and
• Rs. 2 Crores, non-fund based advances of the branch or
whichever is less • Rs.10 crores,
whichever is less.
For all accounts
Above the threshold Transaction audit/account specific details to be seen
and commented
Below the threshold Process needs to be checked and commented upon
 List of Total Advances of the Branch List of accounts examined for Audit
Balance as at Year Balance as at Balance as at Balance as at
Accoun S. Account
S. No. Account No. End- Year End- Total (Amount in INR) Account No. Year End- Year End- Total
t Name No. Name
Funded Non-Funded Funded Non-Funded
1 26890105001 A 1,05,00,000 1,50,00,000 2,55,00,000
6 26890105006 F 5,23,49,450 34,50,000 5,57,99,450
2 26890105002 B 1,55,50,000 - 1,55,50,000
3 26890105003 C 1,32,44,400 - 1,32,44,400 7 26890105007 G 8,59,50,200 5,00,000 8,64,50,200

4 26890105004 D 1,29,50,000 - 1,29,50,000 8 26890105008 H 8,94,92,040 - 8,94,92,040

9 26890105009 I 7,99,20,954 - 7,99,20,954
5 26890105005 E 1,34,94,500 2,35,00,000 3,69,94,500
15 26890105015 O 6,30,64,930 - 6,30,64,930
6 26890105006 F 5,23,49,450 34,50,000 5,57,99,450 13 26890105013 M 43,29,000 - 43,29,000
7 26890105007 G 8,59,50,200 5,00,000 8,64,50,200 14 26890105014 N 4,35,67,000 - 4,35,67,000

8 26890105008 H 8,94,92,040 - 8,94,92,040 Total 41,86,73,574 39,50,000 42,26,23,574

9 26890105009 I 7,99,20,954 - 7,99,20,954 Total 50,44,02,474 4,24,50,000 54,68,52,474

10 26890105010 J 40,00,000 40,00,000
- Percentage examined 83.00 77.28
9.31
11 26890105011 K 1,25,40,000 1,25,40,000
-
12 26890105012 L 34,50,000 34,50,000
-
13 26890105013 M 43,29,000 43,29,000
-
14 26890105014 N 4,35,67,000 4,35,67,000
-
15 26890105015 O 6,30,64,930 6,30,64,930
-
Total 50,44,02,474 4,24,50,000 54,68,52,474
5. Advances
(b) Credit Appraisal
(i) In your opinion, has the branch generally complied with the
procedures / instructions of the controlling authorities of the
bank regarding loan applications, preparation of proposals for
grant/ renewal of advances, enhancement of limits, etc.,
including adequate appraisal documentation in respect
thereof. What, in your opinion, are the major shortcomings in
credit appraisal, etc.
(ii) Have you come across cases of quick mortality in accounts, New Clause
where the facility became non-performing within a period of
12 months from the date of first sanction? Details of such
accounts may be provided in following manner:-
• Account No.
• Account Name
• Balance as at year end
5. Advances- Credit Appraisal continued……
(iii) Whether in borrowal accounts the applicable interest rate is New Clause
correctly fed into the system?
(iv) Whether the interest rate is reviewed periodically as per the New Clause
guidelines applicable to floating rate loans linked to MCLR /
EBLR (External Benchmark Lending Rate)?
(v) Have you come across cases of frequent renewal / rollover of New Clause
short-term loans? If yes, give the details of such accounts.
(vi) Whether correct and valid credit rating, if available, of the New Clause
credit facilities of bank's borrowers from RBI accredited Credit
Rating Agencies has been fed into the system?

Important Points
1. Reports from the branch for change in the interest rates on various occasions.
2. List of short terms loans –renewed/rollover.
3. Refer RBI Circular on Ad-hoc/Short Review/Renewal of Credit Facilities
4. Board approved Policy for review/renewal & Credit rating
5. Advances
(c) Sanctioning / Disbursement
(i) In the cases examined by you, have you come across
instances of:
(a) credit facilities having been sanctioned beyond the
delegated authority or limit fixed for the branch?
(b) Are such cases promptly reported to higher authorities
(ii) Whether advances have been disbursed without complying
with the terms and conditions of the sanction? If so, give
details of such cases.
(iii) Did the bank provide loans to companies for buy-back of New Clause
shares/securities?
Important Points
1. Need to depend upon the branch confirmation and end use certificate wherever available
5. Advances
(d) Documentation
In the cases examined by you, have you come across
instances of:
(i) Credit facilities released by the branch without execution of
all the necessary documents? If so, give details of such cases.
(ii) Deficiencies in documentation, including non-registration of
charges, non-obtaining of guarantees, etc.? If so, give details
of such cases.
(iii) Advances against lien of deposits have been granted without Words added
marking a lien on the bank’s deposit receipts and the related
accounts in accordance with the guidelines of the controlling
authorities of the bank.

Important Points
1. Need to check lien in the branch system
5. Advances
(e) Review/Monitoring/Supervision
(i) Is the procedure laid down by the controlling authorities of
the bank, for periodic review of advances, including periodic
balance confirmation / acknowledgement of debts, followed
by the branch? Provide analysis of the accounts overdue for
review/renewal. What, in your opinion, are major
shortcomings in monitoring, etc.
a) between 3 to 6 months, and
b) over 6 months
(ii) a) Are the stock/book debt statements and other periodic New Clause
operational data and financial statements, etc., received
regularly from the borrowers and duly scrutinized? Is suitable
action taken on the basis of such scrutiny in appropriate
cases?
b) Is the DP properly computed?
c) Whether the latest audited financial statements are
obtained for accounts reviewed / renewed during the year?
5. Advances
(e) Review/Monitoring/Supervision
(iii) a) Whether there exists a system of obtaining reports on stock New Clause
audits periodically?
b) If so, whether the branch has complied with such system?
c) Details of:
 cases where stock audit was required but was not
conducted
 where stock audit was conducted but no action was taken
on adverse features
(iv) Indicate the cases of advances to non-corporate entities with Limit to be asked from Branch
limits beyond that is set by the bank where the branch has
not obtained the duly audited accounts of borrowers.
Important Points
1. List of cases where stock audit was mandatory
2. Stock Audit Reports
3. Limit where obtaining duly audited accounts from the non-corporate entities is mandatory
5. Advances
(e) Review/Monitoring/Supervision
(v) Does the branch have on its record, a due diligence report in New Clause
the form and manner required by the Reserve Bank of India
in respect of advances under consortium and multiple
banking arrangements. Give the list of accounts where such
certificate/report is not obtained or not available on record.
(In case, the branch is not the lead bank, copy of
certificate/report should be obtained from lead bank for
review and record)
Important Points
1. Whether branch has provided any advances under consortium and multiple banking arrangements. If yes,
obtain list of such accounts and confirm whether due diligence report as required by the RBI has been
obtained or not
2. Refer various circulars issued by RBI
5. Advances
(e) Review/Monitoring/Supervision
(vi) Has the inspection or physical verification of securities
charged to the bank been carried out by the branch as per
the procedure laid down by the controlling authorities of the
bank? Whether there is a substantial deterioration in value
of security during financial year as per latest valuation
report in comparison with earlier valuation report on
record?
(vii) In respect of advances examined by you, have you come
across cases of deficiencies, including in value of securities
and inspection thereof or any other adverse features such as
frequent/ unauthorized overdrawing beyond limits,
inadequate insurance coverage, etc.?
Important Points
1. Need to verify two valuation reports
2. Substantial Deterioration? Absolute or Percentage? Auditor’s Judgement?
5. Advances
(e) Review/Monitoring/Supervision
(viii) Whether the branch has any red-flagged account? If yes, New Clause
whether any deviations were observed related to compliance
of bank's policy related with Red Flag Accounts?
(ix) Comment on adverse features considered significant in top 5 New Clause
standard large advances and which need management's
attention.
Important Points
1. Master Directions on Frauds – Classification and Reporting by commercial banks and select FIs
RBI/DBS/2016-17/28 DBS.CO.CFMC.BC.No.1/23.04.001/2016-17 Dated: July 3, 2017
2. A Red Flagged Account (RFA) is one where a suspicion of fraudulent activity is thrown up by the presence
of one or more Early Warning Signals (EWS)
3. An illustrative list of some EWS (42 points) is given for the guidance of banks. Banks may choose to adopt
or adapt the relevant signals from this list and also include other alerts/signals based on their experience,
client profile and business models. The EWS so compiled by a bank would form the basis for classifying an
account as a RFA.
4. Need to verify top 5 advances in detail
5. Comment on atleast large 5 accounts
5. Advances
(e) Review/Monitoring/Supervision
(x) In respect of leasing finance activities, has the branch
complied with the guidelines issued by the controlling
authorities of the bank relating to security creation, asset
inspection, insurance, etc.? Has the branch complied with the
accounting norms prescribed by the controlling authorities of
the bank relating to such leasing activities?
5. Advances
(f) Asset Classification, Provisioning of Advances and Resolution New Section under Advances
of Stressed Assets
(i) a) Has the branch identified and classified advances into
standard / substandard / doubtful / loss assets through the
computer system, without manual intervention?

b) Is this identification & classification in line with the norms

prescribed by the Reserve Bank of India

c) Whether the branch is following the system of classifying

the account into SMA-0, SMA-1, and SMA-2. Whether the
auditor disagrees with the branch classification of advances
into standard (Including SMA-0, SMA-1, SMA-2) / sub-
standard / doubtful / loss assets, the details of such advances
with reasons should be given.
Important Points
1. Refer RBI Circular dated RBI/2020-21/37 Ref. No. DoS.CO.PPG./SEC.03/11.01.005/2020-21 Automation of
Income Recognition, Asset Classification and Provisioning processes in banks
2. Log report where manual intervention done in the classification of advances
5. Advances
(f) Asset Classification, Provisioning of Advances and Resolution
of Stressed Assets
(i) d) Also indicate whether required changes have been New Clause
incorporated/ suggested in the Memorandum of Changes. Verify RBI guidelines
e) List the accounts (with outstanding in excess of Rs. 10.00
crore) which have either been downgraded or upgraded with
regard to their classification as Non-Performing Asset or
Standard Asset during the year and the reason thereof.
f) Whether RBI guidelines on income recognition and
provisioning have been followed.
(ii) a) Whether the branch has reported accounts restructured or New Clause
rephased during the year to Controlling Authority of the RBI Circular August 6, 2020 on
bank? Restructuring
b) Whether the RBI Guidelines for restructuring on all such MSME Restructuring
cases have been followed. Agriculture Restructuring
c) Whether the branch complies with the regulatory stance Others
for resolution of stressed assets, including the compliance
with board approved policies in this regard,
tracking/reporting of defaults for resolution purposes among
others?
5. Advances
(f) Asset Classification, Provisioning of Advances and Resolution
of Stressed Assets
(iii) a) Whether the upgradations in non-performing advances is
in line with the norms of Reserve Bank of India
b) Where the auditor disagrees with upgradation of
accounts? If yes, give reasons thereof.
(iv) Have you come across cases where the relevant Controlling
Authority of the bank has authorized legal action for recovery
of advances or recalling of advances, but no such action was
taken by the branch? If so, give details of such cases.
(v) Whether there are any accounts wherein process under IBC is New Clause
mandated but not initiated by the branch?
Whether there are any borrowers at the branch against
whom the process of IBC is initiated by any of the creditors
including bank? If yes, provide the list of such accounts and
comment on the adequacy of provision made thereto?
5. Advances
(f) Asset Classification, Provisioning of Advances and Resolution
of Stressed Assets
(vi) a) Have appropriate claims for credit guarantee (ECGC and
others), if any, been duly lodged and settled?
b) Give details of claims rejected? (As per the given table)
c) Whether the rejection is appropriately considered while
determining the provisioning requirements
(vii) In respect of non-performing assets, has the branch obtained
valuation reports from approved valuers for the immovables
charged to the bank, once in three years, unless the
circumstances warrant a shorter duration?
(viii) In the cases examined by you, has the branch complied with
the Recovery Policy prescribed by the controlling authorities
of the bank with respect to compromise/settlement and
write-off cases? Details of the cases of
compromise/settlement and write-off cases involving write-
offs/waivers in excess of Rs. 50.00 lakhs may be given.
5. Advances
(f) Asset Classification, Provisioning of Advances and Resolution
of Stressed Assets
(ix) Is the branch prompt in ensuring execution of decrees New Clause
obtained for recovery from the defaulting borrowers? Give
Age-wise analysis of decrees obtained and pending execution.
(x) Whether in the cases concluded the recoveries have been New Clause
properly appropriated against the principal / interest as per
the policy of the bank?
(xi) In cases where documents are held at centralized processing
centres / office, whether the auditor has received the
relevant documents as asked by them on test check basis and
satisfied themselves. Report the exceptions, if any.
(xii) List the major deficiencies in credit review, monitoring and
supervision.
5. Advances
(g) Non-Fund Based facilities
(i) List of borrowers with details of LCs devolved or guarantees
invoked during the year. (Earlier end of year)
(ii) List of borrowers where the LCs have been devolved or
guarantees have been invoked but not paid with amount
thereof.
(iii) List of instances where interchangeability between fund New Clause
based and non-fund-based facilities was allowed subsequent
to devolvement of LC / invocation of BG.
6. Other Assets
(a) Suspense Accounts/Sundry Assets
(i) Does the system of the bank ensure expeditious clearance of
items debited to Suspense Account? Details of outstanding
entries in excess of 90 days may be obtained from the branch
and the reasons for delay in adjusting the entries may be
ascertained. Does your scrutiny of the accounts under various
sub-heads reveal balances, which in your opinion are not
recoverable and would require a provision/write-off? If so,
give details.
(ii) Does your test check indicate any unusual items in these
accounts? If so, report their nature and the amounts involved.
Are there any intangible items under this head e.g. losses
not provided / pending investigation?
II. LIABILITIES
1. Deposits
(a) Does the bank have a system of identification of dormant/
inoperative accounts and internal controls with regard to
operations in such accounts? In the cases examined by you,
have you come across instances where the guidelines laid
down in this regard have not been followed? If yes, give
details thereof.

(b) After the balance sheet date and till the date of audit,
whether there have been any unusual large movements
(whether : increase or decrease) in the aggregate deposits
held at the year-end? If so, obtain the clarifications from the
branch and give your comments thereon.
(c) Whether the scheme of automatic renewal of deposits New Clause
applies to FCNR(B) deposits? Where such deposits have been
renewed, report whether the branch has satisfied itself as to
the 'non-resident status' of the depositor and whether the
renewal is made as per the applicable regulatory guidelines
and the original receipts / soft copy have been dispatched.
II. LIABILITIES
1. Deposits contd:
(d) Is the branch complying with the regulations on minimum New Clause
balance requirement and levy of charges on non-
maintenance of minimum balance in individual savings
accounts?
II. LIABILITIES
2. Other Liabilities - Bills Payable, Sundry Deposits, etc.
(a) The number of items and the aggregate amount of old
outstanding items pending for one years or more be obtained
from the branch and reported under appropriate heads. Give
details thereof.
(b) Does your test check indicate any unusual items or material
withdrawals or debits in these accounts? If so, give details
thereof.

II. LIABILITIES
3. Contingent Liabilities
(a) List of major items of the contingent liabilities (other than
constituent’s liabilities such as guarantees, letter of credit,
acceptances, endorsements, etc.) not acknowledged by the
branch?
III. PROFIT AND LOSS ACCOUNT
(a) Has the test checking of interest/discount/ commission/ fees
etc. revealed excess/short credit of a material amount? If so,
give details thereof.
(b) Has the branch complied with the Income Recognition norms
prescribed by R.B.I.? (The Auditor may refer to the
instructions of the controlling authorities of the bank
regarding charging of interest on non-performing assets).
(C) Has the test check of interest on deposits revealed any
excess/short debit of material amount? If so, give details
thereof.
(d) Does the bank have a system of estimating and providing
interest accrued on overdue/matured/ unpaid/ unclaimed
term deposits including in respect of deceased depositors?
(e) Are there any divergent trends in major items of income and
expenditure, in comparison with corresponding previous year,
which are not satisfactorily explained by the branch? If so, the
same may be reported.
IV. GENERAL
1. GOLD/ BULLION / SECURITY ITEMS
(a) Does the system ensure that gold/bullion is in effective joint new

custody of two or more officials, as per the instructions of the

controlling authorities of the bank?
(b) Does the branch maintain adequate records for receipt, issues
and balances of gold/bullion and updated regularly? Does the
periodic verification reveal any excess/shortage of stocks as
compared to book records and if any discrepancies observed
have been promptly reported to controlling authorities of the
bank?
(C) Does the system of the Bank ensure adequate internal control
over issue and custody of security items (Term Deposit
Receipts, Drafts, Pay Orders, Cheque Books, Traveller's
Cheques, Gift Cheques, etc.)? Whether the system is being
followed by the branch? Have you come across cases of
missing/lost items?
IV. GENERAL
2. Books and Records
(a) Whether there are any software / systems (manual or New Clause
otherwise) used at the branch which are not integrated with
the CBS? If yes, give details thereof.
(b) i) In case the branch has been subjected to IS Audit whether New Clause
there are any adverse features reported and have a direct or
indirect bearing on the branch accounts and are pending
compliance? If yes give details.
ii) Whether branch is generating, and verifying exception Words added
reports at the periodicity as prescribed by the bank
iii) Whether the system of bank warrants expeditious
compliance of daily exception reports and whether there are
any major observations pending such compliance at the year
end.
iv) Whether the bank has laid down procedures for manual New Clause
intervention to system generated data and proper
authentication of the related transactions arising there from
along with proper audit trail of manual intervention has been
obtained.
IV. GENERAL
2. Books and Records contd.
(b) v) Furnish your comments on data integrity (including data New Clause
entry, checking correctness/integrity of data, no back ended
strategies etc.) which is used for MIS at HO / CO level.

IV. GENERAL
3. Inter Branch Accounts
Does the branch expeditiously comply with/respond to the
communications from the designated cell/Head Office as
regards unmatched transactions? As at the year-end are there
any un-responded/un-complied queries or communications
beyond 7 days? If so, give details?
IV. GENERAL
4. Frauds
Furnish particulars of: New Clause
(i) Frauds detected/classified but confirmation of reporting to
RBI not available on record at branch.
(ii) Whether any suspected or likely fraud cases are reported New Clause
by branch to higher office during the year? If yes, provide the
details thereof related to status of investigation.
IV. GENERAL
4. Frauds
(iii) In respect of fraud, based on your overall observation, New Clause
please provide your comments on the potential risk areas
which might lead to perpetuation of fraud (e.g. falsification of
accounts/false representation by the borrower;
misappropriation of funds especially through related party/
shell company transactions; forgery and fabrication of
financial documents like invoices, debtor lists, stock
statements, trade credit documents, shipping bills, work
orders and encumbrance certificates and avail credit; Use of
current accounts outside consortium where Trust and
Retention Account (TRA) is maintained, to divert funds; List
of Debtors/ Creditors were being fabricated and receivables
were not followed up/ write off of debt of related parties;
Fake export/shipping bill, etc.; Over statement of invoice
amounts, stock statements, shipping bills, turnover; fly by
night operations -including the cases where vendors, related/
associate parties, manufacturing units etc. aren’t available on
the registered addresses; Round Tripping of funds, etc.)
IV. GENERAL
4. Frauds
(iv) Whether the system of Early Warning Framework is New Clause
working effectively and, as required, the early warning signals
form the basis for classifying an account as RFA.
IV. GENERAL
5. Implementation of KYCAML guidelines
Whether the branch has adequate systems and processes, as
required, to ensure adherence to KYC/AML guidelines
towards prevention of money laundering and terrorist
financing
Whether the branch followed the KYC/AML guidelines based
on the test check carried out by the branch auditors

IV. GENERAL
6. Management Information System
Whether the branch has the proper systems and procedures
to ensure data integrity relating to all data inputs which are
to be used for MIS at corporate office level and for
supervisory reporting purposes. Have you come across any
instances where data integrity was compromised?
IV. GENERAL
7. Miscellaneous
(a) In framing your audit report/LFAR, have you considered the
major adverse comments arising out of the latest reports such
as:
i) Previous year’s Branch Audit Report / LFAR;
ii) Internal audit/ Snap Audit/ concurrent audit report(s);
iii) Credit Audit Report;
iv) Stock audit Report;
v) RBI Inspection Report, if such inspection took place;
vi) Income and Expenditure (Revenue) Audit;
vii) IS/IT/Computer/Systems Audit; and
viii) Any special inspection / investigation report?
(b) Are there any other matters, which you, as branch auditor,
would like to bring to the notice of the management or the
Statutory Central Auditors?
 Summary of Honourable Supreme Court Judgment dated March 23, 2021
in case of Writ Petition no. 476 of 2020 along with other Writ Petitions
S. No. Relief Sought by Petitioner Honourable Supreme Court Judgment
1 Complete waiver of interest or interest on No relief granted for interest.
interest during the moratorium period Relief for Penal Interest
No penal interest/ interest on interest/ compound interest to
be charged from any of the borrower during the moratorium
period and any amount recovered on account of this should
be refunded back or adjusted in next instalment
2 Sector wise relief packages to be offered by the No relief granted
Union of India and/or the RBI and/or the
Lenders
3 Extension of moratorium beyond 31.08.2020 No relief granted
4 Relief packages offered by the Central No relief granted
Government and/or the RBI and/or the Lenders
are not sufficient looking to the impact due to
Covid19 Pandemic
5 Last date for invocation of the resolution No relief granted.
mechanism, namely, 31.12.2020 provided
under the 6.8.2020 circular should be
extended.
Interim relief granted earlier not to declare the accounts of respective borrowers as NPA stands vacated.
List of accounts examined
Information to be provided as per Format

Credit Appraisal
• Quick Mortality
• Correct interest rate fed into system
• Interest Rate reviewed Periodically
• Frequent renewal or rollover
• Correct & Valid Credit Rating

Sanctioning and Disbursement

• Loan for buy-back of shares/securities
Review/Monitoring/Supervision
• Analysis of accounts overdue for renewal 3 to 6 months, 6 months and above
• Calculation of DP
• Latest financial statements are obtained
• Cases where stock audit was required but not conducted & Cases where stock audit conducted but no
action taken in adverse features
• Due diligence report for advances under consortium
• Red flagged accounts
• Adverse features in Top 5 standard large advances
Asset Classification, Provisioning of Advances and Resolution of Stressed Assets
• Accounts downgraded or upgraded with regard to classification as NPA or Standard Assets
• Accounts restructured or rephased during the year
• Upgradation in Nonperforming advances
• Prompt in execution of decrees
• Due diligence report for advances under consortium
• Red flagged accounts
• Adverse features in Top 5 standard large advances
CA. Pankaj Gupta
FCA, B. Com (H), L.LB, DISA(ICAI), DIRM
(ICAI)

9999781500
[email protected]

Thank you!!