Audit procedure for verification of CASH in Bank Audit

1. Auditor should obtain the cash retention limit of the branch. He should review the cash records and comment if the cash balance generally exceeds significantly the retention limit. He should verify that instances of excess cash beyond the retention limit are being regularly reported in returns to HO

2. In case, ATM is being operated by a branch, obtain cash limit fixed for ATM machines. Generally, during the festival season or continuous holidays, cash is fed more than limit some times to serve customers. Verify, whether excess cash beyond the limit has been intimated to higher authorities.

3. Auditor should ask the branch as to who is getting the cash insured. In case, it is done by HO, a management representation should be obtained and commented upon accordingly.

4. If insurance cover details are available at the branch, the auditor should verify, whether the branch holds adequate insurance cover of cash on hand, cash in ATM, and cash-in-transit. Verify insurance cover is in force.

5. Generally, cash in transit includes the movement of cash between currency chest and branch, one branch to another branch, cash movement for doorstep banking facility to clients, etc.

6. Auditor should obtain the prescribed guidelines from a branch with regard to custody of vault cash/ATM cash and comments in case of deviation.

7. Cash vault/ATM machines can be opened by joint custodians. The auditor should physically verify the vault cash/ATM Cash and observe that vault/ATM machines are being opened by joint custodians as prescribed only. Ensure that custody of keys of vault/ATM machines should be with the staff as mentioned in the key register of the branch.

8. Verify from records, whether duplicate keys of cash vault and ATM machines are deposited with other branches as prescribed.

9. Auditor should obtain the prescribed procedure in the bank for periodical verification of cash and ensure that it is being strictly adhered to. If there is any deviation from the prescribed process, the auditor should report.

10. Generally, in every bank, joint custodians are supposed to verify cash every day at the time of cash closing and to sign the cash records evidencing the same. Similarly, for ATM machines, cash is being verified daily at the time of feeding of cash in the machine by joint custodians.

11. Further in some banks, there is also a prescribed procedure for monthly verification of cash by officers other than custodians. Ensure same has been conducted and evidenced on records.

Foreign Currency

All above points are applicable to foreign currency also

Reconciliation of ATM balance with GL at year-end

Ensure, the figure of the balance in the branch books in respect of cash with its ATM(s) tally with the amounts of balances with the respective ATMs, based on the year scrolls generated by the ATMs

Where the bank has appointed the agents for cash feeding in ATM

If the account relating to cash with an agent is being maintained with the branch, verify the figure of cash with the agency is forming part of cash in hand.
Ensure the branch holds periodic as well as period/year-end confirmation of balances of cash held by such agents. Whether discrepancies, if any, have been reported to controlling authorities.
Verify retention limit of cash/ custody process is being adhered to
Verify the process of physical verification of cash with the agent and cash in the ATM by bank officials

Excess cash in ATM

Banks are advised by RBI that pending reconciliation or matching claim by customers, such ATM-related credit balances represent unclaimed balances and should not be transferred to profit and loss accounts.

For the above auditor can refer to:-

Rbi Cir DBOD.BP.BC.No.49/21.04.018/2013-14 dt Sept 3, 2013

Cash lying in cash Deposit Machines

Verify physical cash in hand in machine tally with the figure of Machine Account in Computer

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Audit procedure for verification of CASH in Bank Audit