Audit procedure for verification of INVESTMENTS in Bank Audit
Audit procedure for verification of Investments in Bank Audit
- If branch does not hold any investments, obtain NIL certificate from branch and comment accordingly. In case branch is having investment certificates, auditor should obtain a certificate from the branch giving details of all investments held by branch
- Auditor should do physical verification of investment certificates with the investment register
- In case, if any certificate is not available, verify evidence for not keeping the same in possession
- If certificates are sent for realisation, verify acknowledgment
- In case, neither certificates have been made available for physical verification nor evidences as mentioned above are available, auditor should comment for these certificates.
- Verify the system of reporting the receipt of income on the investment held on behalf of corporate office and ensure in all the cases, income is received on due date and reported to HO.
- Verify instructions from Corporate office regarding accounting of income on investments. Generally, instructions are, income received on investments should be sent to HO through IBR and same should be recognised as income at HO to have better control. Comment in case, income is accrued/received and recognised as income of the branch, contrary to the instructions of controlling authorities of the branch
- Auditor should verify the Investment register maintained at the branch and comment the cases, where investments have been matured or overdue and same have not been encashed. Give details of such investments.
- Generally these activities are being done at corporate office/specialised branches. If being done at branch, obtain the guidelines issued by corporate office/RBI for transactions in securities and ensure whether same are complied with. In case of any deviation same should be commented upon
- Obtain corporate office guidelines for valuation of investment. Auditor should obtain from bank management a statement showing the basis of valuation of investment. If statement not received, comment accordingly in report. In case valuation is not as per guidelines, impact of the same on profit should be reported along with deviation details.
CA. K.Nagaraju
Chartered Accountant
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