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CA Intermediate · Auditing and Ethics · Audit of Banks

CA Meera is the statutory central auditor of a nationalised bank. While planning the audit, she wants to decide how to obtain comfort over the bank's advances at branches that she will not visit. Under the framework of bank audits in India, which approach is correct?

The central auditor may rely on reports of branch auditors for branches she does not visit, because bank audits are split between central and branch auditors. She still remains responsible for her opinion on the bank's financial statements as a whole and cannot disclaim that responsibility.

  1. AShe may rely on the reports of branch auditors appointed for those branches, and her responsibility for the bank's overall financial statements continuesCorrect
  2. BShe must personally visit every branch holding advances before signing the report
  3. CShe may disclaim responsibility for the advances at unvisited branches in her audit report
  4. DShe should ask the RBI to certify the advances at those branches in place of her own work

Explanation

In a bank audit the central auditor audits the head office and selected branches, while other branches are covered by branch auditors, whose reports the central auditor considers. The central auditor still forms the opinion on the bank's financial statements as a whole. Visiting every branch is impractical and not required, and disclaiming responsibility is not permitted.

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