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CA Final · Advanced Auditing, Assurance and Professional Ethics · Special Features of Audit of Banks & Non-Banking Financial Companies

The auditor of Kaveri Credit Ltd, an NBFC, has made a report to the RBI about deposits under the RBI Act. How should this be reflected in the auditor's report to members under the Act?

The auditor must include in the statutory audit report the contents of the report already made, or intended to be made, to the Reserve Bank. Section 45MA(2) requires the contents themselves, not a bare reference, and no board approval is needed.

  1. AIt need not be mentioned, as the RBI report is confidential
  2. BThe contents of the report made or intended to be made to the Bank must be included in the auditor's report to membersCorrect
  3. COnly a general reference that a report was sent to the Bank is enough
  4. DIt should be included only if the Board of Directors approves

Explanation

Section 45MA(2) requires that where the auditor has made or intends to make a report to the Bank, the contents of that report must be included in the statutory audit report. A mere reference is not enough, and neither confidentiality nor board approval removes the requirement.

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