Skip to content

CA Intermediate · Auditing and Ethics · Audit of Banks

The statutory auditor of Gomti Bank is examining the long form audit report (LFAR) requirement. Which statement correctly describes the LFAR in the context of bank audits?

The long form audit report is a detailed, non-public report from the statutory auditor to the bank's board and the RBI, covering areas such as advances, NPA classification and internal controls. It supplements the regular audit report and is required for banks irrespective of whether they earned profits.

  1. AIt replaces the auditor's report under Section 143 and is published with the financial statements
  2. BIt is a detailed confidential report submitted to the bank's management or the RBI as required, in addition to the statutory audit report, covering matters like advances, NPAs and internal controlsCorrect
  3. CIt is required only if the bank reports a loss for the year
  4. DIt is an optional document prepared by the bank's internal auditors

Explanation

The LFAR is a detailed report on the bank's operations, asset classification, internal controls and compliance, submitted in addition to, not instead of, the normal audit report. It is not published and is not loss-dependent. It is prepared by the statutory auditor, not the internal auditors.

Did you get it right without looking?

One question tells you little. A timed set on Audit of Banks shows your real accuracy, how long you take and where you lose marks.

Practise Audit of BanksFree diagnostic mock

More Audit of Banks questions