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

While auditing Sagar Finance Ltd, a deposit-taking NBFC, the auditor inquires whether the company has furnished to the Reserve Bank the statements, information or particulars about deposits that the RBI Act, 1934 requires. The auditor finds that the company has NOT furnished them. What is the auditor's duty under Section 45MA?

The auditor must report to the Reserve Bank the aggregate amount of deposits held by the NBFC, because the required statements were not furnished. The contents of that report must also be included in the statutory audit report. Oral mention or waiting for a special audit does not discharge the duty.

  1. AMake a report to the Reserve Bank giving the aggregate amount of deposits held by the company, and include the contents of that report in the audit reportCorrect
  2. BOnly mention the default orally to the Audit Committee and take no further action
  3. CWait for the Reserve Bank to order a special audit before reporting anything
  4. DReport only to the Registrar of Companies, since deposit matters are outside the RBI's concern

Explanation

Section 45MA(1) requires the auditor, unless satisfied that the required statements were furnished, to report to the Bank the aggregate deposits held. Under 45MA(2), the contents of that report must also be included in the audit report. Informal oral communication or waiting for a special audit does not discharge the duty.

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