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

While auditing Sundaram Finance Ventures Ltd, an NBFC, the auditor finds that the company has not furnished to the RBI the statements and particulars about deposits that the RBI Act, 1934 requires. Which action is correct for the auditor?

The auditor must report to the RBI the aggregate amount of deposits held, because the company did not furnish the required statements. The contents of that report must also be included in the audit report. Informing management alone or waiting for an inspection does not discharge the statutory duty.

  1. AMention it only in the management representation letter, since deposit returns are management's responsibility
  2. BMake a report to the RBI giving the aggregate amount of deposits held, and include the contents of that report in the audit reportCorrect
  3. CWait for the next inspection by the RBI and take no action in the current year
  4. DReport to the Registrar of Companies only, since the RBI is not the recipient of such reports

Explanation

Under section 45MA(1) the auditor must inquire whether the required deposit statements were furnished to the Bank. If not satisfied, the auditor reports to the Bank the aggregate deposits held. Under section 45MA(2) the contents of that report must also be included in the audit report. Reporting only to management or the ROC does not discharge the duty.

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