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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 Finserve Ltd, an NBFC, the auditor finds that the company has not furnished to the Reserve Bank the statements and particulars about deposits that the RBI Act, Chapter IIIB requires. What is the auditor's duty under Section 45MA of the RBI Act, 1934?

The auditor must inquire whether the NBFC furnished the required deposit statements to the RBI. If not satisfied that it did, the auditor must report to the Bank the aggregate amount of deposits held. This duty arises directly under Section 45MA(1) and does not depend on any RBI order.

  1. AReport to the Bank the aggregate amount of deposits held, unless satisfied after inquiry that the required statements were furnishedCorrect
  2. BWait for the Bank to order a special audit before saying anything about deposits
  3. CReport the matter only to the shareholders at the next general meeting
  4. DIgnore the matter, because deposit returns are management's responsibility alone

Explanation

Section 45MA(1) makes it the auditor's duty to inquire whether the required statements on deposits were furnished to the Bank. Unless satisfied on inquiry that they were, the auditor must report to the Bank the aggregate deposits held. Waiting for a special audit order or reporting only to shareholders ignores this direct duty.

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