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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 certain statements and particulars about deposits that the RBI Act requires it to furnish. Which action is correct for the auditor under Section 45MA of the RBI Act, 1934?

The auditor must inquire whether the required deposit statements were furnished to the RBI. If not satisfied that they were, the auditor must report to the Bank the aggregate amount of deposits held. This is a direct statutory duty under the RBI Act and does not depend on management or a special audit.

  1. AMake a report to the Bank giving the aggregate amount of deposits held, unless satisfied on inquiry that the statements were furnishedCorrect
  2. BIgnore the matter, as deposit returns are management's responsibility alone
  3. CReport only to the audit committee and take no step with the Bank
  4. DWait for the Bank to issue a special audit order before taking any action

Explanation

Section 45MA(1) makes it the auditor's duty to inquire whether the required deposit statements were furnished to the Bank. Unless satisfied on inquiry that they were, the auditor must report to the Bank the aggregate deposits held. Treating it as management's matter or waiting for a special audit ignores this statutory duty.

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