Earlier, the central bank used to formulate rules for concurrent audits, which are done to shorten the interval between a transaction and its audit. The idea is to develop sound internal accounting, minimising errors, and preventing frauds.
However, with the rise of many kinds of banks, a common programme for all cannot be set, the RBI said. Rather, “the scope of work to be entrusted to concurrent auditors, coverage of business/branches, etc is left to the discretion of the head of internal audit of banks,” with prior approval of the audit committee or management committee of the bank.
However, the minimum areas to be covered would include cash transactions, including physical verification of cash, loans, and advances such as physical verification of securities, delegation of powers for sanction, end-use verification of funds, monitoring of accounts with excess drawings, monitoring of projects, etc.
The auditors will also have to check compliance with know-your-customer norms, and other such norms, while monitoring remittances and bills for collection, including SWIFT transactions. It will have to check treasury operations, non-fund-based business, foreign exchange transactions, clearing transactions, verification of merchant banking business, verification of card business, conduct of employees, misselling of products, and compliance to RBI guidelines, among others.
The option to consider whether concurrent audit should be done by bank’s own staff or external auditors (which may include retired staff of its own bank) continues to be left to the discretion of individual banks.