Tamil Nadu Grama Bank Concurrent Audit Policy 2024-25 PDF

Concurrent Audit Policy 2024-25 Inspection and Audit Department Head Office Salem Concurrent Audit Policy 2023-24  Policy Certification Title: Concurrent Audit Policy 2024-25 Owned by...

Concurrent Audit Policy 2024-25 Inspection and Audit Department Head Office Salem Concurrent Audit Policy 2023-24  Policy Certification Title: Concurrent Audit Policy 2024-25 Owned by HO: Inspection and Audit Department Prepared by HO: Inspection and Audit Department Approved by Board Effective from 01.04.2024 One year from the effective date / until Validity next review. Addition/Deletion/Amendments for Concurrent Audit Policy for the year 2024-25 Sl. No Existing Policy Revised Policy 1. Addition 3. Scope of the Concurrent Audit 35. New Products Scrutiny & Preservation of requests of new products like Internet Banking, Mobile Banking, UPI etc. 2. Addition 3. Scope of the Concurrent Audit 36. New BGLs Verification of the nature of transactions in new BGLs introduced by the Bank.  Concurrent Audit Policy 2024-25 1. Preamble: The Bank shall put in place an effective Concurrent Audit system to comply with the NABARD guidelines as also to supplement the efforts of the Internal Audit Department to strengthen the internal control system. The concurrent audit system will be a part of Bank's early-warning system to detect irregularities and lapses, which helps checking repeated / recurring violations of the internal and regulatory guidelines, controlling risks and in preventing fraudulent transactions. The General Manager (Admin) will be the custodian of the policy. 2. Regulatory requirement & Audit coverage As per NABARD guidelines issued under circular NB/DOS.HO.POL/4915-J-1/2011-12 dated March 12, 2012 coverage of at least 50% of deposits and 50% of advances and other risk exposure of the Bank under concurrent audit to be ensured on an on-going basis. To achieve this, the branches are listed in the descending order of advances position and branches are selected from the top to cover 50% of advances. If deposits its, additional branches in descending order of deposits which are not included in the list of branches already selected will be selected to cover the shortfall in deposits so as to fulfil the criteria laid down by NABARD. While complying with the above parameters the possibilities of covering the branches rated as High and above in RBIA and Poor under present system of inspection in previous year internal audit will also be explored. Bigger branches, Branches rated as Unsatisfactory in the internal audit and Head Office departments dealing with treasury / funds management, HRM ,Expenditure and any other unit of the Bank which in the opinion of the Chairman, concurrent audit is desirable shall also be covered. 3. Scope of the Concurrent Audit: The Concurrent Auditors should certify all the reports normally covered under Branch Statutory Audit System wherever Concurrent Audits are conducted by external Chartered Accountants / Retired Bank Officials. Such Concurrent Auditors shall also provide various certifications done earlier by Branch Statutory Auditors, covering NPA classification and income recognition, Insurance coverage, P & L Account, , LFAR etc., Similarly, certification regarding Tax Audit may also be taken from the Concurrent Auditors. It is pertinent to note that the Concurrent Auditors are carrying out all the verifications on a continuous basis which the Branch Statutory Auditors are supposed to Page 1 of 18 do annually for giving these Certificates. Concurrent Auditors should also undertake Stock Audit function for which they may be suitably remunerated. Branch Audit and other duties to be performed by Concurrent Auditors are as under a) Credit Audit for the accounts identified by the bank shall be conducted by concurrent audit firms. But Stock Audit / Credit Audit shall not be allotted to the concurrent auditor of the same branch. b) Apart from checking of daily transactions, the Concurrent Auditor has to undertake the following:- 1. Half yearly Revenue audit. 2. Pre-release Audit / post-sanction follow up, whenever required. Pre-release Audit shall be carried out for all loans with the limits of Rs 10.00 lakhs & above. In case the Pre- release audit gives a qualified report for a particular sanction pending compliance of certain conditions, verifications of progress in compliance of pending terms and conditions will be taken up by concurrent auditors till full compliance. If the loan is disbursed without Pre-release audit done by the Concurrent Auditor, he should mention the same in the flash report of the month. 3. Verifying compliance to KYC / AML norms 4. Verification of E-filing of TDS deduction done (if it is done at the branch level) 5. Random verification of 20 number of jewel packets every month. 6. Ensure that loans and advances have been sanctioned properly and that securities and documents have been received and properly charged/ registered. Concurrent Auditors should verify the application form, back papers, documents etc. of all loans sanctioned during the month except Jewel loans and loan against deposits and record their comments. However sample check will be taken up in respect of JLs and LODs. 7. Concurrent Auditors are required to mandatorily inspect at least five units every month jointly with Bank Officials. Preferences shall be given to all new sanctions / high value advances, accounts showing symptoms of stress and units that were not inspected by branches during the last 6 months. The Concurrent Auditors should visit minimum of 5 SHG groups per month in branches having SHG business of Rs.5 crores and above as on previous March and the visit report should form part of the monthly concurrent audit report. 8. The Concurrent Auditors should go through the irregularities in the documentation / transactions details of 5 large borrowal accounts every month. 9. Transactions in staff accounts in general, with special attention on cash transactions of Rs.1 lakh & above and transfer transactions of Rs.2 lakhs and above should be monitored. Page 2 of 18 10. All high value transactions of Rs.10 lakhs and above of customers to be verified in depth; Non-compliance to KYC, deficiency in due diligence and risk categorization, suspicious nature of transactions etc. if any should be reported. Transaction should be verified with respect to risk profile of the customer / due diligence and advise the branch to modify risk profile of the customer, if necessary. If any transaction is suspected to be fraud or fraudulent activity or act of exercising powers beyond MDL unreasonably or indication of any foul play in any transactions of fraudulent nature warranting the attention of top management is required, immediately the same should be reported by way of special report to the Chairman As per extant guidelines of RBI any deliberate failure on the part of the auditor would render himself liable for action. 11. All types of customer complaints received by the branch which is not addressed fully and pending should be reported. Serious complaints which require immediate attention of controlling authorities are to be escalated. 12. Verify whether RTI and Ombudsman cases are properly diarized and reply sent to the respective departments in time. 13. NPA Management Manual intervention in NPA classification without any authority to do so should be reported. The process of identification of NPA is system-driven and manual flagging is done on monthly basis. Accordingly the concurrent auditors are advised to verify the following aspects of the audited branch on NPA identification (on CIF basis) Recovery mechanism. Movement in Restructured Advances and to ensure that the process of NPA identification and other issues are as per guidelines of IRAC norms. 14. Verifying flagging of fraud accounts, as reported to NABARD as advised by HO in CBS system. 15. Verify whether VVR checking is up to date and missing vouchers are recorded in a separate register as per the guidelines of the Bank. 16. Verify whether the Authorised Officer is strictly following the procedures laid down with timelines for dealing with SARFAESI accounts and follow up for realization of our dues. 17. Any sudden spurt in advances both in number and amount to be verified and reported. In cases where increase of 5% and above from previous month should be analysed and details to be included in the report. Page 3 of 18 18. Capital subsidy account / SRF (Subsidy Reserve Fund) account should be reconciled. 19. Routing of any unrelated transactions in BGL a/c viz., Sundry Deposit, SR-II, Parking account, etc., should be verified. 20. Any remittances without charges / fees should be verified. 21. Verify whether all NRE / NRO accounts opened on or after 01.11.2015 are with new application forms with FATCA / CRS details. 22. Verify whether branch is following Fair lending practices, Privacy Policy, AML / KYC/ CFT guidelines (including CTR, STR and Counterfeit Currency Report). 23. Early warning signals observed in any account to be included in monthly report 24. The monthly audit report should contain a review of the compliances to the observations in the previous reports. Irregularities pending compliance should be carried over. 25. Accounts reflected as SMA by the system itself should be observed carefully so that it may not slip to NPA. Other accounts, which are not reflected as SMA by system, should also be seen for non-reflection in SMA list. 26. Non Fund based business Recovery of Processing charges and commission for Bank Guarantees (BGs) Comment on timely performance of projects for which BGs issued (Actual vs. Projected) and likely invocation of BGs Timely reversal of expired BGs Timely payment / default of BGs invoked. 27. Concurrent Auditors to verify whether Solvency Certificate issued by branches is backed by sanction from competent authorities. 28. Ensure verification of genuineness and their enforceability of documents of title submitted as security for loans. 29. Verify whether the sanctions are in accordance with delegated authority. 30. Ensure that the branch has put in place a system that documents of title are subjected to verification regarding their genuineness, especially for large value loans. 31. Wherever a Chartered Accountant certificate, property valuation certificate, legal certificate, guarantee/ line of credit or any other third party certificate is submitted by the borrower, it should be ensured that the bank independently verifies the authenticity of such certification by directly communicating with the concerned authority issuing the certificate ,indirect confirmation may also be resorted to i.e., indicating to the issuer that Page 4 of 18 in the case there is no response by a certain deadline, it would be assumed that the certificate is genuine. 32. Credit Monitoring a) Ensure that post disbursement supervision and follow up is proper, such as receipt of stock statements, instalment, renewal of limits, etc. b) Verify if there is any misutilisation of the loans and whether there are instances indicative of diversion of funds. c) Check the bank guarantees issued, whether they have been approved by the competent authority and the guarantee draft has been approved by HO and recorded in the register of the bank.Whether they have been promptly renewed on the due dates. d) Verify whether the loan account has been opened under the correct product code. e) Verify whether the instances of exceeding delegated powers have been promptly reported to controlling /Head office by branch and have been got confirmed or ratified at all required levels. f) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials. 33. Housekeeping a) Ensure that the maintenance and balancing of accounts, ledger and registers including clean cash is proper. b) Early reconciliation of entries outstanding in the inter-branch accounts, Sundries Receivables II Account, Sundry Deposit Account, Demand Drafts account etc. Ensure early adjustment of large values entries. c) Carry out a percentage check of calculations of interest, discount, commission and exchange. d) Check whether debits have been made in income accounts/GL/BGL and report in the monthly report. e) Check the transactions of staff accounts. f) In case of difference in clearing there is a tendency to book it in an intermediary parking account instead of locating the difference in clearing. It is to be verified as to how the difference in clearing has been adjusted. Such instances should be reported to Head Office in case the difference persists. g) Check cheques returned/bills returned register and look into reasons for return of those instruments. Page 5 of 18 34. Others items Ensure that the branch gives proper compliances to the internal inspection /audit reports. Ensure that customer complaints are dealt with promptly. Verification of the statements, HO returns, Statutory returns etc. 35. New Products Scrutiny & Preservation of requests of new products like Internet Banking, Mobile Banking, UPI etc. 36. New BGLs Verification of the nature of transactions in new BGLs introduced by the Bank. 5. Selection of the Branches and other Offices for Concurrent Audit: Internal Audit Committee (IAC) consisting of GM (Admin), HOD (Inspection & Audit), HOD (Accounts) and HOD (Planning) as members may identify the branches and other units / offices for concurrent audit from time to time and place it for approval of the Chairman. The officer in charge of concurrent audit shall coordinate the meeting. While selection of branches, the regulatory requirement shall be complied without fail. The Concurrent Audit shall cover 50% of deposits and 50% of advances of the Bank. While selecting the branches for Concurrent Audit, the risk profile of the branches needs to be considered. Branches rated as High risk or above or its equivalent in the last Branch Inspection or where serious deficiencies are found in Internal Audit are to be subjected to concurrent audit irrespective of their business size. However the branches which have not completed 3 years can be exempted. Branches with average advance figure of less than Rs.10.00 Crore may be exempted from concurrent audit. While selecting branches for concurrent audit, special thrust should be given to advance oriented branches. 6. Selection of the audit firms for conducting Concurrent Audit: The following basic criteria should be kept in mind while selecting a firm for concurrent audit assignments: a) It should be a partnership firm of Chartered Accountants. We may consider sole proprietorship firms also in case of non-availability of partnership firms. b) The firm should be selected from the RBI panel as per gradation suggested for Branch Statutory Auditor appointment. c) There should not be any disciplinary action by RBI pending against the firm. The name of the firm should not appear in the list of Third Party Entities (TPE) Caution list of IBA. Page 6 of 18 d) Preference shall be given to CISA/DISA qualified auditors. e) Weightage to be given to the firms where the partners themselves are ex-bankers or the firm has got tie-up with ex-bankers with requisite experience and exposure. f) It is to be ensured that the audit firm or any sister / associate concern / network firm is not conducting the statutory audit of the Bank or any of its branches. g) Weightage to be given to a firm having exposure in conducting concurrent audit of the Bank branches for public sector / major private sector banks. h) The firm should have necessary office set up and adequate personnel to ensure proper deployment and timely completion of the assignments. i) The firm should execute undertaking of fidelity and secrecy on its letter head in the format prescribed by the Bank. j) The assignment should be carried out in a professional manner and in case of any misconduct & negligence; the Bank is free to report the matter to ICAI / RBI under the guidelines from time to time. This will be in addition to the disengagement from the assignment. k) The firm should not sub-contract the audit work assigned to any outside firm or other persons even though such persons are qualified chartered accountants. l) A declaration to be furnished by the firm that credit facilities availed by the firm or partners or firms in which they are partners or directors including any facility availed by a third party for which the firm or its partners are guarantor/s have not turned or are existing as non- performing assets as per the prudential norms of RBI. In case the declaration is found incorrect, the assignment would get terminated besides the firm being liable for any action under ICAI / RBI guidelines. m) There should not be any complaint against concurrent auditor for having unduly referred any credit proposals of their friends / relatives / clients / non clients of the bank. n) If the branch under concurrent audit is closed / merged / removed from concurrent audit due to official exigencies and for any other reasons whatsoever, the tenure of the concurrent auditor of the branch will stand terminated automatically. In such cases Bank will not be liable to give alternate branch for audit to the CA firm, whose concurrent audit assignment is so terminated. o) Any other terms and conditions of the assignment would be decided by the Bank on a case-to-case basis. Page 7 of 18 p) In addition to the qualified audit firm, the retired officials of our Bank and other bank including Sponsor Bank retired officers having experience in Bancs CBS platform can also be empanelled. 7. Appointment of Concurrent Auditors, their fees and other conditions: a. The Chartered Accountants / CA firms applying for appointment of Concurrent Auditors should find place in the panel approved by RBI. The appointment of the concurrent auditors for various concurrent audit assignments needs to be done as per the gradation based on the size of the Branch. The list of chartered accountant firms fulfilling the eligible criteria and the retired bank officials who have applied in response to the call of the bank and those fulfill the criteria laid down for empanelment shall be placed to Internal Audit Committee comprising of GM (Admin), HOD (Inspection& Audit), HOD (Planning) and HOD (Accounts) for approval. Suitable firms and the retired officials would be identified for each assignment and would be approved taking into account their experience and exposure, similar activity carried out for the Bank or other banks, availability of adequate trained resources, location of the audit unit etc. The monthly fees payable to the auditors will be approved by Board. b. The tenure of the concurrent audit would be initially for one year and would be extended for a further period of two years (overall three years), based on the performance of the auditor in the first year. c. After completion of specific period, the firms may be considered for audit assignment in other locations or areas. Cooling period of two years would be observed for a firm to become eligible for reappointment in the same audit unit. This will be purely at the discretion of the Bank and no rights whatsoever accrue to the firm for such reappointment. d. At any one point of time, not more than one audit assignment would be awarded to any single firm. An audit assignment that needs to be carried out across the branches / units at different locations would be considered as a single assignment for this purpose. In other words, wherever audit firms are not available, two or three branches can be allotted to a single firm provided that the firm has sufficient man power. e. As required vide Sec 141 of the Companies Act 2013, a self-declaration should be submitted by the Concurrent Auditors / Stock Auditors. f. The concurrent auditor should adhere to the audit coverage strictly as per the scope as may be decided by the Bank from time to time. g. The concurrent auditors should not undertake any other activities / assignment on behalf of the branch or unit without obtaining the concurrence of the Inspection & Audit department in writing. Page 8 of 18 h. No out of pocket expenses or traveling allowance / halting allowance would be paid to the concurrent audit firms for carrying out the assignment. However, GST or other taxes as applicable from time to time will be paid in addition to the basic fees. The concurrent auditors may be reimbursed actual out of pocket expenses incurred in connection with travel involved for conducting stock audits. The payment to the concurrent auditors wouldbe subject to deduction of tax at source at appropriate rates. i. All the necessary certificates that need to be given as a part of the concurrent audit assignment would be given by the audit firm under its letter head without any additional certification fee. j. A detailed checklist and other operating guidelines will be provided to the concurrent auditors. They would be made aware of the guidelines and circulars issued subsequent to commencement of assignment and having impact on the concurrent audit, to keep them abreast of the changes in the operational and regulatory guidelines. k. Necessary arrangement should be made for providing space, workstation and access to systems (viewing rights only) to the concurrent auditors for ensuring smooth conduct of audit assignment. This would be the responsibility of the RM of the audit unit / Branch Head. l.The Bank will prescribe structured formats for the audit reports and also stipulate the time limits for submission of the reports. Timely submission of reports is one of the areas assessed in the performance review of the auditors. Their services may be discontinued if there is continuous non-compliance. m. The audit formats would be reviewed on an annual basis. The firms should strictly adhere to the format and the time limit. Bank may prescribe different periodicity for different reports within the same audit unit. n. Audit assignments and subsequent renewals shall be given to Concurrent Auditors during the month of Sep/Oct every year. o. Fees payable is based on the level of total business of the branch as of previous year ending March. The fees once fixed shall remain the same throughout the tenure of the concurrent audit irrespective of change in the total business of the branch. The only exception may be in case of transfer / shifting of entire business of another branch to the auditee branch. Bank’s decision will be final in this regard. Page 9 of 18 Fee structure to be adopted: Total volume of business of the branch Fees (in Rs) Total Business upto - 25 crore 7,000/- Total Business >25 crore and upto 50 crore 8,000/- Total Business >50 crore and upto 100 crore 9,000/- Total Business >100 crore and upto 250 10,000/- crore Total Business >250 crore 12,000/- HO Department Audit 12,000/- In addition, applicable GST from time to time is payable. The fee payable for Concurrent Audit of the specified branch will be fixed based on categorization and business position of that branch as of the previous financial year end. Revision of fees: Fees payable to Concurrent Auditors shall be reviewed by the Board as and when warranted 8. Removal / Delisting of Concurrent Auditors: As per IBA guidelines, Concurrent Auditors, who have colluded with borrowers for pecuniary benefit and who failed to report major irregularities and frauds of more than Rs. One cro s Caution List under Third Party Entity (TPE) and auditors whose names are included in the IBA Caution List from time to time will also be removed from the Concurrent audit as per extant guidelines. Concurrent Auditors will be delisted / removed by placing a note to the Chairman in the following instances Frauds of financial loss not detected / not reported. Poor ratings in the Review of Quarterly performance by the respective Inspection Centres. Not complying with our requirements viz., refusing to attend assignments like Pre- release audit and Credit Audit, etc. Not conducting audit for the minimum required number of days; poor quality of reports etc. and; Who have resigned in the middle of their assignment period. 9) Engagement of Retired Officers of Banks as Concurrent Auditors: In addition to CA firms, Bank may appoint retired Officers of our Bank or other Banks as Concurrent Auditors based on the eligibility criteria. Page 10 of 18  a. b. Officers who have retired on superannuation in Scale II & above within the last three years may be considered for initial engagement as Concurrent Auditor. c. Should not have been awarded any major punishment, during their tenure in the bank. d. Initial period of assignment will be 1 year which may be extended for a further period of two years in the same branch (overall three years), based on the satisfactory performance. However, he can be assigned another branch in the 4th year onwards within the above terms and conditions, within the maximum permissible age of 65 years. 10. Reporting: Significant findings on concurrent audit reports are to be reported to Audit Committee of Executives and thereafter to Audit Committee of Board on quarterly basis. 11. Review of the Policy: The policy shall be reviewed based on further regulatory guidelines and operational experience. Only the Board is empowered to make changes / revisions / amendments in the Policy. Page 11 of 18  STANDARD OPERATING PROCEDURE 1. Conduct and follow up of concurrent audits and functional role of verticals: a) Each branch / audit unit having more than one officers should identify a nodal officer as a single point contact for coordinating the concurrent audit work. In other cases the Branch Manager will be the nodal officer. The audit units should ensure rectification of the deficiencies without any loss of time so as to achieve the very purpose of concurrent audit. b) A detailed checklist and other operating guidelines will be provided to the Concurrent Auditors. They would be made aware of the guidelines and circulars issued subsequent to commencement of assignment and having impact on the concurrent audit, to keep them abreast of the changes in the operational and regulatory guidelines. c) The bank should provide the concurrent auditor with requisite initial induction to the branch activities and further support the auditor with the MIS generated from the CBS system. d) HOD of Inspection & Audit Department at HO shall put in place necessary systems to initiate follow up on the concurrent audit reports with the respective branches / units by ROs. However the ROs will be responsible for further follow up with the branches / units to ensure compliance. e) The pending issues of the previous reports need to be mentioned as a persisting irregularity / deficiency in the subsequent reports. f) While carrying out internal audits, the quality of compliance with the concurrent audit report would be covered and commented upon by the Internal Auditors. 2. Functional Role: a) HO (Inspection & Audit Department) i. Coordinating the concurrent audit of HO departments like HRM, Expenditure, Accounts & Treasury whereas monitoring and follow up shall be carried out by the respective departments. ii. Empanelment of Chartered Accountants for concurrent audit following due process by placing to IAC( Internal Audit Committee) iii. Should collect the acceptance letter, declarations etc. from the concurrent auditors and keep safely. iv. Concurrent audit assignment of branches as per the approved fee structure. Page 12 of 18  v. Quarterly review of performance of Concurrent auditors and interaction with them will be done by respective Inspection Centers. The exercise will be completed within 15 days from the respective quarters. The compiled report of the review and interaction is to be submitted by the Inspection centers to HO: Inspection & Audit Department within 10 days from date of completion so that the review can be placed to ACE/ACB. Half yearly review, on completion of 6 months period, will be held by GM, in selected places, either in person or through other mode. b) Regional Offices i. On receipt of assignment letters and contact details from HO: Inspection & Audit Department, ROs should follow-up with the concurrent auditors and ensure commencement of concurrent audit in time. ii. Organizing / conducting pre-disbursal audit and Quarterly or half yearly limited Review as the case may be through concurrent auditors for the CA branches. iii. Evaluation of performance of concurrent auditors should be based on the quality of their efficiency in detection and reporting of fraud and improvement of risk rating of the branch. iv. Scrutiny of Deviations / irregularities observed including adherence to KYC norms from concurrent audit reports and follow up. 3) Other important guidelines (i) Compliance to LFAR: Branches under both Statutory Audit and Concurrent Audit, should submit a rectification / compliance certificate for LFAR observations signed by the Branch Managers which should be duly countersigned by Concurrent Auditor. (ii) On the spot rectification: The Concurrent auditors should endeavor to get majority of irregularities noticed by them rectified, by the branch before submission of the report. (iii) Compliance Audit: The monthly audit report should contain a review of the compliances to the observations in the previous reports. Page 13 of 18  (iv) Detection of fraud: Concurrent Auditors should observe and scrutinize the back papers kept along with the loan documents and report any fraudulent elements in the loans sanctioned. (v) Improvement in Risk Rating of the branch: Concurrent Auditors should analyse the reasons for the poor risk rating of the branch and take steps for improving the risk rating of the branch in the next internal inspection. 4. Concurrent Audit cycle a) Submission Channel: The concurrent auditor shall give report of the month before 5th of succeeding month. The copies of the audit report duly signed by the auditor with membership number & seal along with the Branch Manager shall be submitted to the ROs concerned under copies to the branch and RO. The Regional Manager will permit the Branch Managers to release the payment on receipt of the audit report. b) Follow up action and closure of the report Once the monthly audit report is received from concurrent auditors ROs should follow up and ensure that the branches are attending the issues raised by the concurrent auditors and complied before 15th of the succeeding month and to be placed for closure in the ensuing RACE (Regional Audit Committee of Executives) meeting. Any specific persisting irregularity appearing in three consecutive monthly audit reports should be reported to HO: Inspection & Audit Department separately with specific recommendations to initiate action against the erring staff ICs have to prepare the quarterly review of Concurrent Audit Reports of branches region wise and submit to HO: Inspection & Audit Department for placing before ACE / ACB It is proposed to formally close the audit reports within two months. RACE Committee should close the concurrent audit reports only on rectification of all major irregularities. Closure of reports is to be recorded in the RACE meeting minutes. However closure of Concurrent Audit Report shall not be kept pending if the same irregularity alone is being carried over to the subsequent reports. Follow up / staff action should be initiated for the persisting irregularity and is to be recorded in the minutes of RACE Page 14 of 18 In exceptional cases of prolonged / chronic pending issues, if any, where the rectification is not possible due to reasons beyond control of BM / RM, the same should be recorded in the minutes, before taking a conscious decision for closure of report by RACE citing valid reasons. The pending issues should however be followed up vigorously till compliance and monthly progress report should be placed in the RACE meetings by RO. At any point of time closure of concurrent audit report of a branch should not be pending beyond two months. Irregularities / deviations reported in the concurrent audit not complied / rectified by the branch beyond two months, Regional Manager shall direct the Branch Manager to comply and report within 10 days and may seek explanation from the Branch Manager for not complying with directions. If the concurrent audit reports are not closed within the timeline Regional Manager may take a call on withdrawing MDL powers. Regional Managers may also recommend staff action to HO: Inspection & Audit Department against the Branch Manager / Officers responsible for noncompliance and it may be reported in the APAR (Annual Performance Appraisal Report) of the Branch Manager and the other officers responsible. c) Closure of Concurrent Audit report of HO: Departments. The Concurrent Audit reports of HO: Departments shall be given to the GM who in turn will release to the respective heads of the departments. The departments will rectify the lapses and place the compliance report to Chairman for closure within 30 days of receipt of the report by them. d) Reviews to be placed: The following reviews on concurrent audit have to be placed: i) The report of audit of treasury and investment transactions, which are separately subjected to a concurrent audit should be placed before the Chairman of the Bank every month. ii) Quarterly review of performance of Concurrent auditors and interaction with them will be done by respective ICs. The exercise will be completed within 15 days from the end of respective quarters. The compiled report of the review and interaction is to be submitted by ROs to HO: Inspection & Audit Department within 10 days from date of completion so that they shall place Review of concurrent audit and significant findings in the immediate next ACE and ACB. Half-yearly review, on completion of 6 months period, will be held by General Manager Page 15 of 18 iii) The review of performance of concurrent auditors is to be done with particular reference to the quality of their reports assessed by verifying their working papers which will be available with the concurrent auditors. The interaction with concurrent auditors periodically involving General Manager is to be done. Page 16 of 18  : 1. Concurrent Auditor should be provided with the observations of the last branch inspection of the branch and rating details 2. Prepare proper audit plan based on 1 above, covering all the areas of the scope, keeping in the view the time lines 3. Have a structured introductory meeting with the auditee and seek all the information required in advance with proper time schedule. Introduce the audit team to the auditee officials. 4. Audit team shall be introduced to the branch by senior and experienced members as required. Proprietor or/ Partner of the CA firm should visit the branch once in a week and discuss with the BM regarding the observations. 5. Auditors to display team spirit and avoid misunderstandings / arguments in the presence of auditees. 6. Discuss the findings with branch officials on daily basis and try to rectify the defects then and there itself. 7. Give auditees a chance to express their opinion while discussing the issues. Getting proper explanation in a co-operative atmosphere will save precious time. 8. In case of difference of opinion with auditee, the auditor should first discuss with the leader of his team. Further discussion on a higher level may be made, if required. 9. In case, auditor comes across any information which causes him/her to suspect any element of fraud, gross negligence, gross incompetence or similar unfavourable actions or tendencies, he should report the matter immediately. 10. Auditor should keep utmost secrecy of the information / audit observations / issues etc. relating to the auditee. 11. Be courteous, cooperative and professional. Page 17 of 18 Don'ts: 1. Auditor should not have any professional or commercial relationship either direct or indirect with borrowers / beneficiaries of the branch / department which they are auditing and also will not have in future as far as possible for a minimum period of three years. 2. Auditor should not take advantage of his association as concurrent auditor with the branch / department of the bank and canvas for any client / business with the bank either directly or indirectly. 3. Auditor should not represent on behalf of any client / customer of the bank for a minimum period of as far as possible three years after the completion of term of the audit. 4. Auditor should not share / pass on / discuss any audit related observations / issues / findings with anyone other than concerned in the Bank. 5. Auditor should not get involved in heated argument with auditee. 6. Auditor should not give orders to auditee and seek requirements from the officer assigned to assist him on a particular job. The officer concerned would issue the necessary orders to their employees if he accepts the inspector’s suggestions and recommendations. 7. Auditor should not delay the submission of audit report. Page 18 of 18