2019 – Posted in: Daily News – Tags: Reserve Bank of India

CONCURRENT AUDIT SYSTEM

For: Preliminary & Mains

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RBI revised the guidelines on concurrent audit system following the recommendations of an committee under Y.H. Malegam.

Now, the concurrent auditors will be appointed for a period of not more than three years.
Earlier the tenure of external concurrent auditors was fixed at five years on a continuous basis.

The concurrent audit aims at shortening the interval between a transaction and its independent examination.
It is integral to the establishment of sound internal accounting functions and effective controls and is regarded as part of a bank’s early warning system to ensure timely detection of serious errors and irregularities, which also helps in averting fraudulent transactions and preventive vigilance in banks.

RBI added the age limit for retired staff engaged as concurrent auditors may be capped at 70 years.
Under the new guidelines, the scope of work for concurrent auditors is left to the discretion of the head of the internal audit of banks, with the due prior approval of the Audit Committee of the Board of Directors/Local Management Committee (in case of foreign banks) of the bank. Earlier, the audit covered at least 50% of the advances and 50% of deposits of a bank.
The banks should ensure that the concurrent audit covers risk-sensitive areas identified by them as per their specific business models.
The broad areas of coverage under concurrent audit shall be based on the identified risk of the unit and must include random transaction testing of sufficiently large sample of such transactions wherever required.