As the FY 2015-16 ends and the countdown starts for the Banks Audit. 1st April reminds chartered accountants to revise the check list, last year bank audit reports and many things which they left unchecked last year. So out team has decided to prepare to 10 things you must consider while Bank Audits. We have seen that most of the youngster Chartered Accountants searched on google about the check list for Bank Audit, Step by Step bank audit process, Process for bank Audit, Complete details regarding Bank Audit, how to conduct concurrent audits for Bank and many more. So this post is just for you.

  1. Start with Basics

The first basic principle of Bank Audit is to check the basic information about the customers of the Bank. The best way to check the same is to vouch the self-attested customer’s identity proofs. By doing so you will be able to know whether your customers are really genuine or fake accounts.

  1. Statutory Compliances

Like any other assesse banks are also bound to other statutory liabilities such as Income Tax, Service Tax etc.  You can check whether Bank has regularly deducted TDS on interest paid to customer and deposited the same before the due dates. Also check whether the bank has also charged Service Tax at appropriate rates.

  1. Penal Interest

Check whether bank is appropriately charging Penal Interest for Non submission of Stock Statements, FFR Reports etc. as per the circulars issued for the banks.

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  1. Check Unusual Transactions

Get the report for unusual transaction from the banks software and do in-depth study of the same.

  1. Surprise Cash Verification

It would be necessary in every bank audit to do a surprise cash verification. Also check whether cash counting machines are working properly.

  1. Top Customer

Check the list of Top Customers as most of the embezzlement found in the accounts of top customers only.

  1. Checking Previous Audit reports

Before starting the Bank Audit, you must recheck the last years bank audit reports. There is catch in reading the previous audit reports as it has been seen that banks mostly repeat the same errors in current year as in last year.

  1. Vouching

After adopting the smart work don’t forget the importance of vouching as this may help you to understand the working of the bank in depth.

  1. Renewal of Sanctions

Bank sanction needs to be renewed every year on the basis of latest documents received from the customers. Check the same and report for non-renewal of sanctions.

10      Other Internal Controls

Among other things check internal controls for issuing of check books, demand drafts etc.


How to do Audit of foreign SUBSIDIARY



The world is a global village. Where it is  a boon on one hand, on the other it also means  that the competition faced by the business in our country are no longer confined to the domestic boundaries, they too are coming from across the globe. An opportunist will however take it as the market gone global. Whichever way we take it, one thing is something everyone will agree to and that is the need to expand- the need to the go beyond the domestic boundaries and face the completion head front. The scenario is slowly but steadily changing and we have seen more and more Indian MNCs emerge. Videocon is a good example.

Setting up a subsidiary in a foreign land comes with a lot of challenges. The law that is applicable to the holding company may not be the same as applicable its foreign subsidiary. The law that will be applicable to a foreign subsidiary will be that which is prevalent in the foreign country.   Apart from that work environment and cultural differences are also there. One must cope up with all of them and then only the organization can flourish. One of the many concerns of the management while setting up a foreign subsidiary is control. They wish to have effective control over the subsidiary while sitting miles away. To ensure the same, internal audit is one of the ways to ensure the existence and effectiveness of control. The management can place reliance of the internal audit report and rest assured with the fact that management of the subsidiary in foreign land is organized and well in order.

Internal auditing is a catalyst for improving an organization’s governance, risk management and management controls by providing insight and recommendations based on analyses and assessments of data and business processes.


Internal audit is not just a tool for the management to ensure that the controls are in place and running effectively but also mandatory under various laws in different countries. Almost In all the countries there exists a law that makes internal audit for a certain class of companies compulsory. Therefore we can say internal audit is not only a need of the management but a requirement of law.

As companies expand globally, internal audit functions need to determine whether to provide audit coverage from a central location or from a satellite or branch operation aligned geographically with the expanded business operations. This is a matter of choice. While some organizations prefer local auditors which are well versed with the situations and practices of the land in which the subsidiary is incorporated while others prefer auditors from the country of parent company with a view that parent company’s management rely on them. At times the assignment is outsourced. This approach may be adopted either for quality or cost effectiveness.


While conducting an internal audit of a foreign subsidiary, the auditor faces many challenges. The major obstacles in performing internal audits of overseas subsidiaries are language and differences in local business practices. In addition, the operations of many overseas subsidiaries are based on different systems than those of their parent company, making it difficult to perform an efficient risk based internal audit in a short period of time. Furthermore, business and accounting information may not reach the parent company in a timely manner, and it is not uncommon for there to be significant amounts of improper usage of funds and fraudulent accounting when you are able to evaluate the situation. However the same can be overcome by proper research and planning in advance.

What differentiates internal auditing from most other professions, though, is the single, global nature of its standards. Our worldwide profession is shaped and guided by the International Standards for the Professional Practice of Internal Auditing. These standards, from The Institute of Internal Auditors (IIA), engender quality and consistency for internal audit organizations throughout the world. Yet flexibility and adaptability underscore the standards; as the internal audit profession continues to evolve, so does our understanding of its parameters.

The standards on internal auditing issued by the Institute of Chartered Accountants of India are also very much in line with the international standards and thus making the Indian internal auditors competent to perform the said assignment. Today Indian internal auditors are nowhere behind when it comes to the audit of foreign companies; Infosys being a leading example. These audits when performed by Indians are not only high quality and cost effective but also completed with a time boxed approach.

One of the distinct features of the internal auditing standards (whether issued by IIA or ICAI) can be summed up to highlight their flexibility and adaptability. On one hand they are strong enough to ensure uniformity and high quality and on the other they are adaptable so that the practices and methods can be varied as per the environment of the auditee.

We can sum up to state that globalization has changed the competitive scenario and expansion seems to be the need of the hour. With more and more Indian companies going cross borders the issues regarding effective management and controls arise. Internal audit serves the purpose in this situation. They are not only need of the management but mandatory as per various statutes. However due to various barriers such as linguistic, environmental cultural etc, the task becomes more and more cumbersome. Internal audit due to its uniform approach globally tries to overcome those barriers. The standards issued by ICAI which are in line with those issued by IIA ensure quality and standardization in the internal audit assignment. Thanks to their flexibility and adaptability, they help the conduct of internal audit assignments across the globe and make the Indian professionals stand shoulder to shoulder with professionals anywhere in the world and thus reinstating the fact of world being a global village.


CO Authored by :- CA Alkit Jain & CA Manisha Jain

How to do HR Audit of Organisation : Complete Checklist

How to do HR Audit of Organisation : Complete Checklist

Many of the articles asked me about how to do HR Audit of a Organisation. So I am providing the HR audit checklist for you all. This HR Audit checklist can be used in  Internal Audit Department of the organisation. Or you can also use it while making HR SOP. If you think i have missed any area then you can comment below or you can also put your queries regarding HR Audit. Because i have done 2-3 HR Audits till now and I can share my experience with you.

HR audit checklist :- 

Check that details relating to manpower requirement is informed to the management at least well in advance.-
No. of Employees required
Kind of Manpower required ( Skilled / Unskilled
Qualification required ( Graduate/ PG / Professional )
Experienced, Fresher or Trainee
B Interview
1 Check that interview is taken by the committee appointed for the purpose, comprised of  of at least three members or may be through proper channel like first HR Round then Technical.
One Functional Head or Respective departmental head.
Higher official – Unit Head
One HR Manager or Executive
2 A proper form should be provided by the HR Executive, Which is duly filled by the candidates.
3 The interview is conducted at Unit level or HR Level for the first phase and then short listed candidates are interviewed by the higher management for final phase.
C  Offer  Letter
Offer letter should be given to the selected candidates within 2 -3 days for their acceptance
D After Appointment or Onboarding 
Please Check that :-
1 Appointment letter is given on the date or within 3 days of joining.
2 Employee Information form should be filled and documented within 3 days of joining.
3 Terms and conditions associated with appointment should presents a clear picture.
4 Complete code of conduct should be provided to the candidate who thoroughly reads it
5 Code of Conduct sheet shall be updated on timely basis.
E Training & Development 
1 There must be proper training calendar for all employees.
2 Lock-in-period of at least one year on completion of probation/ Training period.
3 Performance Management Document should be present
F Statutory  Compliances Relating To HR :
1 Check for Applicability of various acts and Their due compliance by HR Executive-
 The Apprentices Act,1961
 The Employee’s Provident Fund and Miscellaneous Provisions Act,1952
 The Employee State Insurance Act,1948
 The Factories Act,1948
 The Minimum Wages Act,1948
 The Payment of Bonus Act,1965
 The Payment of Gratuity Act,1972
 The Payment of Wages Act, 1936
 The Trade Union Act,1926
 The Workmen’s Compensation Act
 Factory and Boilers Act
 The Industrial Disputes Act, 1947
 Contract Labour (Regulation and Abolition) Act
 The Industrial Employment (Standing Orders) Act
 Air (Prevention and Control of Pollution) Act, 1981
 Water ( Prevention and Control of Pollution) Act
 The Environment (Protection) Act
 Noise Pollution (Regulation and Control) Rules,2000
 The Personal Injuries (Compensation Insurance ) Act, 1963
2 All the required registers and documents as per above applicable acts should be maintained.
3 Various challans are paid on time. For eg. Challan for PF has to be paid by 15th of next month and Challan for ESI has to be paid by 20th of next month)
4 Consolidated HR records are sent to the HR head for the group including details about all the compliances made by the Company by 20th of   next month in a prescribed format.
G Attendance
1 Daily attendance is taken either in morning or evening in Attendance Register ( Now a days this is done through ERP)
2 Separate register is maintained for daily workers & staff on probation period
2 This register is checked and signed by Executives of two different Department (i.e. by HR Executive and Unit head)
3 Gate pass register should be maintained. Entries relating to all visitors is made in the register and at the end of the day it is verified by Admin department.
H Salary And Wages Procedure
Check that :-
1 Pay scale  and salary structure of the labour & staff should be uniform
2 Calculations of allowances, deductions etc should be according to the provisions and rules .
3 Person making the salary and processing the payment should be different.
4  Salary payment by the first week of next month.
5 Proper workings of salary sheet  should be maintained and its authorisation thereon. If payroll processing is outsourced a proper report should be asked from them.
I Leave Procedures
Leaves taken by employees are classified in Paid, Casual, Sick Should be allowed as per the HR Policy
J Termination or resignation 
Proper notice period should be served by the employee and full and final clearance thereof before resignation/termination as per HR Policy.
k Promotion Management System
1 After completion of at least 12 months of service, promotion or hike in salary  should be done on the basis of performance appraisal and as per management decision.
2 Bonus amount would be calculated depending upon the employee performance and at the decision of the higher management.
3 Employees should submit Self Appraisal Performance Report on quarterly basis to his manager and manager should review the same and transfer it HR Team
4 Employee birthdays, Marriages and anniversaries  should given due consideration and token of gift  should is sent on behalf of the Company.
5 A suggestion or a complaint box should be kept and it is the responsibility of the HR Department to check the same and reporting  the same to the higher management .
Expenses are reimbursed to the employees incurred for official purposes as per the reimbursement policy of the organisation.