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Update from ICAI

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Statutory audit of banks involves a number of peculiarities due to some unique features of banks and banking operations e.g., huge volumes and complexity of transactions, wide geographical spread of banks’ network, large range of products and services offered, extensive use of technology, strict vigilance by the banking regulator, etc.

In this regard, ICAI releases a publication ‘Guidance note on audit of banks’ (the guidance note) every year to provide detailed guidance to auditors conducting audit of banks and their branches. The revised 2022 edition of the guidance note is divided into two sections i.e., Section A - Statutory Central Audit and Section B - Bank Branch Audit. It contains illustrative formats of an engagement letter, auditor’s report both in case of nationalised banks and banking companies and management representation letter. It also incorporates the impact of various circulars of the Reserve Bank of India (RBI) as well as certain important advisories, pronouncements of the ICAI which would be relevant for bank audits for the financial year ending 31 March 2022.

To access the text of ICAI guidance note, please click here

Action points for auditors

  • Auditors should refer to the various Appendices included in the guidance note, such as - illustrative formats of an engagement letter, formats of auditor’s report in case of nationalised banks and banking companies, formats of management representation letter, text of master directions, master circulars and other relevant circulars issued by RBI. This will provide relevant guidance and enhance uniformity in the audit reports issued.
  • With the entire banking process becoming automated and computerised, auditors should emphasise on key IT aspects like cyber security review, digital banking fraud risks, blockchain and so on.
  • Previously, AASB had also issued two separate publications i.e., “Technical Guide on Audit of Internal Financial Controls in case of Public Sector Banks” and “Technical Guide on Revised Formats of Long Form Audit Report”. Auditors should use this guidance note in conjunction with the mentioned publications.

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