Tag: andhra bank

Auditors at several state-owned banks have asked the Reserve Bank of India (RBI) to increase the number of agencies empanelled to conduct audits citing unprecedented increase in workload and number of certificates to be issued by statutory central and branch auditors in light of the merger of several state-run banks last year, according to an ET report.

Auditors have argued that increasing the manpower for inspecting bank books is important to maintain the quality of the exercise.
“The huge work allocated to statutory central auditors and statutory branch auditors in respect of various state-run banks requires huge manpower deployment of partners and paid chartered accountants. This itself justifies appointing a minimum of six such auditors,” said Prakash Sharma, vice chairman, Institute of Chartered Accountants of India (ICAI), according to the report.

Quality aspect

Sharma said the rise in services of banks and their branch count, especially for merged banks, requires enhancing the number of auditors to ensure good quality inspections.

As per the present rules, the ICAI prepares a list of eligible auditors and audit firms, subject to the regulator’s scrutiny. RBI forwards the final list of all eligible auditors to PSBs for selection.

The merger

Under the government’s mega consolidation plan, Oriental Bank of Commerce and United Bank of India merged into Punjab National Bank; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.

Officers have also requested the RBI to consider specifying the minimum number of auditors to be appointed rather than leaving the choice to banks.

They have also sought a revision of audit fees given the rise in the scope of the audit, enhanced compliance requirements, security risks, new legislations, and the ever-changing policy landscape.

Intensive and time-consuming

Abhinav Sharma, partner, AVG & Associates, said that increasing regulatory oversight has already made branch-level audits intensive and time-consuming.

“Hence, post-merger of PSBs, audit completion of a higher number of branches will pose a challenge. For instance, PNB is working with five statutory auditors despite having the approval of six prior to the merger,” Sharma said.
Auditors have also sought proportionate increase in number of auditors.