DBS.CO.PP.BC.11/11.01.005/2002-03 January 30, 2003 All Scheduled Commercial Banks
(excluding RRBs and LABs) Dear Sir, Concurrent Audit in Banks Please refer to our circular DBOD.BC.182/16.13.100/93-94 dated October 11, 1993 advising banks to take steps to institute an appropriate system of concurrent audit in banks. Our instructions on concurrent audit systems were subsequently revised vide our circular DOS.No.BC.16/08.91.021/96 dated August 14, 1996, based on the recommendations of the Working Group on Internal Control and Inspection/Audit Systems in Banks (Chairman: Shri Rashid Jilani). As you will agree, concurrent audit in banks serves as a useful system which can throw up early alerts as to weaknesses in the processes and controls existing in banks. In view of this, the Reserve Bank has been reiterating its instructions regarding concurrent audit from time to time. 2. Recently, the "Joint Committee on the Stock Market Scam and Matters Relating Thereto" has, in its report dated December 12, 2002, observed that, in spite of the Reserve Bank instructions, auditors had not been appointed for months together by some of the banks. We do not appreciate the circumstances under which the concerned banks failed to appoint concurrent auditors warranting such adverse comments by a Parliamentary Committee. We would, therefore, like to reiterate that the detailed guidelines as indicated in Annexure I to our circular dated August 14, 1996, should be adhered to strictly and that there should not be any delay in appointing auditors for the purpose. You may please note that any deviation from the guidelines will be viewed seriously and could attract penal provisions as laid down in the Banking Regulation Act, 1949. 3. Please acknowledge receipt. Yours faithfully, Sd/- (P.V. Subba Rao)
Chief General Manager-in-Charge | |