It is an examination which is conducted within a few time with the occurrence of transactions. It tries to shorten the time gap between a transaction and its examination by an independent person who is not involved in its documentation. There is an emphasis in favor of deep checking in key areas rather than checking or taking the overview. It is considered as part of the bank’s early-warning system to ensure timely detection for irregularities.
Concurrent Audit should cover the following:
- branches whose total credit add other rest exposed aggregate to not less than 50% of the total credit and other risk exposure of the bank; and
- branches whose deposits cover not less than 50% of the aggregate deposits of the bank.
In addition to the above-mentioned parameters, the bank should ensure the coverage of the following:
- The branch should be considered by category like exceptionally large, very large, and large branches.
- Special branches handling foreign exchange business and merchant banking business.
- Rating of branches as poor or very poor.
- Ensure that the head office department is dealing with treasury/funds management and handling investment portfolios in banks.
- Other branches are departments where in the opinion of bank concurrent audit is desirable.
Scope of Concurrent audit:
The scope of the concurrent audit includes the following:
- Concurrent audit scope related to daily cash transactions regarding abnormal receipts and payments. The scope related to this will include currency chest transactions, major expenses met by cash, high-value receipts, and disbursements.
- Purchase and sale of shares, securities, etc. The scope also includes physical verification of investments and rates at which they are entered into.
- Verification of procedure and documentation to open new current, savings account, term deposit accounts, etc. While checking the auditor and his team should thoroughly examine the unusual operations noticed.
- Verification of advances, overdrafts, temporary overdraft, cash credit account, term loans, bill purchase, letter of credit, etc. Procedure for sanction and documents to be verified. Any deviation notice to be examined in detail.
- Foreign exchange transactions to be verified with the reference to Reserve Bank of India (RBI) guidelines.
- The scope includes the verification of balancing of all ledgers and registers, inter-branch reconciliation calculation and verification of interest, discount, commission, etc.
- Revenue leakage to be detected.
- Special efforts have to be made in the audit in all fraud-prone areas. The attempt should be to ensure that all effective measures are taken to prevent fraud.
- Verification of high-value transactions.
- Procedure for the safe custody of security firms with the branch.
- Whether all procedures for tax deduction at source are followed and the tax so deducted is deposited into the government account within the time fixed.
- Verification of returns, statement, calculation of capital adequacy ratio, and compliance with requirements of government business.
- The concurrent auditor should study the RBI and Internal Inspection reports, statutory auditor’s report, and compliance thereto.
- Check whether the customers’ complaints are dealt with promptly.
While performing the audit the auditor must ensure that all the compliance is fulfilled and if not report it to the branch as in the banking sector there is a huge amount of public money involved, so the system should be secured and reliable.