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reconciliation of which can be verified. This list can be of tremendous help for scrutinizing
financial statements.
Auditor can check expense accounts and verify if expenses debited are subject to TDS. If proper
TDS is not deducted, the same can be reported in Form 3CD.
Apart from that, Auditor can verify debit entries in fixed asset accounts and check if branch has
obtained proper authority to purchase such assets.
- ACSP also has an option to generate list of accounts opened during a given time period. A list
of such accounts under various schemes (SBA, CC, TL) can be generated and KYC documents,
Interest Rate entered in the system etc. can be verified on random selection basis.
- ACSP can also generate list of Dormant Accounts (enter D in A/c Status > F4), accounts
which are frozen (enter D or C or T for Debit Freeze, Credit Freeze or Total Freeze
respectively in Freeze Code > F4) any many more criteria based reports.
2. AINTRPT (Interest Report for Accounts)
- AINTRPT generates the calculation of interest charged in a particular account till date!
- To generate the report,
SOL ID- XXXX > Report to- M > Scheme Type- LAA > From A/c ID & To A/c ID- Enter
same ID only > Dr./Cr. Int-D > To date- dd/mm/yyyy > MRT file intDetRep.mrt > F4
- This should generate a report in PR menu which will give you the exact balance of account
during the period, number days and rate at which interest is calculated as well as the actual
amount of interest charged to that particular account.
- Now if during the course of Audit you observe an account on which interest rate is not applied
as per Sanction Letter or latest circulars (It can be verified from menu INTTI), you can generate
this report and calculate the amount of interest which should have been charged. This report
simplifies the calculation for Short Recovery.
3. LAODR (Loan Overdue Reminder)
- It is a generally prevailing (mis)conception that an account is classified as an NPA if 3
consecutive monthly installments are not received. However, RBI master circular on Asset
Classification states that A Non Performing Asset (NPA) is a loan or an advance where interest
and/ or installment of principal remain overdue for a period of more than 90 days in respect of a
term loan. The term overdue is defined as follows: Any amount due to the bank under any
credit facility is overdue if it is not paid on the due date fixed by the bank.
- It means if even a single rupee is not paid to the bank within 90 days from the date of demand
of such rupee, the advance account should be classified as an NPA.
- Menu LAODR generates the list of overdue accounts as on the given date. We also get to
choose the age of overdue accounts! This means, if we are only interested in accounts overdue
for a period beyond 90 days, this menu lets us have exactly the same.
- Now many Banks have other software (Such as ACSROM) to classify advances. It should be
checked whether all such accounts which are overdue beyond 90 days in LAODR, are classified
as NPAs by the branch. If not, the Auditor should get figure of NPA rectified. Accordingly,
provisioning and profit also get changed. MOCs can be given if Asset Classification is not
proper.
- However care should be observed as this report generates the list of each and every overdue
account including Loan Against Banks Own Deposit (LABOD), Loans against NSC/KVP and
Agriculture Loans. Such loans have different classification norms.
- If Bank has classified any Term Loan as an NPA, which does not appear in the list of overdue
accounts beyond 90 days in the report generated by this menu; explanation can be sought for the
same as well.
- This menu can also be useful to Concurrent Auditors as they can get a list of overdue accounts
beyond 60 days and inform management about such Potential NPAs, and help in overall credit
monitoring.
- For report generation, following criteria are to be given:
LAODR > Report To-M > As on date dd/mm/yyyy > Overdue greater than- 60/90 > F4
>Background-B > Print-N >F10.
- LAODR focuses on Term Loans. For overdue in CC/OD accounts, menu option TODRP can be
used.
4. LAOPI (Loan Overdue Position Inquiry)
- Once we have got the list of overdue accounts from LAODR, we can generate a report showing
how much principle and interest is demanded by the system in that particular account and how
much is settled by the borrower till date.
- This report can be generated for one account at a time, however it works pretty fast. You just
have to enter:
Account No. From/To- > F4 > Ctrl + E > F4 > Background/Foreground-B > Print Req-N>
F10
The report will be available in PR menu. The account is said to be overdue from the date on
which principle/interest collected amount is less than principle/interest demanded amount given
in the report.
Does the Branch generally carry cash balances, which vary significantly from the limits fixed by
the controlling authorities of the Bank? Whether excess balances have been reported to the
controlling authorities of the Bank?
ACLI. Cash in Hand account can be scrutinized from this menu.
Balances with Reserve Bank of India, State Bank of India and Other Banks
a)
Whether balance confirmation certificates obtained in respect of outstanding balances as at the
year-end and whether the aforesaid balances have been reconciled? The nature and extent of
differences should be reported.
Balance with RBI/SBI can be checked from ACLI. Accordingly reconciliation can be verified.
Advances
a)
Credit Appraisal
In your opinion, has the branch generally complied with the procedures/instructions of the
controlling authorities of the bank regarding loan applications, preparation of proposals for
grant/renewal of advances, enhancement of limits, etc. including adequate appraisal
documentation in respect thereof?
Renewal of advances or Enhancement in limit can be seen for a particular account by ACLI >
Ctrl + E > Option- E > F4 > Event- S > F4.
b) ii.
In the cases examined by you, have you come across instances of credit facilities released by the
branch without execution of all the necessary documents?
Most documentation has to be checked physically; however interest rate can be checked from
INTTI menu.
d)
i.
Review/Monitoring/Supervision
Is the procedure laid down by the controlling authorities of the Bank, for periodic review of
advances including periodic balance confirmation/acknowledgement of debts, followed by the
Branch? Provide analysis of the accounts overdue for review/renewal
- Between 6 months and 1 year, and
-Over 1 year
Accounts pending from review : ACDREV
LAD due : LADRPT
d)
ix.
Has the branch identified and classified advances into standard/sub-standard/ doubtful/ loss
assets in line with the norm prescribed by the RBI?
NPARPT, LAODR, LAOPI, TODRP menus as discussed can help.
e)
Guarantees invoked, paid but not adjusted.
Guarantees invoked can be checked from GI > Guarantee Status- N > F4.
e)
ii.
Details of the outstanding amounts of letters of credit and co-acceptances funded by the branch
at the end of the year may be obtained from the management and reported in the following
format.
DCQRY menu generates list of LCs outstanding.
Other Assets
a)
i.
Stationery and Stamps
Does the system of the Bank ensure adequate internal control over issue and custody of
stationery comprising security items (Term deposits Receipts, Drafts, Pay Orders, Cheque
Books, Travelers Cheques, Gift Cheques, etc.)? Whether the system is being followed by the
branch?
ISIA menu can be used as discussed above.
b)
i.
Suspense Accounts/Sundry Assets
Does the system of the bank ensure expeditious clearance of items debited to Suspense Account?
Details of old outstanding entries may be obtained from the branch and the reasons for delay in
adjusting the entries may be ascertained. Does your scrutiny of the accounts under various subheads reveal balances? Which in your opinion are not recoverable and would require a
provision/write off? If so, give details.
Balance in Suspense/ Sundry accounts can be verified from ACLI/ACSP. The breakup of old
outstanding entries can be obtained from MSGOIRP menu.
LIABILITIES
Deposits
ii.
After the balance sheet date and till the date of Audit, whether there have been any unusual large
movements (whether increase or decrease) in aggregate deposits held at the year-end? If so,
obtain the clarifications from the management and give your comments thereon.
Balance Sheet of each day can be generated from GR menu to verify changes in the amount of
Total Deposits.
Contingent Liabilities
iii.
List of major items of the contingent liabilities (other than constituents liabilities such as
guarantees, letters of credit, acceptances, endorsements, etc.) not acknowledged by the Branch?
Auditor should ensure that guarantees expired are cancelled by the branch. This can be checked
from GILR.
Profit And Loss Account
iv.
Does the bank have a system of estimating and providing interest accrued on overdue/matured
term deposits?
Account No. for overdue deposits can be obtained from
ACSP as discussed. Balance and Interest can be checked from ACLI.
Miscellaneous
i.
Does the examination of the accounts indicate possible Window Dressing?
Balances of Advance and Deposits can be checked from daily balance sheets generated from GR
menu. FTI menu can be used to locate high value transactions.
Again, this is not an exhaustive list of Finacle menu options. However, I do feel it will make
Auditors well equipped for Audit of Banks with Finacle.
For any queries and suggestions, comment below-let me know.
(Disclosure/Disclaimer: These views are not professional advice and shall not be considered to
be as such. The menu codes/ software name are property of Software Developer/License Holder.
The information in this and my previous article is not for any commercial purpose. It is merely in
the nature of guidance.)
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