Page 49 - Banking Finance June 2023

ARTICLE

Many banks also create outfits to provide Merchant Banking by external auditors. Where internal audit is done by an
facilities to various clients. The Internationalisation of independent audit department of banks, external audit is
banking operations also throws lot of challenges for the done majorly by specialized people like C.A, Advocates,
banks and these are converted into opportunities by many Engineers, professionals appointed by regulators etc. Fig 3.
banks. Banks have started doing cross-selling of products so gives an idea about the type of audits in banks. Though it is
as to stabilize interest income and to enhance fee income. not exhaustive, it gives a fair amount of idea about Audit
Thus, the focus of banking business has been changing Function in Indian Banks.
rapidly in the past few years. This has resulted in changing
the focus of banking operations. Naturally the risks in
Concerns in Bank Audit
business of banking have also to be evaluated under the new
The change of Business orientation in banks has resulted in
environment in which banks are operating.
complex products, procedures, technologies, skill mix of
human resource, etc. The established practices of Audit are
Objectives of Bank Audit now not sufficient enough to deal with the increasing
The main aim of Audit and Inspection is to- complexity. In last few years, banking in India has seen a lot
To check whether the activities of the bank are of very high value frauds, procedural lapses, monitoring
compliant to laid down procedures, instructions, failure, which directly or indirectly shows the inefficiency and
systems of bank based on regulatory/statutory/ internal ineffectiveness of audit systems.This all has put a dent on
guidelines. the image of Audit functions and Auditors. There are lot of
concerns in bank audit but we will take only four major
Monitor adherence to internal controls- both
concerns-
administrative and accounting controls
Help improving control system of bank 1. Technical Competence
Banking growth in India is riding the technology wave.
Help bank to improve the effectiveness of Risk
Management, control and Governance process by Technology is advancing leap and bound, so is the use of it
in banking sector. Banks are not only using the technology-
brining a systematic disciplined approach
based products, but use of technology in internal
Finally, establishing transparency in banking business for
management like accounting practices, data management,
a greater good of all stakeholders
information and reporting system etc. has also gone a long
way. Many time, internal and external auditors are finding
Types of Bank Audit themselves unable to deal with the requirement of
Banks' Audit has two-way system where banks have their technology to complete the audit procedure. Auditor, as a
own internal audit systems as well as banks are also audited profession was supposed to have the knowledge of rules,

Fig 3. Types of Audit in India

44 | 2023 | JUNE | BANKING FINANCE