![\"\"](\"https:\/\/paperdigit.com\/wp-content\/uploads\/2020\/06\/Auditing-vs-constraints-1.png\")
Element of subjectivity<\/h2>\n\n\n\n
Banks\u2019 management assign branches to eligible auditors with\/without consultation with the central statutory auditors of the respective banks, as the case may be.<\/p>\n\n\n\n
\u2022 Central statutory auditors of banks are the ones who take the onus of getting the audits completed on \u2018time line\u2019 for the bank as a whole.<\/p>\n\n\n\n
\u2022 Assignment of \u2018number of branches\u2019 and \u2018location of branches\u2019 to individual chartered accountants involves \u2018subjectivity\u2019.<\/p>\n\n\n\n
\u2022 This process may be subjected to artificial intelligence-led technique, so that the subjectivity is minimised, if it cannot be altogether avoided.<\/p>\n\n\n\n
\u2022 Subjectivity results in allocation of branches that are in \u2018diametric\u2019 locations falling at the frontiers of the bank\u2019s respective regional office.<\/p>\n\n\n\n
\u2022 Some chartered accountants feel that even possession of and deployment of more than required manpower is sometimes overcome by the challenges posed by logistic issues.<\/p>\n\n\n\n
Auditing vs constraints<\/h2>\n\n\n\n
Audit of financial institutions is an area where sampling theory of statistics cannot be relied upon\/applied. In order to satisfy \u2018herself\/himself\u2019, in the least scenario:<\/p>\n\n\n\n
(a) the auditor must cover 100 percent of the fresh loans sanctioned during the year;<\/p>\n\n\n\n
\u2022 (b) compliance with respect to disbursements in respect of loans sanctioned in the earlier years must be verified in full;<\/p>\n\n\n\n
\u2022 (c) deficiencies pointed out by other control mechanisms such as concurrent audit, own inspection, RBI inspection, etc., in respect of other loan accounts and deposits need to be tracked and compliance ensured;<\/p>\n\n\n\n
\u2022 (d) an auditor must diligently ensure compliance with AML requirements; and<\/p>\n\n\n\n
\u2022 (e) a handful of other \u2018procedural related\u2019 audit checks and compliance checks must be carried out to be true to oneself.<\/p>\n\n\n\n
Statutory audit of a medium sized private limited company would consume at least 15-21 days, with a fairly sized effective audit team.<\/p>\n\n\n\n
Key performance indicator<\/h2>\n\n\n\n
However, due to the schedule that is being chalked out by the bank\u2019s head office, regional office and in turn by the central statutory auditors, the branch managers, as a part of their key performance indicator, are mandated to get the audits completed in 4-5 days.<\/p>\n\n\n\n
\u2022 Some managers still do not bother about such \u2018KPIs, which is a boon as far as the \u2018philosophy of auditing\u2019 is concerned.<\/p>\n\n\n\n
\u2022 As \u2018tight schedule\u2019 creeps in the minds of some chartered accountants, few auditors plan and tend to complete the audits much earlier, despite the emphasis by the office bearers of the councils of the ICAI during seminars and training programmes on the quality rather than the \u2018speed\u2019.<\/p>\n\n\n\n
\u2022 Such historical \u2018speed\u2019\/turnaround time is considered as the benchmark by some bank branches.<\/p>\n\n\n\n
Conclusion<\/h2>\n\n\n\n
In the interests of the national economy, subjectivity surrounding allocation of branches and expected \u2018turnaround time\u2019 are factors to be focussed upon.<\/p>\n\n\n\n
\u2022 One could appreciate the need by reckoning with the \u2018mounting\u2019 NPAs of the banking industry.<\/p>\n\n\n\n Q.1) Do you think the use of artificial intelligence-led technique could make easier the tasks for the auditors? Comment.<\/p>\n\n\n\n Audit of financial institutions is an area where sampling theory of statistics cannot be relied…<\/p>\n","protected":false},"author":1,"featured_media":1287,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[46,49],"tags":[60],"class_list":["post-1281","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-study-notes","tag-upsc"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/paperdigit.com\/index.php?rest_route=\/wp\/v2\/posts\/1281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/paperdigit.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/paperdigit.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/paperdigit.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/paperdigit.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1281"}],"version-history":[{"count":0,"href":"https:\/\/paperdigit.com\/index.php?rest_route=\/wp\/v2\/posts\/1281\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/paperdigit.com\/index.php?rest_route=\/"}],"wp:attachment":[{"href":"https:\/\/paperdigit.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/paperdigit.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/paperdigit.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Mains Questions:<\/h3>\n\n\n\n
Important note<\/h2>\n\n\n\n\n","protected":false},"excerpt":{"rendered":"