Classification of Bank Advances and Audit of New Advances
- Blog|News|Account & Audit|
- < 1 minute
- By Taxmann
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- Last Updated on 30 March, 2022
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Audit of advances is one of the most important areas covered by the auditors during bank audits. Hence, it is necessary that auditors should have adequate knowledge of the banking industry and the regulations governing the banks. Auditors must be aware of the various functional areas of the bank/branches, its processes, procedures, systems, and prevailing internal controls with regard to advances.
In carrying out the audit of advances, the auditor is primarily concerned with obtaining evidence about the following:
a) Amount of advance outstanding at the date of the balance sheet.
b) Advances representing the amount due to the bank.
c) Amounts due to the bank are appropriately supported by loan documents and other documents as applicable to the nature of advances.
d) Existence of unrecorded advances, if any.
e) Existing basis of valuation of advances is appropriate.
f) Advances are disclosed, classi?ed, and described in accordance with recognized accounting policies and practices and relevant statutory and regulatory requirements.
g) Appropriate provisions towards advances have been made as per the RBI norms, Accounting Standards, and generally accepted accounting practices.
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