LFAR FORMAT OF BANK FOR 2015-16

From,

 

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LONG FORM AUDIT REPORT (LFAR)

           

 

We advise having submitted the LFAR to the respective authorities.

  1. The salient Points of the report have been discussed with the Branch Manager.

               

For.

                                                                                                Chartered Accountants

 

                                                                                                    

  1.    No

                                                                                                       F R N

Date:-

Place:-

The Deputy General Manager/The Asstt.General Manger/

Chief Manager/Manager,

   Branch

I confirm that the salient points have been discussed with me as mentioned above.

Date:               Deputy General Manager/

Assistant General Manager/

Chief Manager/Manager

CC:The Zonal Manager

The Head Office

 

 

 

 

                       LONG FORM AUDIT REPORT AS AT 31-03-2015

BRANCH.                    ADVANCES RS.

 

LONG FORM AUDIT REPORT (LFAR) TO MANAGEMENT IN CASE OF BANK BRANCHES

The following paragraphs list the matters which the branch auditors of banks are expected to comment upon in their Long Form Audit Reports.  The appendix to this questionnaire contains questions which are relevant to specialized branches dealing in foreign exchange transactions, recovery of non-performing assets, clearing house operations and branches having very large advances.  Auditors of foreign branches of Indian Banks should also furnish this report.  In the case of such branches, reference to the Reserve Bank of India should be construed to include the Reserve Bank of India, as well as the relevant regulating authority of the foreign country where the branch is located.

Where any of the comments made by the auditors in their LFAR is adverse, they should consider whether a qualification in their main report is necessary.  It should not, however, be assumed that every adverse comment in the LFAR would necessarily result in a qualification in the main report.  In deciding whether a qualification in the main report is necessary, the auditors should use their judgement in the facts and circumstances of each case.  Where the auditors have any reservation or adverse remarks with regard to any of the matters to be dealt with in their Long Form Audit Reports, they may give the reasons for the same.  Also, where relevant, instances of situations giving rise to their reservations or adverse remarks may also be given.

 

QUESTIONS COMMENTS
I. Assets

 

1. Cash

a)      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?

 

The branch cash retention limit is Rs. 5.00 Lacs. However it is crossed many times. It is suggested that cash retention limit is very low keeping in view volume of business so it should suitably be increased.

b)      Does the branch hold adequate insurance cover for cash-on-hand and cash-in-transit?

No Insurance policy for Cash in Hand or Transit is shown to us at branch.. We were informed that insurance is arranged at H.O
c)      Is cash maintained in effective joint custody of two or more officials, as per the instructions of the controlling authorities of the bank? Yes the cash is maintained in the effective joint custody of two officials as per the instructions of the controlling authority.
d)     Have the cash balances at the branch been checked at periodic intervals as per the procedure prescribed by the controlling authorities of the bank? Yes, the cash balance at the branch has been checked at  periodic intervals prescribed by the controlling authorities.

2.BALANCES WITH RESERVE BANK OF INDIA, STATE BANK OF INDIA AND OTHER BANKS

a)       Were 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. NOT APPLICABLE
b)      Your observations on the reconciliation statements may be reported in the following manner NOT APPLICABLE
(i)                 Cash transactions remaining unresponded(give details) NOT APPLICABLE
(ii)    Revenue  items requiring adjustment/write-off(give details) NOT APPLICABLE
(iii)Old outstanding balances remaining unexplained / unadjusted.  Give details for

-outstanding between six months and one year; and

-one year and above

NOT APPLICABLE
c)      In case any item deserves  special attention of the management, the same may be reported NOT APPLICABLE
3.MONEY AT CALL AND SHORT NOTICE
Has the branch kept money-at-call and short notice during the year?  If so, whether instructions / guidelines, if any, laid down by the controlling authorities of the bank have been complied with? NOT APPLICABLE AT BRANCH
4.INVESTMENTS

(A) For Branches in India

a)      Are there any investments held by branches on behalf of head office/other offices of the bank?  If so, whether these have been made available for physical verification or evidences have been produced with regard to the same where these are not in possession of the branch? No investment held by Branch on behalf of Head Office
b)      Whether any amounts received as income on such investments have been reported to the Head Office? Not applicable
c)      In respect of investments held by branches on behalf of head office/other offices of the bank whether any income is accrued/received and recognized as income of the branch contrary to the instructions of the controlling authorities of the bank? Not applicable
d)     Whether there are any matured or overdue investments which have not been encashed?  If so, give details Not applicable
e)      Whether the guidelines of the Reserve Bank of India regarding transactions in securities have been complied with? Not applicable
f)       Whether the guidelines of the Reserve Bank of India regarding valuation of investments have been complied with? Not applicable
(B) For Branches Outside India

 

 
a)      In respect of purchase and sale of investments, has the branch acted within its delegated authority, having regard to the instructions/guidelines in this behalf issued by the controlling authorities of the bank? Not applicable
b)      Have the investments held by the branch whether on its own account or on behalf of the Head Office/other branches been made available for physical verification? Where the investments are not in the possession of the branch, whether evidence with regard to their physical verification have been produced? Not applicable
c)      Is the mode of valuation of investments in accordance with the RBI guidelines or the norms prescribed by the relevant regulatory authority of the country in which the branch is located whichever are more stringent? Not applicable
d)     Whether there are any matured or overdue investments which have not been encashed? If so, give details Not applicable
5. ADVANCES
(The answers to the following questions may be based on the auditor’s examination of all large advances and a test check of other advances.  In respect of large advances, all cases of major adverse features, deficiencies, etc., Should be reported.  In respect of other advances, the auditor may comment upon the relevant aspects generally, along with instances of situations giving rise to his reservations or adverse remarks.  For this purpose large advances are those in respect of which the outstanding amount is in excess of 5% of the aggregate advance of the branch or Rs.2 crores, whichever is less).
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. Yes, the branch has generally complied with the procedure/instruction of the controlling authority regarding loan applications, preparation of proposals for grant / renewal of advances, enhancement of limits, etc.
b)      SANCTIONING/DISBURSEMENT
i)                    In the cases examined by you, have you come across instances of credit facilities having been sanctioned beyond the delegated authority or limit fixed for the branch?Are such cases promptly reported to higher authorities? No, we have not come across any case in which the limit has been sanctioned beyond the delegated authority.
ii)                  In the cases examined by you, have you come across instances where advances have been disbursed without complying with the terms and conditions of the sanction?  If so, give details of such cases. No, we have not come across instances where advances have been disbursed without complying with the terms and conditions of the sanction.
c)      DOCUMENTATION
i)                    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?  If so, give details of such cases. No, we have not come across instances of credit facilities released by the  branch without execution of all the necessary documents.
ii)                  In respect of advances examined by you, have you come across instances of deficiencies in documentation, non-registration of charges, non-obtaining of guarantees, etc., If so, give details of such cases. Yes, we have examined the advances and in some cases we have found some discrepancies which are discussed separately in Annexure 1.
iii)                Whether advances against lien of deposits have been properly granted by marking a lien on the deposit in accordance with the guidelines of the controlling authorities of the bank Lien on the deposits is checked in computer in few cases and found marked.
d)   REVIEW/MONITORING/SUPERVISION
i)  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 over due for review/ renewal.

-between 6months and 1year, and

-over 1 year

Almost all the cases checked by us were reviewed however except the cases refered in annexure 1 the quality of Some review was not up to mark.
ii)   Are the stock/book debt statements and other periodic operational data and financial statements, etc., Received regularly from the borrowers and duly scrutinized?

Is suitable action taken on the basis of such scrutiny in appropriate cases?

Following deficiencies were noticed in stock statements.:  (Annexure 2 attached)

  1. In all the  cases we observed that creditors were not deducted in calculation of DP Few Parties are not regular in submitting stock statements.
  2. Some Stock statements are not checked and signed by the credit officer.
iii)    Whether there exists a system of obtaining reports on stock audits periodically?  If so, whether the branch has compiled with such system? There was no case in which stock Audit was carried out
iv)    Indicate the cases of advances to non-corporate entities with limits beyond Rs.10 lakhs where the branch has not obtained the accounts of borrowers, duly audited under the RBI guidelines with regard to compulsory audit or under any other statute. No Such Case Found
v)      Has the inspection or physical verification of securities charged to the bank been carried out by the branch as per the procedure laid down by the controlling authorities of the bank? Yes
vi)    In respect of advances examined by you, have you come across cases of deficiencies in value of securities and inspection thereof or any other adverse features such as frequent/unauthorized over drawing beyond limits, inadequate insurance coverage,etc.,? As per Annexure 3
vii)  In respect of leasing finance activities, has the branch complied with the guidelines issued by the controlling authorities of the bank relating to security creation, asset inspection, insurance, etc.,?  Has the branch complied with the accounting norms prescribed by the controlling authorities of the bank relating to such leasing activities? There was no such account.
viii)   Are credit card dues recovered promptly? Not Applicable
ix)          Has the branch identified and classified advances into standard/sub-standard/doubtful/loss assets in line with the norms prescribed by the Reserve Bank of India? Yes the branch has been identified and classified advances into standard / sub standard / doubtful / loss assets in line with the norms prescribed by the Reserve Bank of India.
x)            Where the auditor disagrees with branch classification of advances into standard/sub-standard/doubtful/loss assets, the details of such advances with reasons should be given.  Also indicate whether suitable changes have incorporated/suggested in the memorandum of changes. There is no such instance where we disagree with the branch on the classification of advances into standard / sub standard / doubtful / loss assets.
xi)          Have you come across cases where the relevant controlling authority of the bank has authorised legal action for recovery of advances or recalling of advances but no such action was taken by the branch?  If so, give details of such cases. We have not come across cases where the relevant Controlling Authority of the bank has authorized legal action for recovery of advances or recalling of advances but no such action was taken by the branch.
xii)        Have all non-performing advances been promptly reported to the relevant controlling authority of the bank?  Also state whether any rehabilitation programme in respect of such advances has been undertaken, and if so, the status of such programme. Yes, there is a proper system at the branch of reporting the non-performing advances been promptly reported to the relevant Controlling Authority of the Bank.
xiii)      Have appropriate claims for DICGC and export credit guarantee/insurance and subsidies, if any, been duly lodged and settled? The status of pending claims giving year wise break-up of number and amounts involved should be given in the following format. There is no claim under DICGC claim pending at the branch.
PARTICULARS Number            Amount(Rs.)
CLAIMS AS AT THE BEGINNING OF THE YEAR

(GIVE YEAR WISE DETAILS)

NIL                              NIL
FURTHER CLAIMS LODGED DURING THE YEAR

In all the cases of NPA accounts, the property mortgaged under the loan is properly valued by the valuer.

TOTAL A
AMOUNT REPRESENTING:
(a)        CLAIMS ACCEPTED/SETTLED (GIVE YEAR WISE DETAILS)
(b)        CLAIMS REJECTED  (GIVE YEAR WISE DETAILS)
TOTAL B
BALANCE AS AT THE YEAR END

(GIVE YEAR-WISE DETAILS)

A-B
xiv)      In respect of non-performing assets, has the branch obtained valuation reports from approved valuers for the fixed assets charged to the bank, once in three years, unless the circumstances warrant a shorter duration?
xv)        In the cases examined by you has the branch complied with the recovery policy prescribed by the controlling authorities of the bank with respect to compromises/settlement and write-off cases?  Details of the cases of compromises / settlement and write-off cases involving write-offs / waivers in excess of Rs.50.00 lakhs may be given Yes, the branch has made vigorous efforts in recovering the money in NPA accounts.
xvi)      List of major deficiencies in credit review, monitoring and supervision No major deficiency in credit review, monitoring and supervision observed and noticed by us.
e)      GUARANTEES AND LETTERS OF CREDIT
i)                    Details of outstanding amount of guarantees invoked and funded by the Branch at the end of the year may be obtained from the management and reported in the following format:
Guarantees invoked, paid but not adjusted:

Sr.N. Date of Invocation Name of the Party Name of Beneficiary Amount Date of Recovery Re-mark

NIL

(b) Guarantees invoked, but not Paid:

Sr.

No.

Date of Invocation Name of the Party Name of Beneficiary Amount Date of Recovery Remark

 

             

              NIL

 

(c)        Details of the outstanding amount 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:

 

Sr.

No.

Date of Funding Name of the Party Nature(LC/

Co-acceptance,etc.)

Amount Date of Recovery Remark

 

             

NIL

6. OTHER ASSETS
a)          STATIONERY AND STAMPS
i)          Does the system of the bank ensure adequate internal control over issue and custody of stationeryany comprising security items (term deposit receipts, drafts, pay orders, cheque books, traveller’s cheques, gift cheques, etc)? Whether the system is being followed by the branch? Yes, bank ensure adequate internal control over issue and custody of stationery comprising of security items (Term Deposits Receipts, Drafts, Pay Orders, Cheque Books, Travellers’ cheques, Gift Cheques, etc.
ii)        Have you come across cases of missing/lost items of such stationery? We have not come across cases of missing / lost items of such stationery.
b)         SUSPENSE ACCOUNTS/ SUNDRY ASSETS
i)                      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 sub-heads reveal balances, which in your opinion are not recoverable and would require a provision/write-off?  If so,  give details in the following format: Yes, the bank ensures expeditious clearance of items debited to Suspense Account. There is No Outstanding in suspence account.
Year
Amount Rs.
Remarks
ii)                  Does your test check indicate any unusual items in these accounts?  If so, report their nature and the amounts involved. NIL
II. LIABILITIES
1. DEPOSITS
i)       Have the controlling authorities of the bank laid down any guidelines with respect to conduct and operations of inoperative accounts? In the cases examined by you, have you come across instances where the guidelines laid down in this regard have not been followed?  If yes, give details thereof. There is a proper system of identifying inoperative accounts and the guidelines laid down are properly complied with.
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 the aggregate deposits held at the year-end?  If so, obtain the clarifications from the management and give your comments thereon. No such movements were detected.
iii)   Are there any overdue/ matured term deposits at the end of the year?  If so, amounts thereof should be indicated. Overdue/matured deposits are automatically renewed.
2. OTHER LIABILITIES –  BILLS PAYABLE, SUNDRY DEPOSITS,ETC.,
i)       The number of items and the aggregate amount of old outstanding items pending for three years or more may be obtained from the branch and reported under appropriate heads.  Does the scrutiny of the accounts under various sub-heads reveal old balances?  If so, give details in the following format: NIL
Year
No of items
Amount Rs.
Remarks
ii)     Does your test check indicate any unusual items or material withdrawals of debits in these accounts?  If so, report their nature and the amounts involved. NIL
3. CONTINGENT LIABILITIES
List of major items of the contingent liabilities (other than constituent’s liabilities such as guarantees, letters of credit, acceptances, endorsements, etc.) Not acknowledged by the branch? We have not come across any such case.
III. PROFIT AND LOSS ACCOUNT
1.      Whether the branch has a system to compute discrepancies in interest/discount and for timely adjustment thereof in accordance with the guidelines laid down in this regard by the controlling authorities of the bank?  Has the test checking of interest revealed excess/short credit of a material amount? If so, give details thereof. The branch has a system to compute discrepancies in interest / discount and for timely adjustment thereof in accordance with the guidelines laid down in this regard by the controlling authorities of the Bank . The test checking of interest has not revealed excess / short credit of a material amount
2.      Has the branch complied with the income recognition norms prescribed by RBI? Yes, the branch complied with the Income Recognition norms prescribed by RBI.
3.      Whether the branch has a system to compute discrepancies in interest on deposits and for timely adjustment of such discrepancies in accordance with the guidelines laid-down in this regard by the controlling authorities of the bank?  Has the test check of interest on deposits revealed any excess/short debit of material amount?  If so, give details thereof. Yes, the branch has a system to compute discrepancies in interest on deposits and for timely adjustment of such discrepancies in accordance with the guidelines.
4.      Does the bank have a system of estimating and providing interest accrued on overdue/matured term deposits? Yes, dealt with at Head office.
5.      Are there any divergent trends in major items of income and expenditure, which are not satisfactorily explained by the branch?  If so, the same may be reported upon.  For this purpose, an appropriate statement may be obtained from the branch management explaining the divergent trends in major items of income and expenditure.
There are no major divergent trends in major items of income and expenditure as compared to the figures of the last year.
IV.GENERAL
1.BOOKS AND RECORDS
a)      In case any books of accounts are maintained manually, does general scrutiny thereof indicates whether they have been properly maintained, with balances duly inked out and authenticated by the authorised signatories? NO
b)      In respect of Computerised branches:
–       Whether hard copies of accounts are printed regularly? There is no procedure in the branch to print the hard copies of the account.
–       Indicate the extent of computerization and the areas of operation covered. Entire branch is computerized.

–       Are the access and data security measures and other internal controls adequate? Yes.

–       Whether regular back-ups of accounts and off-site storage are maintained as per the guidelines of the controlling authorities of the bank? Since the branch us under CBS system, hence this requiremnet is not applicable.

–       Whether adequate contingency and disaster recovery plans are in place for loss/encryption of data? There is adquate recovery plan in case of

loss/ encryption of data

–       Do you have any suggestions for the improvement in the system with regard to Computerised operation of the branch?
NIL
2. RECONCILIATION OF CONTROL AND SUBSIDIARY RECORDS
Have the figures, as at the year end, in the control and subsidiary records been reconciled? If not, the last date upto which such figures have been reconciled should be given under the respective heads, preferably in the following format Yes all accounts are reconciled.
A/C NIL
Date NIL
General ledger balance (Rs.) NIL
Subsidiary balance (Rs.) NIL
Last date on which balanced NIL
3. INTER BRANCH ACCOUNTS
i)                    Does the branch forward on a daily basis to a designated cell/head office, a statement of debit/credit transactions in relation to other branches? YES
ii)                  Does a check of the balance in the head office account as shown in the said statement during and as at the year-end reveal that the same is in agreement with the head office account in the general ledger? There is a automatic reconciliation at the Head Office level and the branch is nothing to report to the HO.
iii)                Are there any outstanding debits in the head office account in respect of inter – branch transactions? NOT APPLICABLE
iv)                Does the branch expeditiously comply with respond to the communications from the designated cell/head office as regards unmatched transactions?  As at the year-end are there any unresponded / uncomplied queries or communications?  If so, give details At present there is no such procedure of informing unmatched transactions to the Head Office. This entire exercise is done at the HO level.
v)                  Have you come across items of double responses in the head office account?  If so, give details. NOT APPLICABLE
vi)                Are there any old/ large outstanding transactions/ entries at debts as at year end which remain unexplained in the accounts relatable to inter-branch adjustments?
NOT APPLICABLE
4. AUDITS/INSPECTIONS

 

i)                    Is the branch covered by concurrent audit or any other audit inspection during the year? Inspection Carried out on 06.02.2015
ii)                  In framing your audit report, have you considered the major adverse comments arising out of the latest reports of the previous auditors, concurrent auditors, stock auditors, or internal auditors or in the special audit report or in the inspection report of the Reserve Bank of India?  State the various adverse features persisting in the branch, though brought out in these audit /inspection reports. No Concurrent audit, Stock audit, Inspection, Internal Audit, RBI audit is carried out at branch.
5. FRAUDS

 

 
i)                    Furnish particulars of frauds discovered during the year under audit at the branch, together with your suggestions.  If any, to minimise the possibilities of their occurrence.

ii)                  Comments on status of compliance of Gosh committee recommendations.

No Case of Fraud
6. MISCELLANEOUS
i)                    Does the examination of the accounts indicate possible window dressing? There is no window dressing.
ii)                  Does the branch maintain records of all the fixed assets acquired and held by it irrespective of whether the values thereof depreciation thereon have been centralized?  Where documents of title in relation to branch or other branches are available at the branch, whether same have been verified Yes the branch has record of all the fixed asset.
iii)                Is the branch in compliance with Anti Money Laundering Laws Yes
iv)                Is the branch in compliance with Know Your Customer (KYC) Norms    Yes
v)                  Are there any other matter, which you as a branch auditor would like to bring to the notice of the management or the Central Statutory Auditors?

               

For M/s..

                                                                                                Chartered Accountants

 

                                                                                                    

      

Date:-

Place:-

 

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