Audit Approach
The SBAs may verify the contents of certificates to be issued at branch level. All the Returns submitted by branch to various higher authorities of the respective bank and also to various authorities of the regulators as per the Master Directions dated 01.07.2016 shall be verified. Branch Auditors should ensure the correctness of financial implication caused due to such frauds and confirm that the adequate provision for the same has been effected.
SCAs of the bank may verify the compilation of all such reports received from SBAs regarding the frauds and check whether adequate provision for the same is effected at Head Office. SCAs should also verify the returns submitted by the bank to regulators regarding such frauds during the year under audit.
SCAs may verify the methodology used by the bank in reporting of such frauds from branches to regional / zonal / circle offices and to head office. SCAs shall verify the existence of internal control mechanism in place to ensure completeness and correctness of such reporting and classification of frauds in the bank.
SCAs may also check the reporting and classifications of frauds at the Head Office level, where the cases other than those reported through reports SBAs are considered.
SCAs may also check that the Board of Directors and Audit Committee of bank are being regularly updated with reporting and classification on frauds throughout the year under audit.