Long Form Audit Report
The auditor has to comment on various specific issues as mentioned in the Long Form Audit Report of the bank. While evaluating the efficacy of internal controls over advances, the auditor should particularly examine those aspects on which he is required to comment in his long form audit report. Thus, he should examine, inter alia, whether the loan applications are complete and in prescribed form; procedural instructions regarding grant/ renewal/enhancement of facilities have been complied with; sanctions are within delegated authority and disbursements are as per terms of the sanction; documentation is complete; and supervision is timely, effective and as per prescribed guidelines. The auditor can gather the requisite evidence by examining relevant documents (such as loan application forms, supporting documentation, sanctions, security documents, etc.) and by obtaining information and explanations from the branch management in appropriate cases. The detailed directives / guidance with regard to such issues are given in a separate Chapter on Long Form Audit Report. The auditors must familiarise themselves with those issues and guidance relating to the same and should cover the same during the regular course of audit of advances.
Observations relating to procedural significance should be mentioned in LFAR. Please note that the whole bank LFAR gets finalised within 60 days of signing of financial statements. Hence during finalisation CSA predominantly concentrates on main audit report submitted by the branch auditor. Any observation that requires to be dealt with during finalisation may miss the attention of CSA if the same is mentioned in LFAR alone. Such observations that need to be dealt with for finalisation of the banks financial statements should find place in main audit report along with appropriate MOC, if required.