Others
This is the residual heading, which will include items not specifically covered under other sub-heads, e.g., claims which have not been received, debit items representing additions to assets or reductions in liabilities which have not been adjusted for technical reasons or want of particulars, etc., receivables on account of government business, prepaid expenses, Accrued income other than interest (e.g., dividend declared but not received) may also be included under this head. The audit procedures relating to some of the major items included under this head are discussed below.
Non-Interest Bearing Staff Advances
The auditor should examine non-interest bearing staff advances with reference to the relevant documentation and the bank’s policy in this regard.The availability, enforce ability and valuation of security, if any, should also be examined. It needs to be examined whether the same relates to employees on the roll of the bank on the date of the preparation of financial statements.
Security Deposits
Security deposits with various authorities (e.g., on account of telephone, electricity, etc.,) and with others (e.g., deposits in respect of premises taken on rent) should be examined with reference to documents containing relevant terms and conditions, and receipts obtained from the parties concerned. The auditor should verify that the deposits have not become due as per the terms and conditions. If it is so, then the recover ability of the same needs to be looked into in detail and appropriate provision should be suggested against the amount where recovery is in doubt.
The auditor, based on the materiality, should send independent balance confirmation for security deposit at period end and should document the reason in the case of any differences. Verification of all security deposits given during the year should be conducted and that of older deposits can be done on a test check basis.
Suspense Account
‘Suspense’ account is another item included under ‘other assets’. Ideally, where accounts are maintained properly and on a timely basis, the suspense account may not arise. However, in a practical situation, suspense account is often used to temporarily record certain items such as the following:
(i) amounts temporarily recorded under this head till determination of the precise nature thereof or pending transfer thereof to the appropriate head of account;
(ii) debit balances arising from payment of interest warrants/ dividend warrants pending reconciliation of amounts deposited by the company concerned with the bank and the payment made by various branches on this account;
(iii) amounts of losses on account of frauds awaiting adjustment.
The auditor should pay special attention to any unusual items in suspense account since these are prone to fraud risk. The auditor should obtain the management policy for provision/write off for old outstanding items. He should obtain from the management, details of old outstanding entries/age wise balances along with narrations in suspense account. The auditor should also verify the reasons for such delay in adjusting the entries. Where the outstanding balances comprised in suspense account require a provision/write off, the auditor should examine whether the necessary provision has been made/written off. All items of more than 6 months in suspense accounts need special attention of the auditor. The auditor has to certify that all the suspense account entries through a separate certificate in the annual closing sets.
Prepaid Expenses
The auditor should verify prepaid expenses in the same manner as in the case of other entities. The auditor should examine whether the basis of allocation of expenditure to different periods is reasonable. The auditor should particularly examine whether the allocation of discounting and rediscounting charges paid by the bank to different accounting periods is in consonance with the accounting policy followed for the bank as a whole. Miscellaneous Debit Balances on Government Account
Miscellaneous debit balances on government account in respect of pension, public provident funds, compulsory deposit scheme payments, etc., for which the branch obtains reimbursement from the government through adesignated branch, are also included under the head ‘others’. In many cases, the accounting for this is outside the core banking solution and needs the special attention of the auditor. The auditor should review the ageing statements pertaining to these items. He should particularly examine the recoverability of old outstanding items. The auditor should also examine whether claims for reimbursement have been lodged by the branch in accordance with the relevant guidelines, terms and conditions. The net balances of the amount recoverable at the Head Office level should also be taken along with the age-wise analysis of the same. In case of old outstanding balances without any confirmation or proper justification of the same, should be provided for /written off as the case may be in the accounts.
The residual item of “Others” in “Other Assets” generally constitutes a significant amount in the Balance Sheet of the bank. The Head Office auditors should obtain the head wise details of the same along with the previous year figures. The age-wise details of the major outstanding should also be obtained. Further, the major variance as compared to the previous year figures should also be enquired into and reasons for the same should be recorded and reviewed. In case any amount seems doubtful of recovery, appropriate provisions against the same should be made.