Relationship among Joint Auditors :
Public sector banks in India as well as some private sector banks appoint more than one firm as statutory auditors. There is also a rotation policy in
place. The joint auditors should mutually decide and divide the audit work amongst themselves so as to ensure equitable distribution of work. This is usually done so in consultation with the management. The division of work as well as the areas of work to be covered by all of them should be approved by all, adequately documented and communicated to the management and in case of public sector banks, communicated to RBI also. With all banks on CBS platform and with the level of automation, the division of work is usually done based on various departments at the HO, like Treasury, central accounts, etc. or geographical areas. However certain areas of work, owing to their nature or importance would often not be divided and would be covered by all the joint auditors.
As per Standard on Auditing (SA) 299, “Responsibility of Joint Auditors”, in respect of audit work divided, each joint auditor is responsible only for the work allocated to him, whether or not he has prepared a separate report on the work performed by him. On the other hand, all the joint auditors are jointly and severally responsible –
in respect of the audit work which is not divided among the joint auditors and is carried out by all of them;
in respect of decisions taken by all the joint auditors concerning the nature, timing or extent of the audit procedures to be performed by any of the joint auditors. It may, however, be clarified that all the joint auditors are responsible only in respect of the appropriateness of the decisions
concerning the nature, timing or extent of the audit procedures agreed upon among them; proper execution of these audit procedures is the separate and specific responsibility of the joint auditor concerned;
in respect of matters which are brought to the notice of the joint auditors by any one of them and on which there is an agreement among the joint auditors;
for examining that the financial statements of the entity comply with the disclosure requirements of the relevant statute; and
for ensuring that the audit report complies with the requirements of the relevant statute.
It is the responsibility of each joint auditor to determine the nature, timing and extent of audit procedures to be applied in relation to the area of work allocated to him. The issues such as appropriateness of using test checks or sampling should be decided by each joint auditor in relation to his own area of work. This responsibility is not shared by the other joint auditors. Thus, it is the separate and specific responsibility of each joint auditor to study and evaluate the prevailing system of internal control relating to the work allocated to him. Similarly, the nature, timing and extent of the enquiries to be made in the course of audit as well as the other audit procedures to be applied are solely the responsibility of each joint auditor.
In the case of audit of large banks with several branches, including those required to be audited by branch auditors, the branch audit reports/returns may be required to be scrutinised by different joint auditors in accordance with the allocation of work. In such cases, it is the specific and separate responsibility of each joint auditor to review the audit reports/returns of the branches allocated to him and to ensure that they are properly incorporated into the accounts of the entity. In case of a Bank having foreign branches, the SCA should review the completeness and accuracy of information obtained by the Bank from its foreign branches and the auditors of such branches.
There may be a situation, where foreign branches are located in jurisdictions, where the local law, does not mandatorily require such branch to be audited. Bank managements may in such case, voluntarily get the branch audited. The auditor should accordingly consider the status of the branch i.e., audited or unaudited while reporting on the financial statements of the bank.
Generally, the joint auditors may arrive at an agreed report. However, where the joint auditors are in disagreement with regard to any matters to be covered by the report, each one of them should express his own opinion through a separate report. A joint auditor is not bound by the views of the majority of the joint auditors regarding matters to be covered in the report and should express his opinion in a separate report in case of a disagreement.