How revenue audit carried out in Banks?

Revenue audit of a bank branches is the audit of items governing income & expenditure of banks.The audit is conducted with a view to verify the accuracy, relevance of expenditure incurred & Incomes earned by the banks according to applicable latest notification and circulars. The audit is entrusted to a Charted Accountant who has to concentrate on the areas which affect revenue items of the bank. The auditor is required to carry out the audit for a specific period as per engagement letter given by head office of the bank along with file & query sheet formats, and circulars provided by the bank.

List of areas to be covered by the Revenue Auditor are as under:

Interest and commission incomes are the bread and butter of the bank. The auditor shall verify that whether the interest is charged in accordance with the latest circulars of RBI on a selective basis. Further, he shall see the special sanctions interest is charged according to the sanction letter. Whenever interest rates are revised he has to check that the revised interest rates are properly applied in the system from the relevant date of applicability. Further, overdue installments, the overdrawn amount exceeding drawing power, and on late submission of the stock statement are properly charged to the customer as per the bank’s circular to be verified. He has to scrutinize the interest charged or commission/discount/exchange collected on cheque purchase, ‘bills purchase’,’ bills discount’, and ‘bills negotiation’ etc, which are calculated according to charges specified by the bank in its circular.   

The Auditor may also ask the branch to make available and scrutinize all the Cash Credit/overdraft accounts of the branch, top 10 Saving Accounts, top 10 Current Accounts, top 10 depositors of the bank, Overdue Advances in Audit Period, List of NPA Accounts of the branch of recoveries made during audit period against them, as per engagement letter given by the head office of the bank. Any discrepancy noted in the above calculations will be noted in query sheets in a proper format.