The Reserve Bank of India in consultation with the ICAI appoints qualified Chartered Accountants as Statutory Auditors of the banks. The auditor appointed as statutory auditor of a bank branch shall conduct the audit at the end of the financial year i.e.as of 31st March of the relevant year. Nowadays, the bank branches are working in a fully automized atmosphere, therefore, auditors are required to verify the parameters set in the system, the logic of programming, etc. Since Income Tax rules are subject to frequent changes, unauthorized change or input of wrong parameters may lead to wrong calculation of income or expenses such as short debit of interest/ commission on advances and excess credit of interest on deposits. Whenever discrepancies are noticed by the auditor, he has to determine whether the discrepancies noticed are intentional or by error. More so auditor has to check whether the recurrence of such discrepancies is general or in respect of specific clients. Therefore, the auditors should concentrate more on the master data entered and validated at the branch and verify the compliance as per the latest tax regulations.
The statutory auditor of the bank shall check all the tax-related items and compliance of income tax rules. The key elements to be checked by the auditor are as under.
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