Page 224 - DCOM509_ADVANCED_AUDITING

Unit 12: Special Features of Audit

Notes
3. The returns received from the branches and offices of the Bank as supplemented
with the information furnished by the Management, have been found adequate for
the purpose of our audit.
In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply
with the applicable accounting standards.
Without qualifying our opinion, we draw attention to Note 9.2 of Schedule 18 to the
financial statements, which describes deferment of pension and gratuity liability of the
bank to the extent of 587.53 crore pursuant to the exemption granted by the Reserve Bank
of India to the Public Sector Banks from application of the provisions of Accounting
Standard (AS) 15, Employee Benefits, vide its circular no. DBOD.BPBC/80/21.04.018/2010-
11 dt.09.02.2011 on Reopening of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits - Prudential Regulatory Treatment.
In our opinion, as shown by books of bank, and to the best of our information and
according to the explanations given to us:

1. The Balance Sheet read together with Significant Accounting Policies and Notes
thereon is a full and fair Balance Sheet containing all the necessary particulars and is
properly drawn up so as to exhibit a true and fair view of state of affairs of the Bank
as at 31st March 2012 in conformity with accounting principles generally accepted in
India.

2. The Profit and Loss Account read with the Significant Accounting Policies and notes
thereon shows a true balance of the Profit for the year covered by the account in
conformity with accounting principles generally accepted in India.

3. The Cash Flow Statement gives a true and fair view of the cash flows for the year
ended on that date.

Source: http://smartinvestor.business-standard.com/company/audrpt-6061-Indian_Bank.htm

Self Assessment

Fill in the blanks:
5. A banking company requires maintaining the books of account in accordance with section
209 of the Companies Act ........................................
6. The financial position of a bank is depended on the condition of assets, loan, investment,
cash balanced and those of its ........................................

12.3 Audit of Non-Banking Financial Companies

Non-Banking Financial Companies (NBFCs) have been the subject of focussed attention during
the nineties. In particular, the rapid growth of NBFCs, especially in the nineties, has led to a
gradual blurring of dividing lines between banks and NBFCs, with the exception of the exclusive
privilege that commercial banks exercise in the issuance of cheques. Owing to certain disquieting
developments in the NBFC sector, the RBI Act was amended in 1997, providing for a
comprehensive regulatory framework for NBFCs. The RBI (Amendment) Act, 1997 provides for
compulsory registration with the Reserve Bank of all NBFCs, irrespective of their holding of
public deposits, for commencing and carrying on business, minimum entry point norms,
maintenance of a portion of deposits in liquid assets, creation of Reserve Fund and transfer of
20 per cent of profit after tax annually to the Fund. The Amendment Act also conferred powers
on Reserve Bank to issue directions to companies and its auditors, prohibit deposit acceptance
and alienation of assets by companies and effect winding up of companies.

LOVELY PROFESSIONAL UNIVERSITY 219