Bank and Financial Institution Act 2073

Chapter-9 Provisions on Accounts, Records, Details and Reporting

Section 66: Functions, Duties and Powers of Auditor
1) The functions, duties and powers of the auditor shall be as follows:-
(a) To conduct auditing of accounts and financial statements,
(b) To prepare an audit report by including audited accounts, balance sheet, and profit and loss accounts and to produce it before the Board of Directors of the bank or financial institution,
(c) If it is found that there are irregularities committed in the activities of the bank or financial institution or works are not being carried out in the appropriate manner, and such matters will cause harm or loss to the bank or financial institution, to inform the same to the Board of Directors,
(d) To inform the Rastra Bank if any of the following situations are likely to emerge:-
(1) Violation of the terms and conditions as prescribed by the Rastra Bank during the issuance of the license or this Act or Rules, Byelaws, Directives framed under this Act,
(2) To cause adverse effect on regular activities of the bank or financial institution,
(3) To prohibit the auditor from submitting the audit report or asking to prepare a false audit report.
2) The auditor shall have the power to inspect all documents concerning accounts, including ledger, books, accounts, vouchers, and goods, at any time. The auditor may seek answers or explanations from a Director or official of a bank or financial institution on matters required by him/her in the course of performing his/her duties and carrying out his/her functions in an appropriate manner.
3) The auditor shall have to include the following matters in his/her report clearly:-
(a) Whether or not replies to the queries as per the demand were provided,
(b) Whether or not the balance sheet, off-balance sheet transactions, profit and loss account, cash flow statement and other financial statements, as well, have been prepared in such format and in accordance with such procedures as prescribed by the Rastra Bank, and whether or not they actually matched with the accounts, records, books and ledgers maintained by the bank and financial institution,
(c) Whether or not the accounts, records, books and ledgers have been maintained accurately in accordance with prevailing laws,
(d) Whether or not any official of the bank or financial institution has committed any act contrary to the prevailing laws, committed any irregularity, or caused any loss or damage to the bank or financial institution,
(e) Whether or not credits have been written off as per the Credit Write off By-laws or directives of the Rastra Bank,
(f) Whether or not the transactions of the bank or financial institution have been carried on in a satisfactory manner as prescribed by the Rastra Bank,
(g) Matters to be informed to the shareholders,
(h) Matters prescribed by the prevailing laws and other matters as prescribed by the Rastra Bank to be mentioned in the audit report by the auditor,
(i) Other suggestions which the auditor deems necessary to be furnished.
4) Upon receipt of the audit report, the Rastra Bank may order the auditor of the bank or financial institution to carry out the following additional functions:-
(a) To submit additional information as required by the Rastra Bank concerning auditing,
(b) To make more expand the areas of auditing of the bank or financial institution or its subsidiary company,
(c) To carry out other tests as recommended to the bank or financial institution or as required by the Rastra Bank in any particular subject.