Lok Sabha Question No. 6483 (UNSTARRED), answered on 2018-04-06
Subject: Appointment of Statutory Auditors
Ministry: FINANCE
Asked by: KAUSHALENDRA KUMAR

## GOVERNMENT  OF INDIA

## LOK SABHA

## MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

## UNSTARRED QUESTION NO. 6483

## TO BE ANSWERED ON THE 6 TH  APRIL 2018/ CHAITRA  16, 1940  (SAKA) Appointment  of Statutory  Auditors

## 6483.  SHRI KAUSHALENDRA  KUMAR:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the banks  are appointing  auditors  in the month  of March  ending  of the financial  year,  if so, the details   thereof   and  the  reasons   therefor   along   with   the  number   of  auditors appointed   in  March during   the financial  year  2017-18;
- (b) whether   branch   auditors are  supposed  to  generate   their   reports   and  cover   full   year   transactions   for checking  the records in  the branches  or there  is any  limit  imposed,  if so, the details  thereof;
- (c) whether  there  are any  regulations  for newly  appointed  auditors  to obtain  No Objection  Certificate  from previous  auditors  of the branch  before accepting  the appointment, if so, the details  thereof  and the compliance in this  regard;  and
- (d) whether   any   disciplinary action   has  been  taken   by   the  Government   against   the  auditors for  noncompliance  and if so, the details  thereof?

## ANSWER

The Minister  of State in the Ministry  of Finance (SHRI SHIV PRATAP  SHUKLA)

- (a): As per Reserve  Bank  of India (RBI) inputs,  Statutory Central  Auditors  (SCAs)  of Public  Sector  Banks  (PSBs) are  generally   appointed   in  the  third   quarter   of  a  financial   year   (October   to  December)   whereas   SCAs   and Statutory  Branch  Auditors  (SBAs) of Private  Banks and Foreign  Banks are appointed  by  the banks  throughout the  year.   RBI  approves   eligible   SCAs/SBAs   of  Private   Sector   Banks,   and  SCAs   of  Foreign   Banks   as  per  the timeline  for regulatory approval.RBI  has apprised  that  PSBs appoint  SBAs in the month  of March  since the final panel  of  eligible   audit   firms   is  received   by   RBI  from   the  Institute   of  Chartered   Accountants   of  India  in  the month   of  February/March of  every   year.   RBI  has  further   apprised   that   the  number   of  SBAs  approved   for appointment  to PSBs by RBI in March 2018 (for audit  of branches  for the Financial  Year  2017-18) is 18,672 firms.
- (c):  RBI  has  apprised   that   there   is  no  regulation   by   RBI  mandating   newly   appointed   auditors to  obtain   No Objection  Certificate  from  previous  auditors of  a branch  before accepting  the appointment.
- (b): RBI has informed  that  Statutory  Branch  Auditors  are expected  to certify  the financial  statements  of branches pertaining  to the entire  financial  year.  Auditors  are expected  to select appropriate  sample  size for branch  audit  in accordance  with  Standard  on Auditing  issued by  the Institute  of Chartered  Accountants  of India.
- (d): RBI has informed  that  it debars audit  firms  from  bank  statutory  audit  assignments/issues  cautionary advice to  audit   firms   for  lapses  in  bank   audit   assignments,   such  as  divergence   observed   in  asset  classification   and provisioning   observed   between   RBI's  assessment  during   inspection vis-à-vis audited   financial   statements,   any other   material   misstatement   in  audited   financial   statements,   issues  related   to  corruption and  professional misconduct  etc. RBI also debars audit  firms,  who  have been blacklisted  by  Government  agencies such as Office of  the  Controller &  Audit   General,   Central   Bureau   of  Investigation,   Central   Vigilance   Commission, etc.  for various  reasons.