Wednesday, January 26, 2011

MOC - Memorandum of Changes

MEMORANDUM OF CHANGES, more often referred to as MOC is an important document enclosed with the Bank Audit Report whenever the Auditor observes significant issues effecting the Financial Statements of the Bank. Usually, in case of other entities, first the accounts are audited and then the financial statements are drawn up adhering to all the regulatory principles as formulated by the laws of the land. Whereas in case of Banks, audit report is sent after the internal authorities have drawn up the final accounts which are already sent for compilation at Zonal levels. Hence, the term Memorandum of Changes, which incorporates in itself all the material changes effecting such final accounts. MOC can be of following naturesRelating to suggested changes in Balance Sheet Relating to suggested changes...

Wednesday, January 12, 2011

SNOWBALL

"A method of efficient debt repayment in which the debtholder initially devotes only enough funds to cover the minimum payments on each debt, after which any remaining available funds from the debt repayment budget are spent on an additional payment to the debt bearing the highest interest rate. Once the debt with the highest interest rate is completely paid for, subsequent extra debt payments go toward the next highest interest-bearing debt. This process continues until all the debts are paid off." Consider the following example Let's say an individual decides to spend Rs.500 every month on retiring his three sources of debt: Rs. 1,000 worth of credit card debt (annual rate of 20% interest), Rs. 1,250 of car loan repayments (annual...

Tuesday, January 11, 2011

FIAT MONEY

Money on wheels..!!! the first thought came to my mind after hearing the term..:-). Fiat Money = Money Confused ? have a look on the literal definition " Money which has no Intrinsic value and cannot be redeemed for specie or any commodity but is made a legal tender through government decree." So, at present, all currency notes and coins are Fiat Money, isn't it. P.S. Specie: Money with intrinsic value e.g. Gold and Silver coi...

Tuesday, January 4, 2011

SIX SIGMA - An Overview

The main objective of a BUSINESS is profit maximization. Profits can be generated only if the business is able to sell its product in the market at a surplus. To have a sustained business growth it is very necessary that the market size of the business is large enough to yield the maximum revenues. In view of the above objectives, various management tools such as TQM, Value Engineering, MBO (Management by Objectives) etc have been formulated taking in conjunction the other supporting objectives of Corporate Responsibility, Shareholders’ wealth maximization, employee satisfaction etc. “Customers are the revenue generators”. Why only customers? Of course, they are. Since a business is set up to sell something and it is only by selling a product to the customer that revenue can be generated....

Monday, January 3, 2011

Internal Bank Auditor or Statutory Bank Auditor

Before taking up a Statutory Bank Branch Audit, the question which usually CA firms have to face is "Can we take up the assignment when we are already working in the capacity of Internal Auditor of the same Branch ?" The above question has been resolved by ICAI as under: As per the directions of RBI, firms associated with internal assignment in the bank have to relinquish the internal assignment before accepting the statutory audit assignment during the year. In this regard, we would like to invite your attention to the Code of Ethics Section 290 " Independence - Assurance Engagements": " A statutory auditor of an entity can not be it's internal auditor as it will not be possible for him to give an independent and objective opinion (Para 173)". Specifically, attention is also drawn to Para...

Sunday, January 2, 2011

Empanelment of CA Firm for Bank Statutory Audit

Getting your firm empaneled with ICAI for Bank Statutory Audit requires a Multipurpose Empanelment form to be filed. The e-form is to be filed as and when advised by ICAI at www.meficai.org.Firms who are approved by ICAI and RBI, are allotted Bank Branch Statutory Audit based on the guidelines issued by RBI. The final approval list of Bank Branch Auditors is categorized as per the following criteria:Categorization norms effective from the year 2005-06 for the empanelment of auditfirms to be appointed as statutory branch auditors for public sector banksCate-goryNo. of CAs exclusively associated with the firm(Full time)No. of partners exclusively associated with the firm (full time) (Out of 2)Profe-ssionalstaffBank auditexperienceStanding of the audit firm(1)(2)(3)(4)(5)(6)I.538The firm...

Friday, December 31, 2010

Bank Statutory Audit - An Overview

Auditing in Banking sector is one of the most booming sectors owing to increasing number of complexities involved in their operational structure and the directions issued by the regulator RBI. Bank Audit is itself a large branch of auditing involving audits of varying scope and objectives. Audits of Banks are generally assigned as per the nature and size of Bank Branch to Chartered Accountant Firms, where the size of Branch itself depends upon the Size of Advances made by the respective Branch. Statutory Audit is also one of such audits which is of significant value to the Bank as well as Auditors comprising of the reporting of entire year operations and future viability of the respective Bank. Statutory Audit: The name itself describes the nature of audit i.e. as mandated by a Statute....

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