MUMBAI: As increasingly loan-related scams come to mild in many private and non-private sector banks main to an enormous pile-up of unhealthy loans, the Reserve Bank of India (RBI) on Friday determined to take auditors to job through caution them of stern punitive actions in opposition to them.
In a new round titled 'Enforcement action framework in recognize of statutory auditors (SAs) for lapses in statutory audit of industrial banks', the RBI today warned that any SA not following instructions shall be met with punitive actions akin to debarring them from conducting industry with banks.
"To improve audit quality and bring about a transparent mechanism to examine the accountability of SAs in a consistent manner, it has been decided to put in place a graded enforcement action framework to enable appropriate action by the RBI in respect of the banks SAs for any lapses observed in conducting a statutory audit," RBI mentioned.
The new framework will duvet circumstances of divergence identified in asset classification and provisioning during RBI inspection vis--vis the audited financial statements of banks above the brink specified on this round.
Underlining the key role that SAs of banks play in contributing to financial balance when they deliver quality bank audits that foster market self assurance in banks' financial statements, the round mentioned quality audits also are a valuable enter within the supervisory process of RBI over banks.
The apex bank mentioned its new enforcement action framework are beneath the more than a few provisions of the Banking Regulation Act of 1949, the Banking Companies (Acquisition & Transfer of Undertaking) Act of 1970/1980, and the State Bank of India Act of 1955, which stipulate that banks shall download prior RBI approval to nominate SAs.
"If the audit quality or conduct of an SA is not found satisfactory, the RBI will enforce action against them by way of not approving their appointments for undertaking statutory audit of banks for a specified period. The RBI may also not approve auditors, who have been debarred by other regulators/law-enforcement /government agencies," it mentioned.
Actions that can invite punitive actions include lapses in carrying out audit assignments leading to misstatement of monetary statements, giving mistaken certifications and mistaken knowledge within the long shape audit file, misconduct while on audit assignments and every other violations/lapses vis--vis RBI instructions about their role.
It can also be noted that serving and retired CMDs/MDs/CEOs of as many as six public sector banks have been arrested through more than a few regulation enforcement agencies within the recent previous for unlawful/violating the board-approved lending norms.
Similarly, Chanda Kochhar, the pinnacle of the largest personal sector lender ICICI Bank, used to be earlier this month pressured to move on leave after she allegedly violated laws to lend Rs 3,250 crore to the Videocon staff, which in flip helped her husband Deepak Kochhar to construct a industry within the renewable power sector.
All those lending in violation of the regulations have resulted within the unhealthy loans within the banking device surging to over 11 consistent with cent of the systemic loan book.
In a new round titled 'Enforcement action framework in recognize of statutory auditors (SAs) for lapses in statutory audit of industrial banks', the RBI today warned that any SA not following instructions shall be met with punitive actions akin to debarring them from conducting industry with banks.
"To improve audit quality and bring about a transparent mechanism to examine the accountability of SAs in a consistent manner, it has been decided to put in place a graded enforcement action framework to enable appropriate action by the RBI in respect of the banks SAs for any lapses observed in conducting a statutory audit," RBI mentioned.
The new framework will duvet circumstances of divergence identified in asset classification and provisioning during RBI inspection vis--vis the audited financial statements of banks above the brink specified on this round.
Underlining the key role that SAs of banks play in contributing to financial balance when they deliver quality bank audits that foster market self assurance in banks' financial statements, the round mentioned quality audits also are a valuable enter within the supervisory process of RBI over banks.
The apex bank mentioned its new enforcement action framework are beneath the more than a few provisions of the Banking Regulation Act of 1949, the Banking Companies (Acquisition & Transfer of Undertaking) Act of 1970/1980, and the State Bank of India Act of 1955, which stipulate that banks shall download prior RBI approval to nominate SAs.
"If the audit quality or conduct of an SA is not found satisfactory, the RBI will enforce action against them by way of not approving their appointments for undertaking statutory audit of banks for a specified period. The RBI may also not approve auditors, who have been debarred by other regulators/law-enforcement /government agencies," it mentioned.
Actions that can invite punitive actions include lapses in carrying out audit assignments leading to misstatement of monetary statements, giving mistaken certifications and mistaken knowledge within the long shape audit file, misconduct while on audit assignments and every other violations/lapses vis--vis RBI instructions about their role.
It can also be noted that serving and retired CMDs/MDs/CEOs of as many as six public sector banks have been arrested through more than a few regulation enforcement agencies within the recent previous for unlawful/violating the board-approved lending norms.
Similarly, Chanda Kochhar, the pinnacle of the largest personal sector lender ICICI Bank, used to be earlier this month pressured to move on leave after she allegedly violated laws to lend Rs 3,250 crore to the Videocon staff, which in flip helped her husband Deepak Kochhar to construct a industry within the renewable power sector.
All those lending in violation of the regulations have resulted within the unhealthy loans within the banking device surging to over 11 consistent with cent of the systemic loan book.
Now, erring bank auditors to face punitive action from RBI
![Now, erring bank auditors to face punitive action from RBI]()
Reviewed by Kailash
on
June 29, 2018
Rating:
