RBI policy for Rotation and Resting for Statutory Branch Auditors

RBI policy for Rotation and Resting for Statutory Branch Auditors

 859 total views

RBI policy of rotation and resting for statutory branch auditors which was applicable to 17 centres viz., Mumbai, Kolapur, Pune, Solapur, Thane, Kolkata, Chennai, Coimbatore, Delhi/New Delhi, Ajmer, Bikaner, Jaipur, Kota, Udaipur, Ahmedabad, Vadodara, and Surat has been continued and other 16 centres viz. Hyderabad, Chandigarh, Raipur, Faridabad, Gurgaon, Panchkula, Panipat, Sonipat, Bangalore, Ernakulam, Indore, Nagpur, Ludhiana, Jodhpur, Bhilwara and Ghaziabad have been included in the list of resting centres thereby raising the total of such centres to 33 effective from 2004-05.
As per the advice of Govt. of India, from the financial year 2006-07 and onwards, it has been decided that branch auditors appointed annually will be allowed to continue for a period of four years after which they will be rotated/ rested. Branch auditors appointed till financial year 2005-06, however, will be allowed to complete their cycle of five years as branch auditors.
While allotting branches, banks are advised to select auditors located in centres in which their offices are situated or branches located in centres, which are in close proximity to their offices.
When the number of eligible auditors/ audit firms is more than the number of branches to be audited at particular centres (to be identified by RBI annually), selection of auditors is done, keeping in view the criterion mentioned above. The same auditors cannot audit the same bank for a continuous period exceeding four years. In such centres, where the number of eligible auditors / audit firms is more than the number of branches to be audited, the auditors / audit firms will be put to a period of compulsory rest for two years after completion of four years of continuous branch audit.
Where the number of eligible auditors / audit firms is less than the number of branches to be audited at particular centres, the branches must be allotted equitably among all the auditors subject to the condition that the same auditor/ audit firm cannot audit the same bank for a continuous period exceeding four years and keeping in view the criterion mentioned above. In such centres, where the number of eligible auditors/ audit firms is less than the number of branches to be audited, the branch auditors on completion of four years of continuous audit with a bank will be subjected to the principle of rotation.
Facts about Firms-vis-a-vis Allocation by RBI:
Total firms eligble in the panel of ICAI    – 21.677 Nos
Total firms listed by RBI for statutory bank audit    – 16791 Nos
All CA firms cannot be granted allocation of statutory bank audit due to gap in the number of branches and firms eligble.
Commonly noticed mistakes by ICAI:
Wrong experience in bank audit
Professional staff wrongly given
Exclusive membership of member with firm wrongly declared
Duplicate submission of application
Delay in fee payment resulted in removal of COP/ Membership
Due to numerous mistakes commonly committed by applicants in submission of MEF application, ICAI had to delay the submission of panel after vigorous persuasion with RBI.

Leave a Comment

Your email address will not be published.

the taxtalk

online portal for tax news, update, judgment, article, circular, income tax, gst, notification Simplifying the tax and tax laws is the main motto of the team tax talk, solving