Audit of Nationalised Banks:
According to Sec. 10(1) of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, under which 14 big banks have been nationalised, the audit of banks would be conducted in the manner given below:
1. The appointment of an auditor would be made with the prior approval of the Reserve Bank of India.
ADVERTISEMENTS:
2. The remuneration of an auditor would be determined by the Reserve Bank with the advice of the Central Government.
3. The qualifications of such an auditor would be the same as have been laid down in Sec. 226 of the Companies Act, 1956.
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4. Such an auditor would have the following rights:
ADVERTISEMENTS:
(i) To appoint accountants for his help at the expense of the bank;
(ii) To examine all the books, accounts and other documents of the bank; and
(iii) To examine custodians, officials or employees of the bank in the matter of accounts.
5. The auditor would submit his report to the Central Government and send one copy each to the Reserve Bank and the bank. The report would cover the following points:
ADVERTISEMENTS:
(i) In his opinion, the Balance Sheet of the bank is full and fair and gives a true and fair view of the state of the bank’s affairs;
(ii) He has obtained all the information and explanations necessary for his work and they are satisfactory;
(iii) The transactions affected by the bank are within its powers;
(iv) The Returns received from the branches of the bank are adequate for the audit work;
(v) The Profit and Loss Account exhibits a correct balance of profit or loss; and
(vi) Any other important matter which the auditor wants to bring to the knowledge of the Central Government.
The Central Government shall cause every auditor’s report and report on the working and activities of such bank to be laid for not less than 30 days before each House of Parliament as soon as may be after each report is received by the Central Government.
Electric supply companies
General:
1. First of all, the auditor should study the provisions of the Electricity (Supply) Act, 1948 and Indian Electricity Act, 1910 relating to the accounts of the company.
2. He should enquire into the internal check system regarding the records of the consumption of electric current by the consumers.
3. He should go through the Memorandum and Articles of Association, if any, specially noting the provisions relating to accounts.
Income:
4. The main source of income of Electric Supply Companies is the money that they receive from the consumers for electric current. The auditor should inspect the necessary contracts, if any, and vouch the cash so received by reference to the counterfoils of Receipt Books.
5. He should see that arrears are properly arrived at and subsequently received and entered in the books of accounts.
Expenditure:
6. He should ascertain that wages are properly allocated between capital and revenue and are also certified as such by the Engineer.
7. Salaries paid to the staff are also allocated between management, generation and distribution departments on proper basis. It should be confirmed.
8. He should see that the cost of replacement has been properly allocated and repairs and renewals are charged to revenue.
Miscellaneous:
9. He should see that allowances granted to consumers are duly authorized by some responsible officer and do not exceed the limits.
10. He should see that proper depreciation in respect of power-house, plant and machinery, meters, mains, stores, etc. has been provided.
11, He should check entries in Consumer’s Ledger and also their postings in the Impersonal Ledger.
12. He should ascertain that accounts and specially, Annual Accounts are prepared according to the prescribed forms as given in the relevant Acts.