Mumbai: Reserve Bank of India (RBI) on Thursday revised the guidelines on concurrent audit system following the recommendations by an expert committee under Y.H. Malegam. According to the revised guidelines, RBI said that concurrent auditors will be appointed for a period of not more than three years.
Earlier the tenure of external concurrent auditors was fixed at five years on a continuous basis. RBI also added that the age limit for retired staff engaged as concurrent auditors may be capped at 70 years.
Under the new guidelines, the scope of work for concurrent auditors is left to the discretion of the head of internal audit of banks, with the due prior approval of the Audit Committee of the Board of Directors (ACB)/Local Management Committee ((LMC) in case of foreign banks) of the bank. Earlier, the audit covered at least 50% of the advances and 50% of deposits of a bank.
RBI also said that banks should ensure that the concurrent audit covers risk sensitive areas identified by them as per their specific business models. The broad areas of coverage under concurrent audit shall be based on the identified risk of the unit and must include random transaction testing of sufficiently large sample of such transactions wherever required, it said.