Approaches of Bank Audit (Part-I) | Dr. Niranjan Shah | Rigorous Internal Control System

e-Gyan : An Academic Solution

7 Sept 202015:23

Summary

TLDRIn this educational video, Dr. Niranjan Shaha Tujjaram from Chhatuchan College, Bharamati, discusses the specialized nature of bank audit. He highlights the unique features in bank accounting and the various audit approaches needed to address the distinct regulations and rules under the Banking Regulation Act and the Banking Companies Act.

Takeaways

🎓 The speaker, Dr. Niranjan Shaha, is an educator discussing the topic of bank audit.
🏦 The previous video covered the introduction to bank audit and the factors that affect it.
📚 The current discussion is focused on the various approaches to conducting a bank audit.
📋 The script mentions that auditors must follow provisions and regulations from the Banking Regulation Act and the Banking Companies Act.
🔍 Bank audit is a specialized field that requires attention to unique accounting features of banks.
💼 The audit approaches are influenced by the distinctive characteristics of banking operations, such as the handling of monetary items.
💵 Special attention is given to the audit of cash and negotiable instruments due to their significance in banking.
🔄 The script implies that the audit process involves both storage and transfer considerations for these monetary items.
🛡️ There is an emphasis on the importance of internal controls within the bank to ensure proper audit procedures.
🤔 The mention of 'individual discretion' suggests that auditors may need to exercise judgment in their work.
🙏 The transcript concludes with a thank you, indicating the end of the educational segment.

Q & A

Who is the speaker in the video?
-The speaker in the video is Dr. Niranjan Shaha Tujjaram.
What is the main topic of the video?
-The main topic of the video is the approaches of bank audit.
What was discussed in the previous video by Dr. Niranjan Shaha Tujjaram?
-In the previous video, Dr. Niranjan Shaha Tujjaram discussed the introduction of bank audit and the features affecting bank audit.
What are the special features that make bank audit a specialized audit?
-Bank audit is specialized due to the unique accounting features of banks, which include the handling of monetary items such as cash and negotiable instruments.
What are the regulations that auditors need to follow while auditing a bank?
-Auditors need to follow provisions and regulations from the Banking Regulation Act and the Banking Companies Act while auditing a bank.
What are the implications of the various provisions and regulations for auditors?
-The provisions and regulations guide auditors on the standards and practices they must adhere to, ensuring the integrity and legality of the audit process.
What does the term 'audit approaches' refer to in the context of bank audit?
-Audit approaches refer to the various methods and strategies used by auditors to examine and verify the financial activities and records of a bank.
Why is it important for auditors to understand the special features of bank accounting?
-Understanding the special features of bank accounting is important for auditors to effectively assess the financial health and compliance of a bank, given the unique nature of banking operations.
What is the significance of the banking regulation act in the context of bank audit?
-The Banking Regulation Act provides the legal framework within which banks operate, and it is crucial for auditors to ensure that banks are compliant with its provisions during the audit process.
How does the script suggest auditors should approach the audit of monetary items and negotiable instruments?
-The script suggests that auditors should apply specific audit approaches to monetary items and negotiable instruments, considering their storage and transfer, which may involve individual discretion and internal controls.
What is the role of internal controls in the audit of a bank?
-Internal controls play a critical role in ensuring the accuracy and reliability of financial records, and auditors must assess these controls as part of the bank audit process.

Outlines

00:00

📚 Introduction to Bank Audit Approaches

In this paragraph, Dr. Niranjan Shaha Tujjaram, a faculty member at Bharamati College, introduces the topic of bank audit approaches. He mentions that in the previous video, they discussed the introduction of bank audit and the features affecting it. This session will focus on the various approaches to auditing banks. Dr. Shaha emphasizes that bank audit is a specialized field with unique accounting features, necessitating specific audit methods. He also refers to the regulations and rules under the Banking Regulation Act and the Banking Companies Act that auditors must adhere to while performing bank audits.

05:01

💼 Audit Approaches for Monetary Items

This paragraph delves into the audit approaches for monetary items, including cash and negotiable instruments. It highlights the importance of considering both the storage and transfer of these items, which are subject to foreign exchange regulations. The paragraph suggests that there are specific audit approaches tailored to these monetary items, acknowledging the complexity involved in auditing such financial assets.

11:38

🔒 Internal Audit and Discretionary Transfers

In this brief paragraph, the focus shifts to the role of internal audit and the management of discretionary transfers. It touches on the need for internal controls and the exercise of individual discretion in the handling of monetary items. The mention of 'thank you' at the end suggests a conclusion or a transition to another topic, possibly indicating that further details on these aspects will be discussed in subsequent content.

Mindmap

Keywords

💡Bank Audit

Bank audit refers to the systematic examination and evaluation of a bank's financial records, operations, and internal controls by an external auditor. It is crucial for ensuring the accuracy and reliability of a bank's financial statements, as well as for detecting and preventing fraud and financial irregularities. In the script, the theme revolves around the introduction and various approaches to bank audit, highlighting its importance in the financial sector.

💡Features Affecting Bank Audit

Features affecting bank audit are the specific characteristics or aspects of a bank's operations that influence the auditing process. These can include the bank's size, complexity, risk profile, and regulatory environment. The script mentions that these features are discussed in the previous video, indicating that understanding these features is essential for conducting an effective bank audit.

💡Approaches of Bank Audit

Approaches of bank audit refer to the different methodologies or strategies used by auditors to examine a bank's financial and operational activities. These approaches can vary based on the bank's specific circumstances and the auditor's objectives. The script suggests that there are various approaches to bank audit, emphasizing the need for auditors to be flexible and adaptable in their audit techniques.

💡Banking Regulation Act

The Banking Regulation Act is a set of legal provisions that govern the operations of banks. It includes regulations related to the conduct of banking business, the rights and responsibilities of banks and their customers, and the regulatory oversight of banks. The script mentions that auditors must follow the provisions of the Banking Regulation Act while auditing a bank, indicating the legal framework within which bank audits are conducted.

💡Banking Companies Act

The Banking Companies Act is a piece of legislation that specifically deals with the incorporation, regulation, and management of banking companies. It sets out the rules and regulations that banking companies must adhere to in their operations. The script implies that the auditor must be familiar with the Banking Companies Act to ensure compliance during the audit process.

💡Auditor

An auditor is a professional who conducts audits to assess the accuracy and completeness of financial records, and to evaluate the effectiveness of an organization's internal controls. In the context of the script, the auditor is responsible for examining a bank's financial statements and operations, ensuring that they comply with relevant laws and regulations.

💡Specialized Audit

A specialized audit is an audit that focuses on a specific area or aspect of an organization's operations. In the case of bank audit, it is a specialized audit because it involves unique accounting and operational features of banks. The script mentions that the audit of a bank is a specialized audit, highlighting the need for auditors to have specialized knowledge and skills in banking.

💡Accounting of Bank

The accounting of bank refers to the specific financial accounting practices and principles used by banks in recording their transactions, assets, liabilities, and equity. These practices are distinct from those used in other industries due to the nature of banking activities. The script notes that there are special features in the accounting of banks, which makes the audit process unique and complex.

💡Monetary Items

Monetary items in the context of bank audit refer to cash and other negotiable instruments that are subject to audit. These items are crucial in the banking industry as they form the basis of financial transactions. The script mentions monetary items, indicating that they are a significant aspect of the audit process in banks.

💡Negotiable Instruments

Negotiable instruments are financial documents such as checks, drafts, or bills of exchange that can be transferred from one party to another in payment for goods or services. In the script, negotiable instruments are mentioned as part of the monetary items that are subject to audit, emphasizing their importance in the banking sector.

💡Internal Controls

Internal controls are the policies and procedures put in place by an organization to ensure the accuracy and reliability of financial reporting, and to prevent fraud and errors. In the context of bank audit, internal controls are critical for maintaining the integrity of a bank's financial operations. The script implies that auditors must evaluate the effectiveness of a bank's internal controls as part of the audit process.

Highlights

Introduction to bank audit and its features discussed in the previous video.

Discussion on the various approaches of bank audit in the current video.

Special provisions and regulations from the Banking Regulation Act and Banking Companies Act that auditors must follow.

Bank audit is a specialized audit with unique features in bank accounting.

Existence of multiple audit approaches due to the special features in bank accounting.

Audit of monetary items including cash and negotiable instruments.

Relevance of foreign exchange to the audit of monetary items.

Importance of storage and transfer in the audit process.

Role of individual discretion in the audit of bank operations.

Emphasis on the internal audit process within banks.

The significance of the Banking Regulation Act in bank audits.

The impact of the Banking Companies Act on the auditing process.

The necessity for auditors to be aware of and adhere to banking regulations.

The social features of bank audits and their implications.

The specialized nature of bank audits compared to other types of audits.

The importance of understanding the unique accounting practices of banks for effective auditing.

The role of internal controls in ensuring the accuracy of bank audits.

The need for continuous update and adaptation of audit approaches in response to changing banking regulations.

The conclusion of the lecture with a thank you note to the students.