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In this regards some key risk areas that usually lead to frauds are highlighted for
information of auditors. All the field auditors should specifically review these areas and
raise the exceptions accordingly, detail as under:
2. Allowing unauthorized persons to the sensitive areas of the branch operations i.e.
Cash Departments, Accounts Department and Profile-CBA (System) through
unauthorized Sharing of IDs & Passwords.
3. Absence of dual control / electronic control over cash receipts & payments
(including government collections and pension payments) and General Ledger
entries resulting into non detection of the customer’s money pocketed by cashiers
well in time.
16. Delayed disciplinary actions against the delinquents Staff and involvement of
delinquent staff in day to day activities of the branch operations.
In order to verify the existence of the above said red flags, auditors should check / review
the working of branch covering audit period using sample techniques as mentioned in
Internal Audit Manual by at least adopting the following audit procedure / check list and
other check lists specific to the areas of operations, e.g. Advances, Deposits, Remittances.
The auditors may also check and highlight other significant areas of concerns as he / she
observed during the course of audit,
Audit Checklist
Observations that can seriously compromise the system of internal control and data integrity resulted in material
High Risk financial/ reputational loss required to be considered as High Risk (H). Higher volume of Violations related to Non
compliance of Regulatory Requirements should also be considered.
The control weakness is more likely to result in material loss of the bank's revenue or goodwill or material non-
Moderate compliance with the statutory requirements or the Bank’s policies and procedures. Compensating controls are
Risk generally not present to reduce the likelihood of any such loss or non-compliance. These areas would be
considered as Moderate Risk (M).
- The control weakness less likely to result in a loss of the bank's revenue or goodwill or non-compliance with
the statutory requirements or the Bank’s policies and procedures (not being a material loss or non-
compliance). However, compensating controls generally exist to reduce likelihood of any such loss or non-
Low Risk
compliance; or
- The observation is more in the nature of a procedural improvement rather than a control weakness.
These areas would be considered as Low Risk (L)
Note: The above said Checklist properly filled in and supported with the relevant
documentary evidences, where deemed necessary, should be retained as audit working
paper for future ready references.