Friday, April 1, 2011

Bank branch Advance limit for Statutory Audit raised to Rs 15 crores

Bank branch Advance limit for Statutory Audit raised to Rs 15 crores

In what has come as a shocker to the entire CA community, the RBI today came out with an internal circular revising the threshold limit of advances of bank branches for the purposes of considering their coverage under the statutory audit requirement. Right now, only bank branches (of scheduled commercial banks) having advances of Rs 3 crores and above are required to get their accounts statutorily audited by external chartered accountant firms. This limit has now been raised to Rs 15 crore, which means that bank branches having advances of below Rs 15 crore will not be required to compulsorily get their accounts audited.

Mr G Ramaswamy, the President of ICAI, said the ICAI was in the process of taking up this matter with the RBI. In 2007, the RBI had raised the threshold advance limit to Rs 5 crore from Rs 1 crore. The ICAI had then been able to persuade the RBI to bring down the coverage limit to Rs 3 crore. Rs 1 crore advance limit was fixed up way back in 1975. Whether the ICAI will meet with success this time around is a matter of conjecture.

The irony is that chartered accountant firms across the country have already been issued letters appointing them as statutory branch auditors for the year 2010-11 in respect of branches having advances of Rs 3 crores. "Those chartered accountant firms should consider their appointment null and void in view of the recent RBI diktat," an RBI official said.

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