Deloitte was appointed to do a special audit at Bank of Rajasthan under the authority of the Reserve Bank of India (RBI). This audit was ordered as a result of anomalous operations by BoR.
Deloitte has to audit the bank’s lending policy and the information security system.
Knowing that special audits (ordered by RBI) are uncommon, Bank of Rajasthan must have done very irregular transactions.
Last week, BoR was already under fire because of breaking the law on different occasions, such as anti-money laundering, not supplying some documents to RBI, …
Besides, management of BoR is not always reliable so the RBI imposed a special audit.
Furthermore, Bank of Rajasthan has only one committee to accept loans. This approach is different compared with other commercial banks, who have more committees. For instance, a local office can accept loans up to Rs (Indian Currency Unit) 250 millions, the credit committee at the head office can approve loans between Rs 250 and 500 millions and only the management committee can accept loans above Rs 500 millions.
The RBI is afraid that at BoR, the directors largely decide in the credit delivery system.
Deloitte Haskins & Sell’s will control if BoR has observed all the statutory regulations. The auditors will also take a look at the pension contributions given to the bank’s employees.
The majority of the bank’s 4,000 employees has a pay which is in accordance with the agreement between the Indian Banks Association and the BoR, but 10% of the employees in the mid to senior level receive a different pay and pension contribution.
In my way of thinking, it’s was a good idea to audit this bank. But I also think it would be good if banks were audited every two years, so the government would discover earlier if banks are doing irregular dealings.
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What Tine has written is right, there must be hold an audit in the bank. I also think that an audit every two years is not a bad idea, so that fraud can be discovered earlier. Maybe banks should be audited every year, not for the whole books but just the cases were fraud is easily to commit like car expenses, depreciations, … I definitely think that there is need for better audits after the financial crisis.
BeantwoordenVerwijderenI also deal the opinion with Tine and Laurens. The audit in this bank was a good measure, but in my view audits should be executed more often. Now, the government intervenes when the fraud has already commited. I think it's necessary to take steps to prevent fraud. If irregularities will be noticed in time, fraud can be prevented.
BeantwoordenVerwijderenTherefor, audits must be executed very frequently.