Banks features, Auditing

Banks Features

(a) Profit and loss account:
When looking at a bank's profit and loss account the accountant should seek to discover what proportions of the bank's profits are derived from sustainable business and how much comes from sources of income that are speculative or uncertain. The three major sources of income that require examination are: the net interest between lending and borrowing, dealing profits derived from the banks investments portfolio and fees and commissions.

(b) Current status:
Although he may be auditing a prior period the auditor should discuss with the management any current problems to discover whether profits are still being made in the current trading period.

(c) Review of projected profits:
Enquiries should be made to ascertain whether projected profits take into account suspended interest, bad debts provision and any other decline in the realisable value of assets.

(d) Frequency of reviews:
The auditor should enquire whether provisions are being reviewed on a regular basis.

(e) Further enquiries:
Further enquiries are made in the following areas: investments, certificates of deposits, foreign exchange, land and property and loans. The fee earning activities of the bank are also investigated in the areas of loan commitment, acceptances, portfolio management and corporate advisory work.

Posted Date: 12/4/2012 5:27:59 AM | Location : United States







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