Core concepts
- 01Banks audited under Banking Regulation Act + Companies Act; RBI guidelines.
- 02LFAR (Long Form Audit Report) submitted to bank management.
- 03NPA classification & provisioning — verify objectively (90-day overdue norm).
- 04Concurrent audit: branches with high turnover or specified categories.
- 05NBFC audit — RBI directions on income recognition, classification, provisioning, prudential norms.
Flowchart summary
Bank Audit Outputs | Main Audit Report (Companies Act + BR Act) | LFAR -- comprehensive, prescribed by RBI | Tax Audit Report (43rd amendment to IT Rules) | Certificates: CRR, SLR, CRAR, Basel disclosures
Exam-critical pointers
- ⭐Income on NPA recognised only on receipt (cash basis).
- ⭐Restructured account moves between categories per RBI norms.
- ⭐RBI's Master Direction on IRAC norms (latest 2021/2022) — periodic update.
- ⭐Special audit (Sec 30 BR Act) — directed by RBI, separate from statutory audit.
Make it click