Banks say concurrent auditors not doing their job

Banks, particularly public sector banks, are pointing fingers at concurrent auditors for failing to detect any wrong-doing at branches.

Banks have begun voicing concerns at the quality of concurrent audit in the wake of the recent scandal involving a fraudster, who opened thousands of demat accounts to take undue advantage of initial public offers.

Union Bank Bank of India's chairman and managing director K Cherian Varghese attributed poor auditing to the weak accountancy skills of persons deployed by chartered accountancy firms.

"Frauds happen even when the simultaneous audit takes place. What value does then concurrent audit provides to bank," questioned Varghese.

His remark was prompted by the recent irregularities in Yes Bank public offer allotment where clients of two banks, including one PSB, had opened thousands of accounts with same address flouting "Know Your Customer Norms".

Bharat Overseas Bank (BhOB), which was one of the banks misused in the Yes Bank IPO scandal, too blamed their concurrent auditors for not alerting the management about the wrong-doing.

Such a large-scale breach should have been detected in the course of concurrent auditing, but it missed the attention of accountants, bankers said.

Piyush Goyal, a chartered accountant by profession and government nominee on the board of State Bank of India (SBI), said the quality of work and amount of work done should be taken into account to compensate accountancy firms carrying out concurrent audits.

The fee paid to auditors is small and hence chartered accountants find it less attractive to depute senior persons for audits. Instead, assistants who are picking up skills on the job are sent for audit assignments, said one senior public sector bank official.

Accountancy firms accept the concurrent audit jobs as they consider it a prestige to have a prominent bank as a client and also as a chance to become the statutory auditor, he added.