RBI points tips for appointment of statutory auditors of banks, NBFCs

Mumbai. The Reserve Bank of India on Tuesday issued tips for appointment of statutory auditors of banks and non-banking finance firms (NBFCs), together with housing finance firms. ‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (together with HFCs)’ can be relevant for monetary yr 2021-22 and onwards.

However, non-deposit taking NBFCs with asset measurement beneath ₹1,000 crore have the choice to proceed with their extant process. The tips present mandatory directions for appointment of SCAs/SAs, the variety of auditors, their eligibility standards, tenure and rotation, and many others. whereas making certain the independence of auditors, the Reserve Bank stated.

As the rules are being applied for the primary time for Urban Co-operative Banks (UCBs) and NBFCs from 2021-22, “they shall have the flexibility to adopt these guidelines from the second half of FY 2021-22, in order to ensure that there is no disruption”. Banks and UCBs can be required to take prior approval of Reserve Bank of India (RBI) for appointment/reappointment of SCAs/SAs, on an annual foundation, the rules stated.

For entities with an asset measurement of ₹15,000 crore and above as on the finish of earlier yr, statutory audit needs to be performed underneath joint audit of a minimal of two audit companies. All different entities ought to appoint a minimal of 1 audit agency for conducting statutory audit. “It shall be ensured that joint auditors of the entity do not have any common partners and they are not under the same network of audit firms. Further, the entity may finalise the work allocation among SCAs/SAs, before the commencement of the statutory audit, in consultation with their SCAs/SAs,” it stated. The tips additional stated that as a way to shield the independence of the auditors/audit companies, entities should appoint the SCAs/SAs for a steady interval of three years, topic to the companies satisfying the eligibility norms every year.