ABC Bank Limited has a substantial portfolio of advances comprising term loans, cash credit facilities and overdrafts. As at the balance sheet date,…
CA Intermediate · Auditing and Ethics · RTP · May 2026
ABC Bank Limited has a substantial portfolio of advances comprising term loans, cash credit facilities and overdrafts. As at the balance sheet date, significant amounts of advances are outstanding and are required to be valued, classified and disclosed in accordance with applicable accounting standards, RBI norms and regulatory requirements. While carrying out the audit of advances, the auditor is required to obtain sufficient and appropriate audit evidence to ensure that the advances reported in the balance sheet are properly recorded, supported, valued and disclosed. With reference to the above, state the primary matters with respect to which the auditor should obtain audit evidence while carrying out the audit of advances.
Suggested Answer and Working Notes:
(a) In carrying out audit of advances, the auditor is primarily concerned with obtaining evidence about the following: (a) Amounts included in balance sheet in respect of advances which are outstanding at the date of the balance sheet. (b) Advances represent amount due to the bank. (c) Amounts due to the bank are appropriately supported by loan documents and other documents as applicable to the nature of advances. (d) There are no unrecorded advances. (e) The stated basis of valuation of advances is appropriate and properly applied and the recoverability of advances is recognised in their valuation. (f) The advances are disclosed, classified and described in accordance with recognised accounting policies and practices and relevant statutory and regulatory requirements. (g) Appropriate provisions towards advances have been made as per the per the RBI norms, Accounting Standards and generally accepted accounting practices.
Topics: Audit of Banks
Related Questions in this Topic
- During the statutory audit of Pragati Bank Ltd. for the financial year ended 31st March, 2026, CA Nikhil examined the ad...
- You are the auditor of a bank. During the audit, you are required to verify the provisions and contingencies recognised ...
- PQR Ltd. has been sanctioned a cash credit facility of ₹30 crores by ABC Bank Ltd. During the financial year 2025-26, th...
- KLM & Co., Chartered Accountants, were appointed as statutory auditors of S Ltd. During the audit of bank borrowings, th...
- XYZ bank, a scheduled commercial bank, is preparing its financial statements for the financial year ended on 31 st Marc...