During the statutory audit of Gala Retail Limited for the year ended 31st March, 2026, the Bank Reconciliation Statements (BRS) prepared for the…

Verification of Bank Reconciliation Statement (BRS) The auditor needs to obtain Bank Reconciliation Statements (BRS) for all bank accounts maintained by the entity as at the reporting period. In addition, the auditor needs to understand the client's process and periodicity of preparing the BRS. The auditor should ensure that the BRS is signed by the authorised personnel so that responsibility can be assigned in case of any errors. Verification of BRS shall entail the following: (1) Tallying the Bank Balance: Tally the balance as per the bank book with the bank confirmation/statement. (2) Checking of Cheques Issued but not Presented for Payment (i) Check all material reconciling items included under 'Cheques Issued but not Presented' with the underlying bank book forming part of the books of account. (ii) Obtain bank statements for the subsequent period and verify whether the cheques have subsequently been cleared by the bank. (iii) Where cheques have become stale (i.e., three months or more have elapsed since the date of issue), the same should not appear in the BRS and should instead be taken back to liabilities. (3) Checking of Cheques Deposited but not Credited by Bank (i) Check all material reconciling items included under 'Cheques Deposited but not Credited' by obtaining bank deposit slips duly acknowledged by the bank. (ii) Verify from the subsequent period's bank statements whether such cheques have subsequently been credited by the bank. (iii) Where cheques remain uncleared beyond a reasonable period, obtain explanations from the management. (iv) If such explanations are found to be unsatisfactory, verify whether the related revenue has been recognised in accordance with the Company's revenue recognition policy. (4) Checking of Amounts or Charges Debited/Credited by Bank but not Accounted for (i) Check all material reconciling items relating to amounts or charges debited/credited by the bank but not recorded in the books by obtaining the relevant bank statements. (ii) If the amounts are material, ensure that the management records the necessary adjustments in the books of account. (iii) If the management does not make the required adjustments, the auditor shall consider qualifying the audit report. The auditor should obtain BRS for all bank accounts and verify the material reconciling items with the underlying records and subsequent bank statements. Cheques issued but not presented, cheques deposited but not credited, and amounts or charges debited or credited by the bank but not recorded in the books should be appropriately examined. Stale cheques should be appropriately dealt with, and necessary adjustments should be considered for material items. Thus, verification of BRS involves detailed examination of reconciling items rather than merely agreeing the closing bank balances.