Remuneration payable to the Statutory Central and Branch Auditors of Public Sector Banks from the year 2012-13
Reserve Bank of India vide its letter Ref.DBS.ARS.No.BC. 08/ 08.92.001/ 2012-13 dated June 25, 2013 addressing all the The Chairman & Managing Director, all Nationalised Banks and The Managing Director, Associate Banks of SBI has increased the bank audit fee from the year 2012-13. Letter is being reproduced herewith for reference:
_____________________RESERVE BANK OF INDIA______________
Ref.DBS.ARS.No.BC. 08/ 08.92.001/ 2012-13
June 25, 2013
CONFIDENTIAL
The Chairman & Managing Director, all Nationalised Banks and
The Managing Director, Associate Banks of SBI
Dear Sir,
Remuneration payable to the Statutory Central and
Branch Auditors of Public Sector Banks from the year 2012-13
Please refer to instructions contained in our circulars DBS.ARS.No.BC.08 /
08.92.001/ 2006-07 dated June 6, 2007, DBS.ARS.BC. No. 3/ 08.92.001/
2007-08 dated July 25, 2007, DBS.ARS.BC. No. 07/ 08.92.001/ 2007-08
dated December 20, 2007 and DBS.ARS.BC. No.09/ 08.92.001/ 2009-10
dated December 31, 2009 on the captioned subject. It has been decided to
revise the remuneration payable to the statutory central and branch auditors
of public sector banks from the year 2012-13.
A. Remuneration for Central Audit work of the bank
As hitherto, for fixing the remuneration, specific areas of work of the auditors,
which have to be taken into account, shall continue to be:
(a) scrutiny and incorporation of returns of branches and
(b) audit of the Head/Central Office as an accounting unit.
Regarding (a) above, the fees admissible to the statutory central auditors has
been fixed at ` 750/- per branch in respect of all the branches of the bank in
existence as on the date of reference for the audit, irrespective of the fact
whether the branches have been taken up for audit or not.
As regards (b) above, the fees admissible will be as under :
Category of banks
(on the basis of balance sheet size)
Rate of audit
fees
(`)
Up to ` 50000 crore 706200/-
Above ` 50000 crore and up to Rs.100000 crore
783200/-
Above ` 100000 crore and up to Rs.200000 crore
842600/-
Above ` 200000 crore and up to `.500000 crore
902000/-
Above ` 500000 crore 961400/-
Note: The total remuneration arrived at for A (a) and A (b) above will be
divided equally among all the statutory central auditors of the bank concerned.
As hitherto, no separate fee will be payable to the statutory central auditors in
respect of Regional, Zonal or Divisional Offices or other Controlling Offices by
whatever name they are called. In case the bank intends to appoint a
separate auditor for the above offices, fee paid for such auditor should be
based on the quantum of advances.
B. Remuneration for Branch Audit work of the bank
Category of bank branch
(on the basis of quantum of advances)
Rates of audit fees
(`)
Up to ` 10 crore 40250/-
Above ` 10 crore up to ` 20 crore 57500/-
Above ` 20 crore up to ` 30 crore 79350/-
Above ` 30 crore up to ` 50 crore 120750/-
Above ` 50 crore up to ` 75 crore 138000/-
Above ` 75 crore up to ` 125 crore 182850/-
Above ` 125 crore up to ` 175 crore 228850/-
Above ` 175 crore up to ` 300 crore 287500/-
Above ` 300 crore up to ` 500 crore 324300/-
Above ` 500 crore up to ` 1000 crore 359950/-
Above ` 1000 crore up to ` 5000 crore 395600/-
Above ` 5000 crore 431250/-
The main operating office of the bank (irrespective of the fact whether it is
attached to Head / Central Office of the bank or functions as a separate unit),
CPUs/LPUs/and other centralized hubs by whatever nomenclature called
which are taken up for the purpose of statutory branch audit during a
particular year so as to cover 90% of advances of a bank will be treated as
any other branch and the fees admissible for the audit work thereof will be on
the basis of the above mentioned schedule.
For branches where there is no advances portfolio such as service branches,
specialised branches etc., or those operating as NPA recovery branches the
banks, in consultation with the Audit Committee of the Board, should propose
the revised fees depending on the volume of business of the branches,
existing fee, etc. for the approval of RBI on a case to case basis.
C. Fees for LFAR
The fees for LFAR are as under:
Fees for LFAR Rate
Head Office / Controlling Offices 25% of the basic audit fee excluding fee for
scrutiny and incorporation of branch returns.
Branches 10% of the basic audit fee payable for audit of
respective branch.
In respect of branches below the cut-off point of the threshold limit of
branches to be taken up for statutory audit, as stipulated from time to time,
which may not generally be subjected to statutory audit but are subjected to
concurrent audit by chartered accountants and where LFARs and other
certifications done earlier by SBAs are required to be submitted by the
concurrent auditors, the fees payable to the concurrent auditors may be
based on the above prescription.
No separate TA/HA shall be payable for LFAR / Tax Audit of Head /
Controlling Offices and branches.
D. Fees for additional certifications
It has been decided that an additional remuneration @ 12% of the basic audit
fees shall be payable for the following certifications/validations required to be
made in terms of various circulars/guidelines issued by RBI and any other
certification/validation included from time to time as per RBI requirements.
i) Verification of SLR requirements under Section 24 of BR Act, 1949
on 12 odd dates in different months in a year, not being Fridays.
ii) A certificate to the effect that the bank has been following RBI
guidelines regarding (a) asset classification, (b) income recognition
(c) provisioning, and also to the effect that the bank has followed
RBI guidelines in regard to the investment transactions/treasury
operations.
iii) A certificate in respect of reconciliation of bank’s investments (on
own account as also under PMS).
iv) A certificate for compliance in key areas by the banks.
v) A certificate in respect of custody of unused BR forms.
vi) Authentication of bank’s assessment of Capital Adequacy Ratio in
the ‘Notes on Accounts’ attached to the balance sheet and various
other ratios / items to be disclosed in the ‘Notes on Accounts’.
vii) Certificate regarding loan portfolio review if the bank seeks World
Bank assistance (Capital Restructuring Loan).
viii) Certification regarding DICGC items.
ix) Verification of SLR and CRR returns submitted by the bank to RBI
during the period under audit and confirming the same to RBI and
the bank under audit.
x) To comment upon the status of compliance by the bank as regards
the implementation of the recommendations of the Ghosh
Committee and the Working Group on internal controls.
xi) Commenting upon the credit deposit ratio in the rural areas as per
the instructions of Government of India.
xii) Reporting of instances of suspected fraud if any, noticed during the
course of statutory audit as per Mitra Committee
Recommendations.
As hitherto, no fee is payable to branch auditors for additional attestations.
E. Fees for additional certifications required by
Securities and Exchange Board of India (SEBI)
As regards fee for additional certificates / attestations prescribed by SEBI and
other regulators, the banks may decide in consultation with the Audit
Committee of the Board/ Board.
F. Fees for auditing of consolidated financial statements
For this purpose banks may pay a maximum of Rs.20,625/- only per
subsidiary / associate whose accounts are to be consolidated in the balance¤
sheet of a bank. The banks have freedom to offer lesser fee if the subsidiary /
associate concerned is not active or is dormant.
G. Fee for quarterly / half yearly limited review
The fee for carrying out quarterly / half yearly limited review to be paid to
statutory central auditors may continue to be 20% of the basic audit fee. It is
further clarified that revised basic audit fee payable from 2012-13 will be
applicable for computing the fee for limited review from the quarters ending
June 30, 2013 onwards and not for the review carried out during the quarters
ended June 30 / September 30 / December 31, 2012.
The concurrent auditors assisting the review process may continue to be paid
a reasonable token fee as advised in our circular letter DBS.ARS.No.BC.17/
08.91.001/2002-03 dated June 05, 2003.
H. Reimbursement of Travelling and Halting
Allowances and Daily Conveyance Charges
1. For reimbursement of the lodging & boarding charges, travelling allowance
and daily conveyance payable to statutory auditors, the banks are given the
discretion to decide the same in a cost effective manner in mutual consent
with the auditors. Further, in no circumstances should the rate exceed the IBA
prescription for the respective ceiling. The categories of officers linked for the
purpose of deciding the ceiling limits are given below:
Sl.
No.
Category of Audit officials Equivalent scale of Bank
officials
(as per IBA)
1 Partners/proprietors VII – General Manager
2 Qualified Assistants III – Senior Manager
3 Un-Qualified Assistants I - Officers
2. With regard to the reimbursement of travelling, halting allowance and
daily conveyance charges, following observations may be noted:
i) Wherever banks have Guest House or Visiting Officers’ Flats, the
same may be utilized to cater to the needs of the auditors.
ii) Banks should call for such details as are necessary for verification of
bills in this regard and the statutory central auditors as well as branch
auditors shall furnish such details for verification of the actual
expenses.
iii) Where the statutory central auditors have their headquarters at a
place different from that where the Head/Central Office of the bank is
situated, but have an office at the same place as the Head/Central
Office of the bank, the TA/HA, if any, should be nominal for the
central audit. However, to ensure the quality of audit, there should be
no objection to the partners of the firm visiting the Head/Central
Office of the bank as and when they deem it necessary.
iv) Where the statutory central auditors or branch auditors have an office
at the place where the branches/offices of the bank to be audited are
situated, they will not be reimbursed TA/HA. However, local
conveyance may be reimbursed.
v) The TA/HA should be kept to the minimum.
vi) In case of dispute between the auditors and the bank regarding
settlement of their bills, the CMD/MD of the bank shall be the final
authority to decide the claims. The CMD/MD has to satisfy himself
that the actual expenses have been incurred by a particular auditor
and the claims are settled keeping in view the aforesaid RBI
guidelines.
Please acknowledge receipt.
Yours faithfully,
Sd/-
¤
(R. K. Panda)
General Manager
Endt.DBS.ARS.No. 18173 / 08.92.001 / 2012-03 of date.
Copy forwarded for information and necessary action to the
1) Chief General Manager-in-Charge, Department of Government and
Bank Accounts, CO, RBI, Mumbai.
2) Chief General Manager, Secretary’s Department, CO, RBI, Mumbai.
3) Chairman, SIDBI, Mumbai.
4) Chairman, NABARD, Mumbai.
5) Managing Director, Export-Import Bank of India, Mumbai
6) Chairman, National Housing Bank, New Delhi
7) President, Institute of Chartered Accountants of India, New Delhi.
8) The Joint Secretary, Government of India, Ministry of Finance,
Banking Division, New Delhi – 110 001.
Sd/-
(Neena Asthana-Amin)
Assistant General Manager
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