Concurrent audit is a systematic and timely examination of financial transactions on a regular basis to ensure accuracy, authenticity, compliance with procedures and guidelines. The emphasis under concurrent audit is not on test checking but on substantial checking of transactions.
It is an ongoing appraisal of the financial health of an entity to determine whether the financial management arrangements (including internal control mechanisms) are effectively working and identify areas of improvement to enhance efficiency
In India concurrent audit is done only for the banking sector. The need for concurrent audit in banking sector arises due to the following reasons:
- At the time of statutory audit, the focus is mainly on finalization of financial statements.
- Low quality of book / account keeping and lack of accuracy of financial reports.
- High amount of unadjusted advances and lack of periodical follow up carried to settle outstanding advances.
- Need of continuous handholding support to the finance staff in improvement of financial management and accounting systems.
- Lack of follow up on statutory audit observations leading to repetition of mistakes continuing for long.
Concurrent audit aims at shortening the interval between a transaction and its independent examination. It is, therefore, integral to the establishment of sound internal accounting functions and effective controls and is regarded as early warning system to ensure timely detection of serious errors and irregularities, which also helps in averting fraudulent transactions and preventive vigilance in banks.
Our approach to concurrent audit provides insights on:
- Studying the previous concurrent audit report to find the critical areas where thorough checking is required.
- 100% checking of all the day to day transactions on daily basis.
- Correction of mistakes immediately without any lag to ensure no repetition of mistakes.
- Preparation of step wise guidelines for process followed and documentation required for account opening, loan borrowing, etc.
- Detailed analysis to ensure that the loan has been approved after proper verification of all the documents and guidelines that needs to be followed for approval.
- Proper check on the system for maintenance and collection of cash to ensure that no leakages exist in the system.
- Physical verification of cash on daily basis.
- Checking of proper accounting of all the transactions done on daily basis.