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

The Reserve Bank of India on Tuesday issued tips for appointment of statutory auditors of banks and non-banking finance corporations (NBFCs), together with housing finance corporations.
‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)’ might be relevant for monetary yr 2021-22 and onwards.
However, non-deposit taking NBFCs with asset dimension beneath Rs 1,000 crore have the choice to proceed with their extant process.

The tips present obligatory directions for appointment of SCAs/SAs, the variety of auditors, their eligibility standards, tenure and rotation, and so on. 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 might 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 dimension of Rs 15,000 crore and above as on the finish of earlier yr, statutory audit ought to be carried out below joint audit of a minimal of two audit corporations. 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 so as to shield the independence of the auditors/audit corporations, entities must appoint the SCAs/SAs for a steady interval of three years, topic to the corporations satisfying the eligibility norms every year.