What changed
RBI clarified that chartered accountants or audit firms cannot simultaneously serve as statutory auditor and internal/concurrent auditor for the same UCB. If a firm is already doing internal/concurrent audit, it must resign that role before accepting the statutory audit mandate for the same financial year.
What it means for you
UCBs must ensure no overlap between statutory audit and internal/concurrent audit assignments. This prevents conflicts of interest and preserves audit independence. Banks need to verify that their appointed statutory auditors have no ongoing internal or concurrent audit engagements with them.
What you must do
- Review current statutory auditor appointments to confirm they are not also engaged for internal or concurrent audit of the same UCB.
- If any overlap exists, require the audit firm to relinquish the internal/concurrent assignment before accepting the statutory audit.
- Update your audit engagement letters and internal policies to reflect this prohibition.
- Communicate this rule to all branches and audit committees.
Who it affects
Primary (Urban) Co-operative Banks, Chartered Accountants and audit firms serving UCBs, State Governments appointing statutory auditors for UCBs with deposits of Rs 25 crore and above
Can a CA firm do internal audit for one UCB and statutory audit for a different UCB?
The circular only prohibits the same firm from holding both roles in the same UCB. It does not restrict a firm from doing internal audit for one UCB and statutory audit for another unrelated UCB.
What if our statutory auditor was already doing concurrent audit when this circular was issued?
The instructions are effective immediately. The firm must relinquish the concurrent audit assignment before accepting or continuing the statutory audit for the same year.