The concurrent audit system of banks has become crucial. The main objective of the system is to ensure compliance with the audit systems in banks as per the guidelines of the Reserve Bank of India and importantly, to ensure timely detection of lapses/irregularities.
An audit takes place when transactions occur, which means it is parallely conducted. Unlike most post-transactional reviews, the concurrent audit is conducted as and when transactions occur. It gives an early warning to ensure timely detection of irregularities and lapses. This proactive approach ensures that errors or frauds are detected early, reducing the potential impact on the bank's financial health.
Main role of the Concurrent Auditor would be to supplement the efforts of the company in carrying out simultaneous internal checks of the transactions and other verifications and compliance with the procedures laid down.
Banking functions are inclusive, not limited to:
To conduct a concurrent audit, all the functions of the bank need to be fragmented into transactions and the necessary checks and balances should be assigned.
Concurrent audit aims to reduce the gap between a transaction's occurrence and its examination. A concurrent audit report covers all transactions and hence is a bank's second line of defense.