Bank & Concurrent Audit Services in India

Why concurrent audit exists alongside statutory and internal audit

A bank's statutory audit happens once a year, well after most transactions are complete. Its internal audit typically runs on a periodic cycle covering a branch every so often. A concurrent audit fills the gap between the two — it examines a high proportion of transactions close to the time they're processed, specifically to catch errors, control breaches or irregularities early, when they're still straightforward to correct.

Reserve Bank of India guidelines direct banks to bring specified categories of business — high-value branches, treasury operations, and certain other segments — under concurrent audit coverage, with banks setting the detailed scope and coverage percentage for their own operations within that framework.

What a concurrent audit typically covers

• Cash transactions — verification of cash handling, vault operations and reconciliation against the day's records.
• Loan documentation and disbursement — checking that sanctioned loans are disbursed against complete documentation and within approved terms.
• Deposit operations — account opening compliance (KYC), and accuracy of interest computation and crediting.
• Foreign exchange transactions, where the branch or unit handles them, checked against RBI and FEMA requirements.
• Adherence to sanctioned limits and internal approval matrices — flagging any transaction processed outside the authority it should have required.
• Housekeeping and reconciliation items — outstanding entries in suspense or reconciliation accounts that should have been cleared.

How a concurrent audit engagement runs

1. Scope and coverage agreed with the bank

   The bank specifies which transaction categories and what proportion of them fall within concurrent audit coverage, in line with its own policy and the regulatory framework it operates under.

2. Ongoing transaction review

   Rather than a single visit, the auditor reviews transactions on a rolling basis — daily or as frequently as the engagement specifies — checking documentation, authorisation and compliance as transactions are processed.

3. Immediate flagging of irregularities

   Anything requiring urgent attention — a control breach, a documentation gap on a disbursed loan — is raised with branch management as it's found, rather than held for the periodic report.

4. Periodic formal reporting

   Findings are consolidated into a formal report on the cadence the engagement specifies, typically monthly, summarising both individual irregularities and any pattern across the period.

5. Follow-up on prior findings

   Each reporting cycle checks whether issues raised previously have actually been resolved, rather than treating every report as a fresh, disconnected review.

Practical notes from our engagements

• Findings held for the monthly report when they needed same-day attention. The value of a concurrent audit is largely in catching issues while they're still easy to fix — anything time-sensitive is raised immediately, not saved for the periodic report.
• Documentation gaps on disbursed loans. A loan disbursed before all documentation is complete is one of the most consistent findings across concurrent audit engagements, and one of the more consequential if it isn't corrected quickly.
• Suspense account entries accumulating unresolved. Items sitting in reconciliation or suspense accounts for extended periods are a recurring red flag, and clearing them promptly each cycle prevents a backlog that becomes harder to unwind later.

Related services

• Stock auditanother bank-commissioned audit, focused on physical inventory rather than transactions.
• Statutory auditthe annual, financial-statement-level audit concurrent audit works alongside.
• Internal audita related but periodic, broader-scope review rather than an ongoing one.

Frequently asked questions