Financial Daily from THE HINDU group of publications
Saturday, Mar 20, 2004
Money & Banking
Public Sector Banks
RBI hikes PSU bank audit fees
New Delhi , March 19
PUBLIC sector banks would now be required to fork out higher remuneration to their statutory central and branch auditors.
The Reserve Bank of India has increased the audit fees for both statutory central audits and branch audits of public sector banks by 25 per cent across the board.
The increase is applicable from the accounting year 2003-04 onwards.
The bank audit fee market in the country is estimated to be about Rs 225 crore per annum. The auditors for the statutory central audit are appointed by the RBI from a panel in consultation with the Institute of Chartered Accountants of India (ICAI).
Confirming the latest move of the central bank, a senior official of the ICAI told Business Line that the audit fees for public sector banks were last revised in 2001.
"Even in 2001, there was a 25-per cent increase in the audit fees of public sector banks," the official said. In the case of private sector banks, the board of directors usually determines the audit fees.
RBI has also increased the fees for long form audit report (LFAR) and tax audit by 25 per cent for both statutory central auditors (SCAs) and branch auditors.
Further, public sector banks would now be required to pay fees to their SCAs for auditing of consolidated financial statements. "The fee can be up to Rs 15,000 per subsidiary/associate", the official said.
For additional certification required by the Securities and Exchange Board of India (SEBI), an additional fee of Rs 20,000 per certificate would be payable by banks to their SCA's.
The RBI has also now modified the slabs that would determine the quantum of audit fees payable for statutory central audits and bank branch audits.
In the case of statutory central audits, the slabs are fixed on the basis of total asset size of banks.
The first slab of banks of total asset size up to Rs 12,000 crore has been changed to up to Rs 18,000 crore, with audit fee of Rs 4,25,000. Further, two new slabs have been added.
For banks with total asset size of Rs 50,000 crore-Rs 70,000 crore, the audit fee is Rs 5,38,000.
In the case of banks with total asset size of Rs 70,000-Rs 80,000 crore, the audit fee is Rs 5,63,000 and for over Rs 90,000 crore, the audit fee has been pegged at Rs 5,88,000 crore.
For bank branch audits, the audit fee is a function of the "advances" made by the branch. The RBI has now added two new slabs. For advances between Rs 175 crore and Rs 300 crore, the audit fee has been pegged at Rs 2,00,000.
In the case of a branch with advances between Rs 300 crore and Rs 500 crore, the audit fee is Rs 2,25,000.
For bank branches with advances of more than Rs 500 crore, the audit fee has been pegged at Rs 2,50,000.
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