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Audit Policy

The policy has been reviewed in the meeting with Management held on 26/07/2025 

OBJECTIVES OF AUDIT

Audit is a systematic process that ensures management has effective internal controls, adheres to established procedures and guidelines, and maintains organizational integrity. Through qualitative reviews, audits verify that a company operates soundly from financial, statutory, and organizational perspectives, ultimately providing stakeholders with assurance.

SCOPE

Internal auditors or office focus on verifying key aspects of  

  • Proper Accounting and Record-Keeping: Ensuring books of accounts are accurately maintained, checked, and balanced periodically.
  • Transaction Accuracy: Verifying all transactions are properly accounted for.
  • Adherence to Corporate Policies: Confirming checks and balances prescribed by the corporate office are strictly observed for investments, advances, cash, securities, and other valuables.
  • Advances and Loan Documentation: Verifying loan documentation, title deeds, stock statements, insurance policies, and due diligence reports.
  • Compliance with Regulatory Guidelines: Ensuring adherence to RBI circulars, KYC, PMLA, and interest rate verification.
  • Physical Verification: Conducting physical verification of cash, fixed assets, ATM cash, and security holdings.
  • Reconciliation and Reporting: Reconciling accounts with the RBI and other banks, reviewing NPA classifications, and assessing stress accounts.
  • Fixed Asset Register and Rent Agreements: Verifying the branch's fixed asset register and rent agreements.
  • Cyber Fraud Impacts and Significant Transactions: Reviewing significant transactions and cyber fraud impacts.
  • To examine whether proper records of instructions received from Corporate Office from time to time are maintained properly and the extent to which they are being complied with.
  • To examine whether advances granted and expenditure incurred are under proper authority and as per norms.
  • To examine whether internal checks and balances prescribed are being properly observed/ complied.
  • To examine whether returns to Corporate Office / Regional Office and Statutory bodies are correctly compiled and regularly / promptly submitted.
  • To assess the quality and quantity of business of the Branch / Office and scope for further development in the area of operations.
  • To examine whether securities obtained to cover advances are adequate and realisable.
  • To examine whether the advance outstanding at the Branch is generally in conformity with the lending policies framed by the Management.
  • To point out the major undesirable features commonly prevailing in the Branch / Office and if necessary, to recommend corrective actions for toning up the entire working of the Branch / Office so as to improve its overall efficiency.
  • To evaluate the overall performance of the branch to the rating mechanism introduced by the management.
  • To submit Special Reports about very serious irregularities noticed - such as misuse of delegated powers, suspected frauds, unethical practises followed at the Branchby members of staff, gross violation of important instructions, matters affecting image of the Company etc- which need immediate attention of higher authorities and to safeguard the interest of the Company.
  • To identify and report the Strength, Weakness, Opportunity &Threat (in line with SWOT Analysis) in the working of the Branch / Office and enable the Controller/s to initiate corrective steps.
  • To examine adequacy and effectiveness ofthe internal control systems.
  • To review application and effectiveness of risk management procedures and risk assessment methodologies.
  • To examine whether customer service is satisfactory
  • To examine whether Know Your Customer and Anti Money Laundering guidelines issued by the Company/RBI / other Statutory Agencies are being observed.

TYPES OF AUDITS

Gold Audit

Gold loan is the Company's primary product. Gold and Cash constitute high risk areas. Hence, these need to be inspected at more frequent intervals to reduce (if not mitigate) the risks. In view of the precious nature of the commodity and its easy liquidity, it is associated with various risks. Lack of adequate skill to accurately assess quality of the ornaments under pledge is an area of concern. Cash is another risk prone area. To mitigate these risks, more frequent Audit is essential. Gold Audit procedure has been chalked out in this direction.
These will be performed by Auditors.

Management Audit

Management Audit is essentially a tool designed to appraise the effectiveness of Management at different levels in accomplishing the designed tasks towards achieving the overall Corporate Objectives / Goals. Management Audit is an independent and systematic appraisal as to how well the Management is achieving / accomplishing its objectives, goals and performing the managerial functions (such as planning, organising, motivating, directing, cooperating, consulting, co-ordinating and controlling). Management Audit is required to be conducted in periodical intervals at Corporate Office.
This will be carried out by the management audit team at HO.

Handing Over and Taking Over & Special Audit

This is usually performed when

  • Change of Branch Head due to transfer due to disciplinary action, resignation or termination
  • Report of fraud, whistle blowing or any other serious violation of systems and procedures, which may affect the Company's image or result in loss.
  • Looting or burglary at Branch.
  • Closure/ merger of Branch.
  • Any other issue where Management deems it necessary to have an immediate inspection.

The areas to be verified depends on the cause for which the Audit is arranged. If the Audit is on account of change of BH / closure or merger, in addition to verification of the entire gold packets, all internal functions/ processes have to be verified.

DUTIES AND RESPONSIBILITIES OF INSPECTING OFFICERS

The term Inspecting Officer refers to Audit Managers, Gold Auditors and senior staff deputed by Audit Department to carry out various types of Audits covered ) above. They are considered to be the “eyes and ears” of the Management. They should be creative, constructive and helpful. Their main duties are:

  • To report whether the Branch is working smoothly, efficiently and within the frame work of the policy and guidelines laid down/issued by the Corporate Office from time to time.
  • To report whether the system of internal control such as rotation of duties, custody and operation of strong room keys, joint custody of cash / gold / other valuables, prompt accounting of all transactions, sanction of loans, KYC Compliance, balancing of different accounts, Statutory compliance etc. as laid down by Corporate Office are being followed by the Branch / Office.
  • To report whether the quality of assets, adequacy of security for advance and proper accounting of assets by the Branch / Office are ensured; securities are identifiable and their condition and reliability are satisfactory.
  • To suggest ways and means to improve the working and/or remove lacunae, if any, in the system.

ESSENTIAL OUALITIES OF INSPECTING OFFICERS

  • The Inspecting Officers have to play a key role in conducting a thorough scrutiny of affairs of a Branch / Office and guiding the Branch officials for improved performance. unbiased and objective reporting style as well as an analytical and practical approach shall be the traits of the Inspecting Officer. Besides certain personal qualities and professional skills, they should have the ability to communicate effectively.
  • Personal qualities include possession of high integrity, robust common sense, initiative, analytical ability to distinguish the important from the unimportant, ability to judge and a sense of thoroughness and orderliness to complete the task on hand systematically and efficiently.

APPROACH AND ATTITUDE OF AN INSPECTING OFFICER

  • The audit work is more of a fact-finding mission than a fault finding one.
  • The Inspecting Officers' approach should be objective and unbiased. They should be guided by a sense of professional independence and should not be swayed by fear, or other influences.
  • Audit work should be thorough, exhaustive and dispassionate. If there is the slightest suspicion of fraud, defalcation, misappropriation, dereliction of duty, and/or abuse of authority causing loss / likely to cause loss to the Company, the Inspecting Officers should submit, after thoroughly verifying the facts, a 'Special Report' to the Head (Audit) through mail.
  • The Inspecting Officers should discuss the findings with the Branch Officials and AM before drawing up the final report.
  • The Inspecting Officers should work in such a manner as not to disturb the normal working of the Branch and conduct themselves in a dignified manner. They should not do anything that may affect the image of the Company.
  • Queries arising in the course of Audit should be passed on to the Branch staff then and there and should not be allowed to accumulate till the closing date/stage. All the irregularities/adverse findings should be discussed with the Branch Head and other staff members to ascertain their view points and encourage them to get maximum irregularities rectified during the course of Audit itself.
  • The Inspecting Officers are not authorised to issue any special instructions to the Branch Head other than those relating to and complying with normal Audit as detailed in this document. In cases where special instructions are to be issued to the Branch Head in respect of Special Report / frauds detected / any other important matter, they should contact Audit Department at HO so that necessary instructions can be passed on to the concerned.
  • All Audit assignments are to be surprise exercises - i.e. without prior intimation to the Branch / Office concerned. It is hence important that Audit programme is kept strictly confidential and the tour is arranged in such a way that nearby Branches to be audited by the same team in succession do not get the hint about the date of the intended visit.

General Instructions Regarding Audit of Branches

  • Auditors should be reach at the branches before 15 minutes of business hours start
  • The dress code should be as per the HR guideline
  • Report all the deviation from the circulares.
  • Auditors are not allowed to give exceptions for any irregularities noticed
  • Auditors should verify in line with the audit check list
  • If any further more investigation required for any suspicious behaviour, document, gasters, etc should be discuss these maters with HO audit head.
  • The list of irregularities noticed by the Inspecting Officers should be passed on to the Branches on a daily basis for spot rectification. They should discuss with the officials of the Branch about the progress in spot rectification, deficiencies and other procedural irregularities.
  • If the findings are of very serious in nature, involving fraud, misuse of delegated powers, unethical practises followed at the Branch by members of staff, gross violation of important instructions, matters affecting image of the Company etc the matter shall be reported to the Audit Department over phone with a Special (Confidential) Report by e-mail to follow.
  • No financial dealings and other interpersonal communications within the organization are not allowed.
  • An auditor required to maintain confidentiality and handle sensitive data with care, should avoid unauthorized disclosure or discussion within the organization and outside organization.

Allotment of Audit Programme

  • Allotment of Internal and Gold Audit programme to the Inspecting Officers will be by the department.
  • Allotment of Special Audit and Management Audit will be communicated directly by Audit Department.
  • As there should be an element of surprise in Audit, the communication received by the Inspecting Officer should be kept STRICTLY CONFIDENTIAL.