Page 123 - Quick Insights Book 2022

Ann. 2.1 – Policy of Empanelment of CA Firms/LLPs and Selection of Auditors

ANNEX II Upon selection of SCAs by the PSBs in consultation
PROCEDURE FOR APPOINTMENT OF SCAS/SAS with their ACB and verifying their compliance with the
eligibility norms prescribed by RBI, the PSBs shall seek
1. The Entities shall shortlist minimum of 2 audit firms for RBI’s prior approval for appointment of SCAs.
every vacancy of SCAs/SAs so that even if firm at first
preference is found to be ineligible/refuses appointment, 4. The UCBs shall place the name of shortlisted audit
the firm at second preference can be appointed and firms, in order of preference, before their Board for
the process of appointment of SCAs/SAs does not selection as SCA/SA. Upon selection of SCAs/SAs by
get delayed. However, in case of reappointment of the UCBs in consultation with their Board and verifying
SCAs/SAs by banks/UCBs till completion of tenure of their compliance with the eligibility norms prescribed
continuous term of 3 years, there would not be any by RBI, the UCBs shall seek RBI’s prior approval for
requirement of shortlisting and sending names of multiple appointment of SCAs/SAs.
audit firms to RBI while seeking approval to appointment.
5. The Entities shall obtain a certificate, along with relevant
2. The banking companies shall continue to follow the information as per Form B, from the audit firm(s)
existing procedure followed by them for selection of proposed to be appointed as SCAs/SAs by the Entity
SCAs/SAs. They shall place the name of shortlisted to the effect that the audit firm(s) complies with all the
audit firms, in order of preference, before their ACB/ eligibility norms prescribed by RBI for the purpose. Such
LMC for selection as SCAs/SAs. Upon selection of certificate should be signed by the main partner/s of the
SCAs/SAs by the bank in consultation with their ACB/ audit firm proposed for appointment of SCAs/SAs of the
LMC and verifying their compliance with the eligibility Entities, under the seal of the said audit firm.
norms prescribed by RBI, the bank shall seek RBI’s
prior approval for appointment of SCAs/SAs. 6. The Commercial Banks (excluding RRBs)/UCBs shall
verify the compliance of audit firm(s) to the eligibility
3. For PSBs, empanelment of audit firms eligible for norms prescribed by RBI for the purpose and after being
appointment as SCAs will continue to be done by the satisfied of their eligibility, recommend the names along
Office of C&AG, based on the norms prescribed by RBI, with a certificate, in the format as per Form C, stating
as on January 1 of the relevant year. that the audit firm(s) proposed to be appointed as SCA/
SA by them comply with all eligibility norms prescribed
The list of firms as furnished by C&AG to RBI will be by RBI for the purpose.
subjected to scrutiny by RBI for identifying the eligible
firms and excluding audit firms who have been denied 7. While approaching the RBI for its prior approval for
audit by C&AG/RBI. RBI will forward a single list of all appointment of SCAs/SAs, Commercial Banks (excluding
14
audit firms eligible for appointment as SCAs to all PSBs RRBs)/UCBs shall indicate their total asset size as
on an annual basis. PSBs shall shortlist audit firms from on March 31st of the previous year (audited figures),
the said list of eligible audit firms as received from RBI, forward a copy of Board/ACB Resolution (resolution not
based on certain objective criteria (like number of full needed for foreign banks operating under branch mode)
time partners, number of professional staff, number of recommending names of audit firms for appointment as
CISA/ISA qualified partners/paid CAs, number of FCAs, SCAs/SAs in the order of preference and also furnish
etc.) as laid down in the bank’s policy for appointment information as per Form B and Form C as mentioned
of statutory auditors. Further, the PSBs shall place the above, to facilitate expeditious approval of appointment/
list of shortlisted firms, in order of preference, before re-appointment of the concerned audit firm.
the ACB for selection of SCAs in a transparent manner.

14 RBI will provide a single list of eligible audit firms to PSBs as the requirement of mandatory cooling of three years and allotment of vacancies
in the ratio of 60:40 between ‘Experienced ‘ and ‘New’ audit firms has been done away with from FY 2021-22. The firms in said list would
not be ranked in any order and all firms would be eligible for selection by all PSBs.

110 Quick Insights on Professional Opportunities for Chartered Accountants