Audit & Inspection

e-Andhra Bank Building, 4^th Floor, Sultan Bazar, Koti, Hyderabad-500095 Phone: 040-24683107/3103, email : co-insp@unionbankofindia.com

Empanelment of Concurrent Auditors

1. Invitation for empanelment

1.1. Union Bank of India had conducted the process for Empanelment of Concurrent Auditors, in the month of February 2020. This document is being published as a part of addendum process for Empanelment of Concurrent Auditors for the FY 2020-21.

1.2. Consequent upon the amalgamation of erstwhile Andhra Bank and erstwhile Corporation Bank with Union Bank of India, Concurrent Auditors are required to be appointed for some Branches/Units of amalgamated entity i.e. Union Bank of India. Hence, Union Bank of India invites applications in the prescribed format from practicing firms of Chartered Accountants who are willing to have their firm empanelled as Concurrent Auditor with Union Bank of India for Branches/Units in select districts ( As per list provided in Annexure – I). Only one application should be submitted ONLINE. No other mode of application will be entertained.

1.3.   This supplementary empanelment would be valid up to 31^st  March 2021 and shall be utilised for allotting the branches/units in select districts as being offered in this document. Applicant has the option to give preferences for districts under which select branch/es is/are located. Hence, Bank may presume that by giving a district preference, CA firm gives its consent to carry out concurrent audit at any of the select branches falling under the opted  district.  However,  the  Bank  reserves  the  right  to  allot  any Branch/unit in other districts also, where the firm is having Office and willing to take up the assignment. The Bank may allot the Concurrent Audit assignment during empanelment period as and when there is a requirement.

1.4.    APPLICATION FORMS NEED NOT BE PRINTED AND SENT TO THE BANK. OLD

SYSTEM OF FORWARDING PRINTED APPLICATION ALONGWITH CERTIFICATES AT THE TIME OF ONLINE SUBMISSION TO BANK HAS BEEN DISPENSED WITH. HOWEVER, IT IS MANDATORY FOR APPLICANT TO SUBMIT DULY SIGNED APPLICATION FORM AND OTHER RELEVANT DOCUMENTS AS AND WHEN ADVISED BY THE BANK.

1.5.    Last date for filing of Online Application is 02.10.2020, before 5.00 PM.

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1.6.      Mere submission of application does not, in any way, constitute any right for allotment of any audit job from the Bank. After empanelment, the work will be allotted as and when need arises at the sole discretion of the Bank.

1. Eligibility Criteria

12         Whenever any of the partner of the Firm is related to any of the staff or director of the Bank, such relationship shall be specifically mentioned in the application.

1. The following type of Audit firms are not eligible to participate for empanelment process:

i)             If Firm / any partner has been disqualified / de-empanelled or whose appointment has been terminated by RBI/ ICAI/ Bank / any other Bank on an earlier occasion.

ii)           The Audit firm or its associate concerns should not be conducting Statutory / Concurrent Audit of Union Bank of India/erstwhile Andhra Bank/erstwhile Corporation Bank or any of its Branches. The Audit firm or its associate concern, whose Statutory Audit term is yet to expire may apply for

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Concurrent Audit empanelment provided concerned Audit firm or its associate concern sacrifices the Statutory Audit assignment.

“Associate concerns means any corporate body or partnership firm wherein the proprietor and/or partner(s) of the Statutory Audit firm and/or their relative(s) is/are Directors or partners and/or jointly or severally hold 20% or more of the interest in the corporate body or partnership.

“Relative” for this purpose will mean the spouse or any lineal ascendant or descendant of the proprietor or partner of the Statutory Audit firm.”

iii)         Any canvassing, influence or reference to appointment of audit firms will render the application invalid.

1. Evaluation of CA firm for allotment of Concurrent Audit

4.1.    The CA firm will be evaluated based on the following parameters

i)             Eligibility criteria as mentioned above.

ii)           Preference will be given to Audit firm having office in the same centre as that of Auditee Branch.

iii)         Experience of Concurrent Audit with Union Bank of India and/or Other Public Sector Bank.

iv)          Weightage will be given to firms where the partners themselves are ex-Bankers or the firms has got tie-up with ex-Bankers/or has ex-Bankers as employees with requisite experience and exposure.

v)            Efforts will be made to allot the branches to the CA firms based on minimum category suggested by RBI and Internal Concurrent Audit Policy of Bank. However, in case CA firm of requisite category is not available in particular location, then Bank will select suitable CA firm either from lower or higher category.

Regarding appointment of Concurrent Auditors from RBI panel as per gradation based on Advances position of Branch, it is proposed to allot Branches to Concurrent Auditors as under:

4.2.      Merely meeting the eligibility criteria shall not automatically entitle the CA firm for empanelment. After empanelment, the work will be allotted as and when need arises at the sole discretion of the Bank. The empanelment will not give any right to the empanelled firm for carrying out the assignments. The Bank reserves its right to cancel any or all the offers without assigning any reason whatsoever.

1. Terms and Conditions

5.1. At any one point of time, not more than one audit assignment shall be awarded to single firm. An audit assignment that needs to be carried out across branches/units at different locations shall be considered as a single assignment for this purpose. Hence the existing Concurrent Auditors who have not completed three years tenure as Concurrent Auditor at the present branch/office of Union Bank of India/erstwhile Andhra Bank/ erstwhile Corporation Bank are not eligible to apply. CA firms may apply during cooling period. However their application shall be considered only after completion of cooling period of one year. Cooling period for auditors who refuse Bank’s offer or cease to continue the Concurrent Audit assignment before expiry of its tenure without cogent reasons will be three financial years.

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5.2.      Concurrent Auditors shall not undertake any other activities on behalf of the branch without obtaining concurrence of Audit & Inspection Department in writing.

5.3.      The firm shall execute undertaking of fidelity and secrecy on its letterhead in the format prescribed by Bank.

5.4.      In order to avoid conflict of interest, an undertaking shall be obtained from the Concurrent Auditors that they do not have any professional or commercial relationship with the borrowers of the Branch/Department which they are auditing.

5.5.      The Concurrent Auditor shall sign the Do’s & Don’ts statement in order to have proper arms length relationship with the Branch / Department of which they are conducting Audit.

5.6.      A declaration shall be furnished by the firm that credit facilities availed by the firm or partners or firms in which they are partners or directors including any facility availed by a third party for which the firm or its partners are guarantors have not turned or are existing as non-performing assets as per prudential norms of RBI. In case the declaration is found incorrect, the assignment shall get terminated besides the firm being liable for any action under ICAI / RBI guidelines.

5.7.      All necessary certificates including quarterly, half-yearly, annual closing of Book of Accounts that need to be given by audit firm as a part of Concurrent Audit assignment shall be given under its letterhead without any additional certification fee.

5.8.      A detailed checklist and other latest operating guidelines, view ID, required Menus for verification of details shall be provided to the Concurrent Auditors.

5.9.      Appointment of Concurrent Audit shall be purely at discretion of the Bank and no rights whatsoever accrue to the firm for such appointment.

5.10.  Audit firms shall submit monthly/quarterly/half-yearly reports in structured formats within stipulated period i.e. within 10 days of the completion of month /quarter /half-year. Any persistent delay shall be viewed negatively at the time of review of the CA firm & Bank also reserves the right to levy penalty as specified hereunder :

Delayed submission of reports will be viewed seriously and a penalty of 10% will be deducted if the report is submitted after 10^th but before 20^th of the next month to which the report pertains. In case the report is submitted after 20^th but before the end of the month a penalty of 20% will be

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deducted from the fees payable.

5.11.  Bank shall monitor the performance of audit firms closely. Performance of the Firms shall be evaluated monthly for their quality and coverage of reporting (Refer to Annexure – II). In case, CA firm is not attending audit work properly, continuous delay in submission of reports, non-reporting of serious irregularities/deviations, non-detection of fraud, non-detection of Leakage of income in branches where they are conducting Concurrent Audit, Bank reserves the right to terminate the assignment, without assigning any reason by giving 7 days notice. In case of termination of assignment, the remuneration for the incomplete month shall not be payable by the Bank. Moreover, the firm shall be debarred from empanelment for three financial years.

5.12.  Similarly, the CA firm may terminate the Agreement of Concurrent Audit assignment with one month prior notice. In such case too, the remuneration for the incomplete month shall not be paid by the Bank. However, as far as possible, the CA firm shall complete the Audit for the month including submission of Report for the month, before effecting its termination. Cooling period for such termination cases will be three financial years, if the same is without any cogent reasons.

5.13.  Concurrent Auditors shall not be permitted to mobilize any credit related proposals for any of the Branches of the Bank during the tenure of their assignment

5.14.  The Firm should undertake that they will not subcontract the audit assignment.

5.15.  As per the extant Concurrent Audit Policy, appointment of Concurrent Auditors will be made initially for a period of one year. The term may be extended, solely at the discretion of the Bank, for a further period of two (1+1) years on receiving satisfactory feedback from Auditee Branch/Unit and respective Zonal Audit office about their overall performance. A cooling period of 1 year shall be given after completion of three years of audit.

5.16.  Bank conducts review/renewal process of Concurrent Audit assignment and appointment of new Concurrent Auditors as of March and September every year. However if an auditor is assigned with the Concurrent Audit in between as per the exigencies of Bank the initial tenure shall be only for the remaining period either up to March or September as the case may be. For example if the assignment is made during the month of May, it shall be reviewed for second year by next year March. Likewise if the assignment is made during November it shall be renewed for second year by next year September itself and for a further period of two (1+1) years as of March and September based on the performance feedback received from Auditee Branch and respective Zonal Audit office.

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5.17.  If the Branch under Concurrent Audit is closed / merged or removed from Concurrent Audit due to official exigencies and for any other reasons whatsoever, the tenure of the Concurrent Auditor of that Branch will stand terminated automatically. In such cases Bank will not be liable to give alternate Branch for audit to the CA firm whose Concurrent Audit assignment is so terminated.

5.18.  On change of identity / change of firm name, during the currency of audit term, due to merger / amalgamation / reconstitution / any other reason, the Bank reserves it's right to allow the new firm to continue with the Concurrent Audit assigned to the old firm provided the new firm fulfils all the eligibility criteria given in our tender document.

5.19.  The Bank reserves its discretion to accept or reject the application of any Firm based on the guidelines issued by the regulators or by the Bank.

5.20.  The applicants shall opt for the Centre wherever they have their own offices with a minimum of one qualified partner/2 Chartered accountants.

5.21.  The Firms shall provide the particulars of assignments currently at hand in the column provided in the application form. The allotment will be done based on the number of qualified personnel available and the current assignments in hand. In case the Bank feels that it will be difficult for the firm to undertake the work, then that firm will not be considered for allotment of concurrent audit.

5.22.  Application which is incomplete is liable to be rejected.

5.23.  Bank reserves its right to maintain a separate panel of Audit Firms for undertaking specialized audits viz., Forex, Risk Management, System Audit etc., from the applications received in present process. Audit Firms are advised to indicate their specialization/qualifications of auditing for these specific areas.

5.24.  The Audit firms allotted with the audit of branches that are designated to carry out Forex business should have necessary expertise to carry out the audit of Forex operations with adequate earlier experience of auditing such branches.

1. Documents to be submitted alongwith the application as and when requested by Bank.

6.1.      CA firms shall scan and upload following documents, only after receiving intimation from the Bank. All enclosures must be self attested as true copy under seal by the partners.

i)            Duly  filled  and  signed  application  downloaded  from  website  by

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entering the required information.

ii)           Copies of certificate of experience / appointment letters of Concurrent Audit etc., in relation to similar assignment performed elsewhere, if any.

iii)         Copy of Registration Certificate issued to the firm by ICAI.

iv)          Copy of Certificate issued by ICAI of having completed “Course on Concurrent Audit of Banks” conducted by ICAI.

v)            Copy of certificate of CISA / DISA.

vi)          Copy of letter from RBI on allotting Unique Code No.

vii)         Due Diligence of staff/employees. (Annexure – B)

viii)       Letter of confirmation regarding non-disqualification of audit firms/Consultant. (Annexure – C)

ix)          Do’s & Don’ts. (Annexure – D)

x)            Declaration of Fidelity & Secrecy. (Annexure – E)

xi)          Undertaking shall be obtained from the Concurrent Auditors that they do not have any professional or commercial relationship with the borrowers of the Branch/Department where they are auditing. (Annexure – C)

xii)        Undertaking shall be obtained from the Concurrent Auditor that none of the credit facilities availed by the firm or any of its partners are declared as NPAs with any Bank.(Annexure – C)

6.2.      The allotment is subject to verification of correctness of the documents.

The Bank reserves the right to cancel/terminate the allotment at any point of time if the information/documents submitted are found to be incorrect. In such cases of termination, the cooling period will be three financial years.

1. Payment and Fees:

7.1. No out of pocket expenses or travelling allowance/halting allowance shall be paid to the Concurrent Audit firms for carrying out the assignment. However GST shall be paid as applicable from time to time in addition to basic fees.

7.2. The Concurrent Auditors shall be reimbursed actual out of pocket expenses incurred in connection with travel involved for conducting Inspections.

7.3. Payment to Concurrent Auditors shall be subject to deduction of tax at source at applicable rates.

7.4. All necessary certificates that need to be given as part of Concurrent Audit assignment shall be given by the audit firm without any additional certification fee.

7.5.    Fees payable to Concurrent Auditors is based on the level of advances as of previous  quarter  ending  in  case  of  branches.  Advances  position  as  of

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December and June quarter ending shall be taken into account for fixation of fees while assigning the Concurrent Audit assignment during or after March and September respectively. However, in case of specialized units it is consolidated fee payable as mentioned below ( Applicable GST will be paid extra.):

7.6.    The  Concurrent  Audit  fees  once  fixed  shall  remain  the  same  till  next renewal of the Concurrent Audit assignment irrespective of the level of

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Advances thereafter. The only exception may be in case of transfer/shifting of entire advances of another branch to the auditee branch. Bank decision will be final in this regard.

1. Conduct and Performance Monitoring

8.1. Each Branch / Audit Unit shall identify Nodal Officer as a single point contact for coordinating the Concurrent Audit work.

8.2. Respective Zonal Audit Office shall provide the Concurrent Auditor with requisite initial information of the branch activities and further support to conduct audit.

8.3. Minor irregularities pointed out by Concurrent Auditors are to be rectified on the spot. The Branch should ensure rectification of deficiencies without any loss of time so as to achieve the very purpose of Concurrent Audit.

8.4. Pending issues of previous reports shall be mentioned as persisting irregularities / deficiencies in the subsequent reports.

8.5. A formal wrap up discussion with the Branch / Units shall be arranged before submission of report by the Concurrent Auditor. In case of any difficulty in interpretation of existing guidelines of the Bank by the Branch/Concurrent Auditor, the same shall be referred to the Controlling Office/Concerned Zonal Audit Office before finalization of the report.

8.6. Quality of compliance with the Concurrent Audit reports shall be covered and commented upon by Internal Auditors.

8.7. Zonal Audit Office shall ensure that deficiencies pointed out in the Concurrent Audit reports are rectified and the Audit Reports are closed within one month of submission. Regional Offices shall be responsible for follow up with Branches to ensure compliance.

8.8. Zonal Audit Office shall interact with Concurrent Auditors at least once in a quarter.

8.9. The Bank reserves its right to review the appointment at any point of time and if necessary, can cancel the appointment.

8.10.  In case the firm fails to report serious irregularities / high value income leakage, Bank reserves right to report the matter to RBI / ICAI / IBA and initiate appropriate action. Such firms will be de-empanelled/black listed and they will not be eligible for assignment of audit work with Bank for next five years. Concurrent Audit has very important role in identifying System lapses, irregularities of every type, income leakage, ensuring compliance of

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Annexure - II

PERFORMANCE REVIEW (PARAMETERS 1 TO 3 TO BE FILLED UP BY BRANCH HEAD AND 4 & 5 BY In-Charge ZAO)

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