The Reserve Bank of India ( RBI ) has issued the guidelines for the appointment /re-appointment of Statutory Auditors for State and Central Cooperative Banks. These guidelines shall come into effect from April 1, 2024. Accordingly, for all accounting periods commencing on or after April 1, 2024, all StCBs and CCBs shall submit an application for prior approval of RBI before July 31 of the reference accounting year, in accordance with the guidelines.
The guidelines mainly focus on the Eligibility Criteria of Statutory Auditors (SAs), Independence of Auditors, Review of Performance of Statutory Auditors, Tenure and Rotation of Statutory Auditors, Number of StCBs / CCBs an Audit firm can Audit, . Audit Fees and Expenses of Statutory Auditors..etc.
According to the guidelines, Statutory Auditors shall be appointed at a time for a period of one year only and shall be reappointed annually for the succeeding two years subject to them continuing to satisfy eligibility norms stated in these guidelines. During such period, premature removal of the SA shall require prior approval of RBI. However, any such request for removal shall be forwarded to RBI with the approval of the Board / ACB.
It was also added that an auditor / audit firm shall not be eligible for appointment / re-appointment in the same bank for six years (two tenures) immediately after completion of a full or part tenure.
In case an auditor / audit firm has conducted an audit of the bank for part-tenure (one year or two years) and then is not re-appointed for the remainder tenure, it shall not be eligible for re-appointment in the same bank for six years after completion of part-tenure. However, audit firms can continue to undertake statutory audit of other banks.
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