APPLICATION TO BE SUBMITTED TO:

THE GENERAL MANAGER,

INSPECTION DIVISION,
KARNATAKA VIKAS GRAMEENA BANK,
HEAD OFFICE,
BELGAUM ROAD,
NEAR NEW BUS STAND,
DHARWAD,
580008.
ON THE WEBSITE
OUTSOURCING OF CONCURRENT AUDIT FUNCTIONS
Notii!"tio# No.K$%&'INSP' 0(')0(*+(, D"t-. 0*.0).)0(,
I//0-. o1 -#%"%i#% C2"1t-1-. A!!o0#t"#t/
D-t"i3/
A. Terms and Conditions Of Engagement
B. Application Form for Empanelment of Concurrent Auditors
C. Details of fee structure
D. Methodology for conducting concurrent audit/reporting
A. TERMS AND CONDITIONS FOR APPOINTMENT OF EXTERNAL
AUDITORS, CONDUCTING CONCURRENT AUDIT OF BRANCHES AND
OFFICES .
The following are the terms and conditions for applying for empanelment as
Concurrent auditor and Conditions for appointment
!. Applicant should "e either a #roprietorship$ #artnership or Company.
%. The audit firm shall "e in the &B' panel and satisfy the minimum eligi"le
criteria li(e professional )ualification$ e*perience etc ie. Auditor/partner shall
"e )ualified FCA and underta(en +tatutory audit in any "an( or concurrent
audit in any other "an(
,. The audit firm shall su"mit one application only. 'f more than one application
's su"mitted$ only one application will "e considered "y the Ban( at its choice.
-owe.er$ this does not dis)ualify any audit firm from su"mitting application as
mem"er of any other partnership firm.
/. The empanelment and allocation of "ranches to the auditors will purely "e the
prerogati.e of the Ban(. +uch empanelment shall "e initially for a period of
one year and can "e e*tended up to a ma*imum period of , years su"0ect to
satisfactory performance of the auditor.
1. The concurrent audit firm should furnish the name and )ualification of the
persons$ who shall "e conducting audit in the "ranch$ to the Ban( "efore
commencing the audit assignment and such persons will ha.e to continue
audit for all the months during the concurrent period..
2. The concurrent audit firm shall gi.e an underta(ing that they will not su"
contract the audit assignment.
3. The concurrent audit firm will not lo""y directly or indirectly for considering any
credit proposals of their friends/clients to the Ban(.
4. Auditors should not ha.e "een dis)ualified under +ection %%2 of the
Companies Act$ !512 to accept this appointment.
5. The Concurrent audit firm / or the partners should not ha.e any credit facilities
with the audit "ranch for which they are applying for e*cept credit facilities
against their own deposits. The audit firm shall not ha.e any conflict of interest
that are of material significance in discharge of their functions as Concurrent
Auditors.
!6. The Company / Directors and Firm /any partners7 of the firm should not ha.e
statutory audit$ credit audit$ .aluation of fi*ed / current assets or any other
similar assignments with any "ranch.
!!. The Company / Directors and Firm/any partners7 of the firm should not ha.e
any disciplinary matters pending with 'CA'/&B' and they should not ha.e
suffered any dis)ualification.
!%. The firm should ha.e sufficient e*perience in conducting audits in Ban(s.
!,. The firm should "e nearer to the proposed audit "ranch as for as possi"le.
!/. Ma*imum of selected 1 "ranches will "e allocated to a firm. -owe.er$ the
Ban( has the discretion to change the allocation of the "ranches "ased on
administrati.e e*igencies.
!1. The audit firm should gi.e their consent in writing / underta(ing letter in the
prescri"ed format agreeing to comply with and "ound "y the terms and
conditions prescri"ed "y the Ban(.
!2. 8hile discharging their duties as Concurrent Auditors$ the audit firm shall
follow the applica"le guidelines / procedures as may "e ad.ised "y
9o.ernment/ C:C and other &egulatory agencies.

!3. The auditor / audit firms shall e*ercise due diligence while conducting the
concurrent audit. The auditor / audit firm is accounta"le for any deficiencies in
the audit report / lac( of diligence on the part of the auditor or any of its
employees leading to any losses.
!4. The audit firm shall own professional responsi"ility for concealment of facts$
not reporting serious irregularities or losses on account of non reporting/non
detection of early warning signals/frauds.
!5. The auditor / firm shall indemnify the Ban( against all actions$ omissions$
proceedings$ claims$ suits$ damages and any other e*penses for causes
attri"uta"le to the auditor / firm including any loss suffered on account of any
"reach of the terms and conditions of the offer of the appointment.
%6. The performance of the auditor /audit firm shall "e re.iewed at periodical
inter.als and if the performance is found wanting$ then the ser.ices of the
auditors shall "e terminated with due intimation at the discretion of the Ban(
and such Audit firms shall stand de;empanelled. This is without pre0udice to
referring the issues to the professional "ody and also claims damages for such
unsatisfactory ser.ice$ whatsoe.er "y the firm or any of its employees.
Methodology of ele!t"o#$
!< The interested firms / companies should apply in the prescri"ed format furnished in
the Ban(=s we"site on or "efore the specified date. They should send the application
to 9eneral Manager$ inspection Department$ -ead Office$ Belgaum &oad$ Dharwad.
%< Mere su"mission of application "y the audit firms for appointment as Concurrent
Auditor in >arnata(a :i(as 9rameena Ban( shall not entitle them automatically for
assignment. The application will "e processed and empanelment will "e
communicated in due course
,< The audit firm which is pro.isionally selected for empanelment will "e communicated
through letter/ e;mail and the acceptance to the Ban(=s offer is to "e confirmed "y the
audit firm immediately.
/< After receipt of letter of acceptance from the Firms$ the Ban( will appoint the audit firm
for concurrent audit for the period of one year su"0ect to correctness of information
furnished in the application
1< 'f the selected firm has not sent copies of other details as called for and letter of
acceptance duly signed "y them within the due date$ the pro.isional selection will
stand automatically cancelled. ?o separate intimation in this regard will "e
communicated.
2< The present offer of appointment is purely pro.isional and su"0ect to the applicant
ta(ing up the audit assignment within the stipulated date.
3< The appointment / allotment of "ranches shall "e "ased on the a.aila"ility of the
"ranches and num"er of audit firms in a particular region. -owe.er the decision of the
"an( is final in this matter.
4< The Ban( reser.es the &ight to appoint / re0ect any audit Firm for Concurrent Audit.
5< 'n respect of firms which are not "eing selected$ no communication will "e
entertained.
!6< Ban( may conduct a day=s wor(shop for selected auditors for familiari@ation of our
terminologies$ +ystems and procedures "efore actual commencement of concurrent
audit. ?o tra.eling / halting allowance or any such allowances will "e paya"le for
attending such wor(shops.
!!< #rocedure relating to issue of letter of authority to ena"le the audit firm to .erify
rele.ant files/ records at specific "ranch allotted to audit firm for conducting concurrent
audit will "e informed to audit firm separately while confirming the acceptance /
appointment letter.
!%< The auditor shall maintain in strict confidence$ the information containing instructions
to 'nspecting Officers issued during the period$ inde* of circular issued during the
period$ indicati.e list of serious irregularities o"ser.ed "y the internal inspectors$
indicati.e list of early warning signals$ shall not use or disclose to others. This should
"e maintained e.en after the termination of the agreement.
!,< The appointment of concurrent audit is purely contractual and for a specific period of
!% months and same may "e renewed on a yearly "asis su"0ect to satisfactory
performance/eligi"ility of the particular "ranch for concurrent audit.
!/< The ma*imum period of contract shall "e restricted to , years. -owe.er$ the Ban(
reser.es the right to terminate the contract at any point of time for whatsoe.er reason
as the Ban( may deem fit.
!1< After termination of the contract the auditor / firm shall not use/(eep any material
information gi.en "y the Ban(. They shall return all materials "elonging to the Ban(
after the termination of this agreement$ unless otherwise instructed in writing in Ban(.
!2< The Ban( shall ha.e the a"solute discretion in allotting the "ranch$ re.ising fee
structure$ stipulating terms and conditions of the appointment and termination of the
ser.ices of the empanelled auditor after gi.ing due notice at any point of time
including during the pendency of the contract.
AAA
A%%l"!&t"o# Fo'( fo' E(%&#el(e#t of Co#!)''e#t A)d"to'
'. 9E?E&AB '?FO&MAT'O?.
! ?AME OF T-E F'&M
% Complete postal/communication
address with City/#in Code$ +tate
, Office Telephone ?o./s.
/ Office FAC ?o. with +TD Code
1 E;mail Address. D.alidation<
2 Constitution 'ndi.idual/#roprietorship/ #artnership Firm Bimited Co.
3 Date of formation /Esta"lishment of
the Firm
4 &egistration ?o. of the Firm /
Company with date with 'nstitute of
Chartered Accountants of 'ndia D'CA'<
5 &egistration ?o. of Firm/Co. 8ith date
Duni)ue code num"er< with &B'.
!6 +er.ice Ta* &egistration ?o.
!! CEA9 Empanelment ?o.
!% #ermanent A/c ?o. of the Firm
DMandatory<
!, ?o. of #artners / Directors.
!/ ?ame$ Fualification$ Mem"ership ?o.$
year and other details DDA+A
)ualification may also "e mentioned<.
?ame of the #roprietor/
#artner/ Director
Contact
?um"er
Educational
Fualification
Mem"ership
?um"er
Gear Brief profile.
!
%
,
!1. Details of audit staff employed
a<Fualified Chartered Accountants
"< +emi Fualified Chartered Accountants
c< &etired/e*;"an( officers
d< Article/audit cler(s
c< other assistants
Total
''. #A+T EC#E&'E?CE OF T-E F'&M / COM#A?G D&elating to .arious "an( audits<
Particulars Name of the Bank No. of years in
completed years
During the
period
A. Central Statutory Audit
B. Statutory Branch Audit
C. Concurrent Audit
D. Income/Reenue Audit
!. System / IS Audit
". Any other Special Audit /
assignment allotted #y the Bank
$. Details of Bank audit assignment currently on hand
including as Concurrent Audit if any.
Bank %ype of audit
-. A'e& of %e!"&l"*&t"o# of the firm/partners in Ban( audits DBarge Corporate Branch$ +ME Branch$
-ousing Finance Branch$ Any other Commercial Ban( / 9ramin Ban(<.
'. Any other rele.ant details / particulars of the Firm.
Documents to be enclosed &a' copy of partnership deed / memorandum
and
Articles of association( &#'Certificate of registration )ith ICAI/R*C in the case of
companies(
&c'Copy of +CN registration )ith RBI( &d' Copies of letters receied from the other
Banks
assigning the )ork of concurrent audit / statutory audit/other audits to audit firms as
reported in the application( &e' any other releant enclosures/eidence / reports
)hich audit
firm has mentioned in the application.


#lace
Date +ignature
H?DE&TA>'?9/DECBA&AT'O?
6!. 8e ha.e read the a"o.e terms and conditions for selection / appointment of
concurrent auditor and agree to a"ide "y the same. 8e also underta(e to e*ecute the
underta(ing letter in the prescri"ed format agreeing to a"ide "y the specific terms and
conditions of appointment "efore ta(ing up the assignment in case the firm is
selected for Concurrent Audit.
6%. 8e here"y declare that all the partners of the firm are full time practicing Chartered
Accountants.
6,. 8e here"y declare that indi.idually$ no partner is engaged in practice otherwise or in
any other acti.ity which would "e deemed to "e in practice under +ection %D%< of the
Chartered Accountants Act !5/5.
6/. 8e here"y declare that neither our Firm not any of the partners ha.e "een
dis)ualified / de"arred / cautioned "y 'CA' during the last 1 years.
61. 8e here"y declare that the constitution of the firm as on the date shown in this profile
/ resume is the same as that of in the Constitution Certificate issued "y the 'CA' and
any changes in the constitution will "e intimated to the Ban( as and when ta(es
place.
62. 8e here"y declare and confirm that the a"o.e particulars are true$ complete and
correct and no other material information has "een withheld.
63. The a"o.e particulars / information / details are gi.en on "ehalf of the applicant$ "y
the undersigned authorised to do so.
64. 8e also underta(e to a"ide "y any other Terms and Conditions which the Ban( may
stipulate in compliance to &B' / 9o.ernment guidelines or other internal guidelines of
the Ban( issued from time to time.
65. 'n case of any dispute$ the decision of the Ban( is final and only the appropriate
Courts
in Dharwad shall ha.e the 0urisdictional authority.
#lace
Date +ignature
Det&"l of Fee St')!t)'e
The S!hed)le of Fee h&ll +e & )#de'
B)"#e Le,el A(o)#t "# R. %e'
+'&#!h- (o#th
For "ranches with total "usiness up to &s !66 crores 2666
Branches with total "usiness of &s !66 crores E a"o.e
"ut less than %16 crores
3666
Branches with total "usiness of &s %16 crores E a"o.e 4666
'n addition to the a"o.e &s 466/; per month for auditing of e*tension counter.
'n case of concurrent audit of "ranch is outside the head )uarter$ the tra.elling
and con.eyance e*pense of &s !666 per "ranch shall "e paid.
METHODOLOG. FOR CONDUCTING CONCURRENT AUDIT-REPORTING
!< The audit team should "e led "y the Chartered Accountant I #roprietor/ #artner/
Director of the audit firm with e*perienced assistance as the wor( may warrant. The
audit personnel should not "e changed so that continuity and consistency is
maintained. 'f there is any change in the constitution of the firm during the period of
appointment it shall "e informed to the Ban( immediately.
%< The audit team should .isit the "ranch for minimum of / days in a month$ out of which
chartered accountant / partner of the audit shall .isit the "ranch compulsorily and
su"mit the audit report.
,< The audit firm shall conduct appropriate due diligence "efore employing any personnel
who will "e entrusted with the wor( of conducting the audit of the Ban(. The audit firm
is also responsi"le for any commission and omission of its employees which may
cause and or li(ely to cause any loss / damage to the Ban( or its clients.
/< Before commencing the audit$ the mem"ers of the Audit team should "e properly
introduced to the Branch in charge "y proper introduction letter containing the
specimen I signatures and photo/s of the persons conducting the Audit duly attested
"y the Chartered Accountant I #roprietor / partner of the firm / Directors of the
Company / Authorised Officials of -ead Office.
1< Auditor to "e guided "y Circulars$ Manual of 'nstructions and other guidelines issued
"y the Ban( from time to time Dwhich are a.aila"le in the "ranch< for conducting the
audit of the "ranch. 'f necessary$ -ead Office$ 'nspection Department will pro.ide the
copies of important Circular / guidelines as and when demanded / situations
warranted.
2< Auditors should do parameter chec(ing of the software to ascertain that the interest
rates and parameters are in accordance with the Circular guidelines in order to chec(
any lea(age of income to the Ban(. They shall also .erify that .arious
hardware/software are (ept properly and proper access control is maintained during
the Branch operations. They should also .erify securities charged to the Ban( and
ensure its correctness.
3< The auditor should (eep watch on large withdrawals from OCC / Cash Credit account
with limits of &s %1 Ba(hs and a"o.e and any de.iations o"ser.ed should "e reported
to the -ead Office immediately.
4< Any deficiencies / lacunae pertaining to post CB+ migration issues / Finacle issues if
any come across during the course of Audit$ Auditors should "ring to the (nowledge
of -O through special report and o.er phone / e;mail or fa*.
REPORTING
The audit team should adopt the following procedure in the matter of reporting their
findings.
Di< The auditors should prepare 0otting sheets in duplicate on day to;day "asis duly listing
the findings and hando.er the one copy of such report to the "ranch manager against
his ac(nowledgement and follow;up for prompt rectification.
Dii< Hpon completion of the audit of the gi.en "ranch in full$ the audit firm shall prepare a
final report in triplicate after discussing with the "ranch Manager and the original copy
of the final report shall "e gi.en to the Manager with due ac(nowledgement. One copy
shall "e su"mitted to &egional office and one copy to -ead Office$ 'nspection
Department immediately after completion.
Diii< Any transactions of serious nature which is against normal "an(ing practices / any
other un;healthy practices indulged "y the "ranch staff$ persistent irregularities$
shortage of securities$ transactions of fraudulent nature$ "orrowal accounts gi.ing
early warning signals and other serious irregularities li(e deficiency in sanction or
documentation / pendency in Documentation / 'ncomplete documentation / non;
renewal or non;reco.ery of e*pired limits / non;o"tention or not ma(ing a.aila"le
Bo&s for loan accounts "eyond ,2 months$ e*pired limit status and so on should "e
su"mitted to / "rought to the notice of -ead Office through special report and o.er
phone / email / fa*. Any failure / omission / negligence on the part of the audit firm
shall render the firm lia"le for action and termination of audit assignment. The special
report should co.er the deficiency in critical areas / guidelines and the irregularities /
shortcomings o"ser.ed during the course of the audit. Auditors are howe.er free to
report any other deficiencies which they may come across during the course of their
audit. The special report should reach -ead Office within 3 days of the final reporting
made.
E/%e!t&t"o# f'o( the &)d"to'
6!. The system of concurrent audit has "een introduced mainly with the following
o"0ecti.es;
a< To (eep all routine wor( of the "ranch under continuous chec( so as to supplement
Ban(=s efforts to ensure a ro"ust internal control system at the "ranch in the critical
and sensiti.e areas.
"< To ensure that .iolation$ if any$ in the procedures of the Ban( are "rought to the
notice of the management immediately so that timely correcti.e and remedial steps
are ta(en.
c< To pic( up and report early warning signals in the right time to alert the
management.
d< To report serious irregularities / fraudulent acti.ities noticed at the "ranch to
management in right time.
e< To ensure the )uality of credit portfolio with due focus on credit appraisal$ sanction$
monitoring$ and reco.ery aspects etc.
6%. The audit firm shall own professional responsi"ility for concealment of facts$ not
reporting serious irregularities or losses on account of non;reporting / non detection of
early warning signals / frauds.
6,. The Ban( may con.ene the meetings of select auditors at periodical inter.als at the
specified centres for interaction.
6/. The Ban( will also e.aluate the performance of the auditors at periodical inter.als
"ased on the following parameters;
i< Ade)uacy of the co.erage of audit areas and reporting$ as per norms.
ii< Timely su"mission of +pecial &eport.
iii< Timely reporting of serious irregularities / early warning signals.
i.< Contri"ution to impro.ement in o.erall control "y the "ranch.
.< Failure to detect and report lea(age of income as well as serious irregularities.
61. The auditor / firm shall indemnify the Ban( against all actions$ omissions$
proceedings$ claims$ suits$ damages and any other e*penses for causes attri"uta"le
to the auditor / firm including any loss suffered on account of any "reach of the terms
and conditions of the offer of the appointment.
62. 'f the performance is found wanting$ then the ser.ices of the auditors shall "e
terminated with due intimation at the discretion of the Ban( and such audit firms shall
stand de;empanelled. These are without pre0udice to referring the issues to the
professional "ody and also claim damages for such unsatisfactory ser.ices$
whatsoe.er "y the firm or any of its employees.