EXIT MEETING

Date: 12.02.2020

Client Name: Islampur Branch

Jamuna Bank Limited (JBL)

Audit Firm: Khan Wahab Shafique Rahman & Co.

Chartered Accountants.

An exit meeting has been held between authority of Jamuna Bank Limited, Islampur Branch and Auditor, Khan
Wahab Shafique Rahman & Co. at the Islampur Branch of JBL on the completion of branch visit for the year
ended 31st December, 2019. The findings which were come to the knowledge of auditor during the audit period
are shown in Annexure-A.

The following members were present in the meeting:

SL. No. Name Designation Signature

01 Mr. Abdullah Al Hassan AVP

02 Mr. Rasel Miah First Officer

03 Mr. Md. Rezwan Rahman Auvy First Officer

04 Md. Golam Kibria Rana FEO

Auditor's Representatives of KWSR & Co., Chartered Accountants

SL. No. Name Designation Signature

01 Mr. Zahid Hasan Auditors Representative

02 Mr. Golam Rabbani Auditors Representative

1
PART - A: LOAN

2
 1. Irregularities in Loan rescheduling facility:

Observation:
During the course of our audit we observed that Loan has been rescheduled but an irregularity was found as per
Bangladesh Bank NOC. Instances are given below:

Name of Down payment

Name of Loan A/C No. Down payment Paid
the Required (As per Shortfall (In Tk.)
Branch (In Tk.)
Borrowers BB)

Choice
Islampur 0060-2006002404 80,653 54,000 26,653
Fashion

Implication/ Risk:
It indicates weakness in credit risk management.

Recommendation:
The management should look into the matter carefully.

Management Response:

2. Poor recovery from parties under suit / litigation as on 31.12.19:

Observation:
During the course of our audit we found that suit has been filed against borrower but recovery prospect was not
satisfactory. Instances are as follows:

Amount Outstanding as
Total Recovery % on 31.12.2019
recovered
Name. of Borrower Loan A/C No. Suit Value during the (Tk.)
during the
(Tk.) year
year(Tk.)
Fahima Fabrics 0060-0200000022 3,845,000 0 0% 3,001,214
J.B Enterprise 0060-2006001021 820,690 0 0% 820,690
M/S JANANI 0060-2006000577
1,050,715 0 0% 734,390
BASTRALOY
BIBI HAZERA 0060-2006001807
1,783,173 0 0% 1,783,173
ENTERPRISE
FOUR STAR 0060-2006001138
320,601 0 0% 253,627
TRADING

Implication/ Risk:
It indicates weakness in credit risk management.
Recommendation:
Management should review the status of the suit files in each month and take necessary steps effective to settle
the issue. Concerned department should regularly follow up the cases under litigation and take necessary steps
for smooth recovery and update.
Management Response:

3
 3. Poor recovery from written-off parties as on 31.12.19:

Observation:
During the course of our audit we found that in some cases loan were written-off but recovery prospect was not
satisfactory. Instances are given below:

Amount
Total recovered Recovery % Outstanding as on
Name of Borrower
Suit Value during the year during the year 31.12.2019 (Tk.)
(Tk.)
Fahima Fabrics 3,845,000 0 0% 3,001,214
J.B Enterprise 820,690 0 0% 820,690

M/S JANANI BASTRALOY 1,050,715 0 0% 734,390

BIBI HAZERA ENTERPRISE 1,783,173 0 0% 1,783,173

FOUR STAR TRADING 320,601 0 0% 253,627

KARIM TRADING AGENCY 1,056,744 0 0% 857,394

Implication/ Risk:
It indicates weakness in credit risk management.

Recommendation:
Management should follow up the recovery process on a regular basis and if needed, organizations outside the
bank may be engaged to recover these outstanding amounts.

Management Response:

4. Poor recovery from Classified (BL) parties as on 31.12.19:

Observation:
During the course of our audit we found that in some cases loans were classified as BL but recovery prospect
was not satisfactory. Some instances are given below:

Amount Outstanding as on
Outstanding as Recovery %
recovered 31.12.2019 (Tk.)
Name of Borrower on 01.01.2019 during the
during the
(Tk.) year
year (Tk.)
KHAJA TRADING 16,641,449 0 0% 16,641,449

Rahbar Fabrics 2,104,877 0 0% 2,104,877

Implication/ Risk:
It indicates weakness in credit risk management
Recommendation:
Management should follow up the recovery process on a regular basis and if needed, organizations outside the
bank may be engaged to recover these outstanding amounts.
Management Response:
4
 5. Irregularities in Loan documentation and utilization procedure:

Observation:
While examining the records we have come across the following deficiencies in Loan documentation.
Instances are given below:

Loan A/C No. Name of Borrower Remarks

ABDULLAH  Updated insurance copy was not found.
0060-0134000354
ENTERPRISE
0060-0151000063
0060-4200000117
0060-4200000126
0060-1502000165
0060-1502000174
0060-1502000209
0060-1502000218
0060-1502000227
0060-1502000236
0060-1502000307
0060-1502000316
0060-1502000325
0060-1502000334
0060-1502000343
0060-1502000352
0060-1502000361
0060-1502000370
0060-1502000389  Updated insurance copy was not found.
Nannu Spinning Mills
0060-1502000398
Ltd.
0060-1502000405
0060-1502000414
0060-1502000423
0060-1502000432
0060-1502000441
0060-1502000450
0060-1502000469
0060-1502000478
0060-1502000496
0060-1502000503
0060-1502000512
0060-1502000521
0060-1502000530
0060-1502000549
0060-1502000558
0060-1502000567
0060-1502000576
0060-0134000256

Implication/Risk:
These are internal control weaknesses therefore legal procedure against the party may be hampered for inadequate documentation.

5
Recommendation:
Management should look into the matter seriously.

Management Response:

6. Irregularities regarding CL maintenance:

Observation:
At the time of auditing at the Branch, we observed following misdeed in CL:

Name of Branch Irregularities

 Wrong Security Value was posted in CL
Islampur  In some cases CL not filled up properly

Implication/ Risk:
It reflects lack of internal control system and it is also non-compliance with relevant BRPD circular.

Recommendation:
Management should look into this matter carefully and also should follow BRPD circular for preparing CL.

Management Response:

7. Excess Security value posted in CL Statement

Observation:
During the course of our audit we observed that, Excess Security value posted in CL Statement. Instance is given
below:
Security
Security
Name of Value as per Difference
Branch Name Loan ID Value as per
Party Valuation (Tk.)
Bank (Tk.)
Report (Tk.)
Islampur ABDULLAH 0060-
ENTERPRISE 0134000354 81,395,676 39,200,000 42,195,676

Implication/ Risk:

Recommendation:

Management Response:

6
 8. NID of borrower was not presented on CL statement

Observation:
During the course of our audit we observed that in some cases NID of borrowers were not presented on CL
statement. Instances are as follows:
Name of Borrower Loan Identification No. Remarks

Sharmin Azad 0060-0133002621

NID of borrowers were not presented
Md. Dulal Ahmed 0060-0133002630 on CL statement
Ridoy Hasan Bijoy 0060-0133002649
Sree Bikash Kumar Das 0060-0133002514

Implication/ Risk:

Recommendation:

Management Response:

9. CL statement was not filled up properly:

Observation:
During the course of our audit we observed that, the CL statement was not filled up properly with value of
eligible security. Instances are given below:
Balance Eligible
Borrower Outstanding/ security as
Nature Loan ID Status
Name Sanction per CL
Amount (Tk.) (Tk.)
Cash Credit-
Euro Collection 0060-0134000390 7,623,016 0
SME Small
Cash Credit-
H & Brothers 0060-0216000172 2.257,753 0
Hypo
Value of
Faruque
SOD (FDR) 0060-0133002069 402,647 0 eligible security
Ahmed
was not found
SME
M/S. Maria in CL
Jamuna 0060-0200000264 1,126,555 0
Fabrics statement.
Sommriddhi
SME
M/S. Saif
Jamuna 0060-0200000353 10,111,391 0
Corporation
Sommriddhi

Implication/ Risk:

Recommendation:

Management Response:

7
 10. Non-compliance of BRPD circular # 1, dated 6th February 2019:

Observation:
As per BRPD Circular no.1 dated 6 February 2019, any Loan following 03 (Three) years of classification as
Bad/Loss Loan for which 100% provisions are already made, bank should take immediate action to write off
those Loans. However, we observed that some loans classified as bad or loss are outstanding for more than 3
years of following classification and no action has been taken to write-off. Instances are as follows:

Outstanding
Period of Arrears
Name of Borrower Loan ID No. Type of Loan Amount
(in month)
(Taka)
Cash Credit
0060-0216000145 49 3,932,452
Hypo
KHAJA TRADING
SME Jamuna
42 11,388,857
0060-0215000165 Chalantika

Implication/ Risk:

Recommendation:

Management Response:

11. Loan made with higher risk

Observation:
During our audit period at Islampur Branch, we observed that considerable amount of loan has been sanctioned
to particular client which is significant to the total loan of the branch. Instance is given below:

Loan made Total Loan of Percentage of

Name of borrower A/C No.
(Tk.) Branches (Tk.) Loan
1 2 3 4 5=3/4
0060-0151000063 900,000,000 2,015,560,349 44.65%
Nannu Spinning Mills 0060-4200000117
Ltd. 0060-4200000126
0060-1502000165
0060-1502000174
0060-1502000209
0060-1502000218
0060-1502000227
0060-1502000236
0060-1502000307
0060-1502000316
0060-1502000325
8
 0060-1502000334
0060-1502000343
0060-1502000352
0060-1502000361
0060-1502000370
0060-1502000389
0060-1502000398
0060-1502000405
0060-1502000414
0060-1502000423
0060-1502000432
0060-1502000441
0060-1502000450
0060-1502000469
0060-1502000478
0060-1502000496
0060-1502000503
0060-1502000512
0060-1502000521
0060-1502000530
0060-1502000549
0060-1502000558
0060-1502000567
0060-1502000576
0060-0134000256

Implication/ Risk:

Recommendation:

Management Response:

9
PART- B: General Banking

10
 1. Irregularities in cash in safe (vault), cash in transit & cash at counter:

Observation:
During the course of our audit we found that actual cash holding at the end of a particular day exceeds
the limit of cash fixed for the branches by the head office.

Cash-in-Safe (Vault) we have noted that the following cash-in-safe exceeded the limit set by the head office. Instances
of balances exceeding the limit are shown below:

Cash Holding Excess of Limit

Branch name Date Limit (Taka)
(Taka) (Taka)

Islampur 22.10.2019 60,921,019 60,000,000 921,019

Implication/ Risk:
a. It indicates non-compliance with policies and instructions of the Bank.
b. It reflects weaknesses in internal control system. and
c. Insurance company may not entertain any claim in case of mishap.

Recommendation:
The branch management should comply with the approved cash holding limit or re-fix the daily cash
holding limit according to the need of the branch with the approval from Head office.

Management Response:

2. Irregularities in opening of customers’ accounts – Current / Saving Accounts

Observation:
While we were auditing we observed that the account opening procedures with regard to current and
saving deposits were not followed properly. Instances are given below:

Branch name Account No. Account holder name A/C Type Remarks
Islampur 0060-
K.M Khairul Islam & Signature of Introducer was
Tahera Mursheda SB not found in account
0310018467 Ruman holder’s photo.
Rahman Shamsul Haque &
0060-
Alhaz Nasaruddin SB No nominee was found
0310018421 Molla
Signature of Introducer was
0060-
Luna SB not found in account
0310018396 holder’s photo.
0060- Sumaiya Parvin SB Signature of Introducer was
11
 not found in account
0310018350 holder’s photo.

Implication/ Risk:
It indicates non-compliance with the policy of the Bank regarding account opening procedures.
It negatively affects the prevention of money laundering activities and
Account holders identification cannot be ensured.

Recommendation:
Management should take proper initiatives to complete the documentation procedure.

Management Response:

3. Minimum balances for Current / Saving accounts were not maintained properly:

Observation:
As per Head Office policy, Taka 500 and Taka 2,000 are required to be maintained as minimum balance for
Current and Saving accounts respectively. But during the course of our audit of branches, as mentioned below, we
identified a good number of cases where minimum balances were not maintained properly. Instances are given
below:

Minimum Lowest
Account Holder Account balance balance
Branch name Account No.
Name Type required observed
(Tk.) (Tk.)

K.M Khairul Islam &

0060-
Tahera Mursheda SB 500 60
0310018467
Ruman
0060-
Rashidul Islam SB 500 51
0310018887
0060-
Md. Faruk Hossain SB 500 16
Islampur 0310019055
0060-
Mr. Babul Khan SB 500 0
0310019242
0060- M/S Bijoy
CA 2,000 15
0210011804 Corporation
0060-
M/S Sonali Trading CA 2,000 427
0210011984

Implication/Risk:
a. It indicates non-compliance of Head office policy regarding minimum balance in deposit
accounts.
b. It indicates lack of adequate control by branch management over deposit accounts.

Recommendation:
12
The management should monitor that the minimum balances in the respective accounts are maintained
in due manner to comply with related head office’s policies.
Management Response:

4. Irregularities in Dormant Account:

Observation:
During the course of our audit we observed that the balance in accounts have been remaining dormant
since long. Instances are given below:

Last
Branch Account no./No. of Account Holder Accoun Balance
Transactio
name Accounts Name t Type (Tk.)
n Date
Pakiza Weaving Mills
0060-0210000021 CA 37,950 31.12.2019
(PVT) Ltd.
M/S Tasfia Fruit
0060-0210002690 CA 104,565 31.12.2019
Collection
Islampur
0060-0210002734 Md. Riaz & Brothers CA 52,825 31.12.2019
Md. Shahinur Islam &
0060-0210003037 CA 138,881 31.12.2019
Shahi
0060-0310000485 Md. Ridwan Ahmed SB 5,026 31.12.2019

Implication/ Risk:
It indicates weaknesses in internal control system.

Recommendation:
The branch management should take initiative so that account remained in dormant be reopened or
activated and followed up with appropriate procedure.

Management Response:

5. Zero balance account

Observation:
We have found that a number of accounts are being maintained zero balance since long. Instances are
given below:

Account Last transaction

Branch name Account no. Account Name
Type Date
0060-0310001475 MD. Sumon SB 31.12.2019
0060-0310001868 Chandraban Begum SB 31.12.2019
Islampur 0060-0310002509 Nasima Akter SB 31.12.2019
0060-0310002554 Md. Foysal Alam SB 31.12.2019
0060-0310002670 Minu Akter SB 31.12.2019

Implication/Risk:
13
 It indicates weakness in internal control system.

Recommendation:
The branch management should take initiative to close those accounts showing nil balance.
Management Response:

6. Unadjusted balance regarding to Pay Order

Observation:
During the course of our audit we have found unadjusted balance of pay order. Instances are given below:

Balance
Branch name Date P/O No. Name of the Applicant
(Tk.)
07.03.2011 JPO0536746 M/S Azom Ali 1,600
20.09.2011 JPO0536911 Rafiqul Islam Khan 14,500
Islampur 10.10.2012 JPO0791041 Md. Alomgir Lion 3,000
27.11.2012 JPO0854711 Md. Iqbal Hossain 74,787
03.01.2013 JPO0854764 Anwar Hakim 10,000

Implication/ Risk:
It indicates weak internal control system.

Recommendation:
Management should take proper initiatives regarding the matter.

Management Response:

7. Irregularities to Employee Transfer

Observation:
During the course of our audit we observed that some of employees of this bank serving for the same
branch continuously for more than 3 years. Instances are given below:

Branch Name of the Designatio Date of Current

Excess period of time
name Employee n joining Date
Islampur 31.12.201
Abdullah Al Hasan AVP 04.11.2012 4 Years 1 month 27 days
9
31.12.201
K.M Khairul Islam FAVP 22.07.2012 4 Years 5 months 9 days
9
31.12.201
Md. Omar Faruk SEO 01.10.2010 6 Years 2 months 30 days
9
Rumki Rezwana 31.12.201
FEO 21.11.2011 5 Years 1 month 10 days
Haque 9
Golam kibria Rana FEO 09.09.2013 31.12.201 3 Years 3 month 22 days

14
 (Cash) 9
31.12.201
Rakibul Hasan FEO 03.06.2013 3 Years 6 month 28 days
9
31.12.201
Rasel Miah FO 29.05.2014 2 Years 7 month 2 days
9
Md. Rezwan 31.12.201
FO 10.12.2015 1 Year 21 days
Rahman Auvy 9

Implication/Risk:
a. Non compliance of BB guidelines.
b. It reflects weak internal control system over human resource management.

Recommendation:
The management should develop and practice a comprehensive human resource management policy to
ensure effective use of existing resources through compliance with BB guidelines. Employees may feel
de-motivated or may be over intimated with the customers.

Management Response:

8. Irregularities in Attendance Register

Observation:
During the course of our audit we have come across the following irregularities in the attendance register.

Branch Name Designation Date

Remarks
name
Md. Omar Faruque SEO 05.03.2019
Rakibul Hasan FEO 13.06.2019
Signature was not
Islampur Md. Omar Faruque SEO 19.09.2019 found in the
Sanjay Narayan attendance register.
FEO 31.10.2019
Basak
Md. Tamim Ahmed AO 07.11.2019

Implication/Risk:
It indicates the weakness internal control system.

Recommendation:
The management should take necessary step about this matter.

Management Response:

9. Irregularities regarding cheque stop payment statement

15
Observation:
During the course of our audit, we noticed the following irregularities in cheque stop payment that is
GD (General Diary) copy has not found. Instances are given below:

Branch name Account No. Name of Account Holder Cheque No

Maisha Butics (Jahangir
0060-0210008247 JCAB-4087956
Hossain Molla)
Islampur 0060-0210009040 Ashraful Alam Babu JCA-B 3072954
0060-0210005259 Maisha Traders JCAB-1819971
0060-0310018207 Biplob sarker JSBA- 2339387

Implication/Risk:
It reflects the inadequate internal control over cheque stop payment statement.

Recommendation:
Management should take proper initiative about this issue.

Management Response:

10. Irregularities regarding ATM Card Register

Observation:
According to the policy of JBL ATM card which will not be collected within the 180 days, those will
be treated as undelivered and should be taken necessary initiative in this regard. During the course of
our audit we found that the policy was not followed properly. Instances are given below:

Branch name Account Holder Name Account. No. / Card No Date

Tarek Uddin Vuia 0310011142 09.05.2017
Md. Jakir Hossain 0210009068 09.05.2017
Onjan kumar Nag SB- 11624 1406.2017
Islampur
Khalil khan 0210010832 14.06.2017
Nizam Uddin CD- 11537 07.08.2018
Helal Fakir SB- 17397 07.08.2018

Implication/ Risk:
It reflects weaknesses in internal control system.

Recommendation:
Management should take proper initiatives as per policy.
Management Response:

11. Mutilated notes have been kept instead of transferring to Bangladesh Bank

16
Observation:
During the course of our audit we observed that mutilated notes have been kept instead of transferring
to Bangladesh Bank. Instances are given below:

Total No. of
Branch name Value (Tk.) Total Value (Tk.)
Currency
100 5000 500,000
50 100 5,000
Islampur
20 400 8,000
10 800 8,000
Total 521,000
Implication/Risk:
It violation of Bangladesh bank guildline

Recommendation:
Management should take proper initiative about this matter.

Management Response

12. Unsecured Cash in Vault

Observation:
In the course of our audit we observed that, Unsecured (without insurance) money in vault of maximum days in the year. Instances
are given bellow;

Insurance Coverage /
Cash Holding
Branch name Date Vault Limit (Tk.) Unsecured (Tk.)
Taka

Islampur 22.10.2019 60,921,019 60,000,000 921,019

Implication/ Risk:
If any accident occurred, the bank would not claim against that accident.

Recommendation:
Management should be taken initiatives about these matters.

Management Response:

13. Tax was not deducted properly at source from salary

Observation:
While auditing we observed that Tax was not deducted properly at source from salary in some cases. Instances
are given below:

17
 Minimum
Total
deductible
Salary Tax
Branch Name of Designatio Tax Difference
paid Deducted
Name employee n (Per (Tk.)
(Monthly) per month
Month)
Basic
(Tk.)
Md. Omar
SEO 60,431 5,000 5,029 29
Faruque
Maliha Tabassum PO 40,000 - 1,400 1,400
Islampur Md. Shihab First
28,000 - 647 647
Hossain Officer
Rumki Rewana
FEO 37079 500 1,115 615
Haque

Implication:
It is non-compliance of ITO 1984.Penalty may be imposed by NBR
Recommendation:
Management should comply with ITO 1984 properly.
Management Response

14. Undelivered Cheque book not destroyed:

Observation:
During the course of our audit we observed that, cheque books, which are undelivered for long time,
are not destroyed yet. Instances are given below:

Branch Account Cheque book Cheque book Account

Account name
name number from to opening date
Ifti Fabrics CD- 2412 2631701 2631850 17.10.2018
Md. Mosaraf
SND- 260 2678151 2678200 22.10.2018
Hossain
Islampur M/S Nandita
CD- 4152 3140551 3140600 24.12.2018
Fashion
Liberty Shirt CD- 7962 3205351 3205400 03.01.2019
Choice Fashion CD- 10547 3923601 3923650 09.04.2019

This indicates internal control weakness in the branch level

Recommendation:
The branch management should take necessary steps to strengthen control over cheque book
management
Management Response:

18
 15. Minimum Tax was not deducted properly at source from salary

Observation:
While auditing we observed that Tax was not deducted properly at source from salary in some cases. Instances
are given below:

Minimum
Total Tax
deductible
Salary Deducted
Branch Name of Designatio Tax Difference
paid per
name employee n (Per (Tk.)
(Monthly) month
Month)
Basic (Tk.)
(Tk.)
First
Rasel Miah 10,600 400 417 17
Officer
Md. Rezwan Asst.
20,000 0 417 417
Rahman Auvy Officer
Md. Helal Asst.
15,000 0 417 417
Foreign Uddin Officer
Exchange Mohammad Asst.
15,000 0 417 417
Tamim Ahmed Officer
Md. Masud Asst.
15,675 0 417 417
Rana Officer
Asst.
Kawsar Hossain 15,000 0 417 417
Officer

Implication:
It is non-compliance of ITO 1984. Penalty may be imposed by NBR

Recommendation:
Management should comply with ITO 1984 properly.

Management Response:

19