Section 30 of BRA : Section 30: Audit

Explanation using Example

Imagine a scenario where ABC Bank, a banking company operating in India, is preparing its annual financial statements. According to Section 30(1) of the Banking Regulation Act, 1949, the bank's balance-sheet and profit and loss account must be audited by a qualified auditor.

Before ABC Bank can appoint a new auditor or re-appoint its current auditor, as per Section 30(1A), it must seek the prior approval of the Reserve Bank of India (RBI). This ensures that the auditor meets the central bank's requirements and standards for auditing a banking institution.

Suppose the RBI suspects irregularities in ABC Bank's transactions. In line with Section 30(1B), the RBI may order a special audit of the bank's accounts. The RBI may appoint a qualified auditor or instruct the bank's current auditor to carry out this special audit, focusing on specific transactions or a particular time frame.

As stated in Section 30(1C), ABC Bank will bear the costs associated with this special audit, including any incidental expenses.

The auditor, while conducting the audit, will have the same powers and duties as outlined in Section 227 of the Companies Act, 1956, as per Section 30(2) of the Banking Regulation Act. Additionally, the auditor must report on specific matters related to the bank's operations, as required by Section 30(3), such as the adequacy of explanations provided by the bank, the legality of its transactions, and the accuracy of its financial reporting.