Module: | Statutory Audit, NFRA & ICAI Standards
Q46: Consider the following statements regarding the RBI guidelines for the appointment of Statutory Central Auditors (SCAs) for Commercial Banks for 2025-2026:
1. A bank with an asset size up to Rupees 5,00,000 Crore is permitted to appoint a maximum of four Statutory Central Auditors.
2. To protect independence, the bank must appoint the SCAs for a continuous period of three years, subject to the firms satisfying eligibility norms each year.
3. SCAs are permitted to undertake tax audit assignments for the same bank during their tenure, as this does not normally result in a conflict of interest under RBI norms.
Which of the above statements is/are correct?
2. To protect independence, the bank must appoint the SCAs for a continuous period of three years, subject to the firms satisfying eligibility norms each year.
3. SCAs are permitted to undertake tax audit assignments for the same bank during their tenure, as this does not normally result in a conflict of interest under RBI norms.
Which of the above statements is/are correct?
✅ Correct Answer: D
🎯 Quick Answer:
D. All statements 1, 2, and 3 are correct.Structural Breakdown: Statement 1 is correct; the RBI enforces a slab-based cap, limiting banks under the Rs 5 Lakh Crore threshold to a maximum of 4 joint SCAs to ensure coordination.
Statement 2 is correct; the tenure is fixed at a continuous 3 years to ensure the auditor has enough time to understand complex banking operations.
Statement 3 is correct; the RBI explicitly lists tax audits and interim financial reporting as "special assignments" that do not normally create a conflict of interest.
Historical/Related Context: Following banking sector NPAs, the RBI dramatically overhauled auditor appointment norms to break monopolies held by a few legacy firms, introducing mandatory joint audits and strict tenure limits to broaden the base of qualified banking auditors.
Causal Reasoning: Allowing the SCA to perform tax audits is a practical concession.
Because the SCA already verifies the financial data at a granular level, separating the tax audit would cause unnecessary duplication of effort and increase compliance costs for the bank without significantly enhancing independence.