The Hindu Business Line : Alert on bank frauds

POLICE have cautioned chartered accountants on the increasing number of bank frauds and advised the auditing profession to effectively monitor banking transactions accounts to prevent major losses to public at large.

Addressing a day-long seminar on `Bank Audit' organised by the Institute of Chartered Accountants of India (ICAI) here on Saturday, the Deputy Commissioner of Police, Detective Department, Mr Amit Garg, said white-collar crimes affect more individuals and turn costlier than traditional offences.

"The auditors have to play a vital role in evolving the system of finding early warnings to detect fraudulent transactions and save the stakeholders of banks and financial institutions from major crisis," Mr Garg said.

Mr Garg was of the view that bank frauds happen when the banking laws, byelaws and guidelines were flirted by the bank employees either with malafide intention or by negligence. He attributed the growing number of bank frauds to abuse of discretionary powers by unscrupulous persons.

According to Mr Garg, audit of bank records was becoming a mere routine exercise and early warning signals in borrowal accounts at the time of appraisals were not acted upon.

Mr Amit Garg was of the view that the system of concurrent audit as operative in the banks failed to achieve its objective in as much as the early signals of gross irregularities were not timely reported and acted upon.

He also advised banks and financial institutions to adopt the system of conducting periodical review of their discretionary powers, legal system and audits.

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