Regional office for ABC Bank have been receiving several complaints against a branch in Delhi and has reasons to believe that balance sheet of such branch was manipulated by window dressing including inflated branch expe

The below procedures shall be considered while conducting the forensic audit work and reporting to regional office: Window Dressing Aspect: Take in to account the figures of the deposits and advances, just one month before the closing date and perform due-diligence to ensure these are not fake receipts. Check whether on or near the closing date, the cash credit limit holders account has been fully utilised to increase the advances portfolio. Whether the amount has been transferred to the respective savings / current account holders to increase the liability side of the balance sheet of the branch. This is called the window dressing. Also check whether after the date of closing the amount so debited in the CC accounts has again been credited. This is called the reversal of the window dressing done on the date of closing. Use data-analytics techniques to identify unique patterns or if there is any unusual activity in deposits or borrowing that may indicate fraud. Also check on possible nexus between the fraudster and the previous Branch Managers. Disk imaging of previous managers to identify suspected mail exchanges. Branch Expenses: Compare the branch expenses figures (other than the operational expenses of interest payment) from YoY / Quarter to Quarter. The expenses may be relating to the branch maintenance, repairs and renewals, entertainment expenses, customer meeting expenses, stationery expenses etc. Whether these expenses have been done under the branch manager's delegated authority or the prior-approval has been obtained for it? Whether the expenses have been judiciously expended, even though they are within the delegated authority and as per bank's policy? Large value expenses shall be evaluated for possible fraud. Use of data-analytics shall be made to identify if there are exceptional expenses which shall be reported in the audit along with the supporting evidence. Insurance Business: Examine the KYC records for customers who have purchased the insurance policy from the branch. Whether they have been made aware about the terms and conditions of the insurance policy and that premium calculation is correct? Collect the data from the branch, the name of the official, who has sold the policy. Also, ensure that policy documents are sent to customers on a timely basis. Whether the policy holder is paying the policy premium on a timely basis? Perform random checks to ensure that the existing policy holders are satisfied with the policy and branch officials. Manager's Integrity: Ascertain from the past records for the Branch manager and assess whether any disciplinary action is pending. Evaluate the living standard of the branch manager and check whether the same in sync with the income, extra sources of income like rent, farm production etc. Perform enquiries from other employees in the branch and ascertain if there is any unusual behaviour identified by the branch manager. Check the personal accounts of the branch manager and family members of the branch manager to ascertain the un-due credit in excess of his income level.