Tuesday, September 11, 2018

YOUR AUDIT REPORT...STACKED IN STORAGE ROOM...


It has been heard for a long time that certain professional bodies were fighting and sending huge number of research papers to the government of India for getting into concurrent audit or statutory audit. They were fighting to get the recognition into the banking industry. Well many members of those bodies who propagated the same into different professional and management bodies   got higher promotion due to raising blindly the voice for the same under the tag line of Professional Development. Well the current statistic of the banking industry reflects that even a delayed or half penetration into the Indian banking audit system has saved them to be part of the major fraud and corrupt process of the Indian Banking Industry.  Well No audit system can help when the whole system is under the influence of bureaucrats. Your audit reports are just stacked in the cupboard of the storage room.  The auditor was happy that he got many audits of many banks and he got his payment and just simply met his responsibilities as prescribed and governed according to the books. There will be many audit reports which might have triggered the alarm but no one read or their reports were tweaked under pressure. The game of bureaucrats.

It is true that most of NPA happens due to political, corporate failures, policy bottlenecks and wrong business strategy.  But the recent few cases of the banking industry raises the voice that in many instances deliberate steps and actions were taken to take advantage of the loopholes of the system.

Concurrent Audit or statutory audit any fraud detection process would fail when the target is deliberate collapse of the bank. The level of corruption has created new history and its being found that the trust level even on the top honchos is a matter of question as of now.  One of the key points to notice is that the performing banks are losing their position and their values are getting drained.  The long term growth and brand is at high stake and almost on the verge of collapse. Exponential growth achieved on short term decision making ,just to make name in market and increase the shareholders returns in the short term are few of the objectives which has lead to a phenomenal growth of few banks in the last decade.
Exploitation of resources have been one of the key burden on the Indian economy as banking industries foul play of loan restructuring  and cooked valuation papers game came into play. Often an economic slowdown for a prolonged period happens due to wrong allocation of resources. Overleveraging a certain segment of bureaucrats would lead to loss for others. Funding gets dried up, banks gets stringent in terms of doable projects and hence the slowdown has a repulsive effect on the whole economy.

 Corporate governance and ethics is now under a big threat even from the top management. The Banking industry is under the threat of competition where a collapse of one bank might lead to mergers growth resulting eradication of competition for the competitors. No auditing system can develop corporate governance and ethics levels when the objective of making NPA is beyond the calculation of theory based objective.
 In many cases one might find historically that across the globe many banks might have come under the threat of collapse due to sharp criminal mind of getting the performing bank into a nonperforming. Faster growth is often being driven to the wrong path so that the monopoly of business is created.

Auditing levels are bound to collapse when the process of hiding is designed by the few greatest minds of the financial industry. When the promotion of the PSU banking segment is linked with politics then NPA are bound to happen. Corporate ethics and governance come nowhere when one political figures play the dice. Indian banking industry needs advanced technology so that the fraud detection is triggered before the fraud converts into a long-term loss. In the last couple of years, the way the Banking Industry has been flooded with re-capitalization speaks enough for the depth of fraud and they mindset of the players who have taken this act as simple play.  The below-mentioned data speaks about the last 10 years recapitalization and the failure of the audit system.

These are all taxpayers money which has been siphoned into the pockets of the corporation making them wealthier and into the pockets of election funding.  The Indian audit system needs to be changed now since traditional practices are not able to catch the technology-driven platform of corruption. The loopholes are being identified so finely that audit system is bound to collapse. The economic impact of the re-capitalization is on the fiscal and other segments of the economy where resources get squeezed and the suffering is passed to some other segment.

The failure of the banking industry gives birth to new business vertical in the corporate funding which is often designed like Ponzi scheme –taking money from people and showcasing for investments.  Private investments look for an opportunity to take advantage as bank lending declines. This might be a nexus of the industry played by top honchos. The high level of corruption in Indian banking system has led its roots so deep that even to catch the big cats the whales might come out of the bag. This is a risky proposition to get the culprits under the ambit of law.

To get the Banking industry on track we need punishment for the professionals who are involved so that the taxpayers and recurrence of the same is stopped. The fear of punishment would only get back the corporate governance and ethics back to its level. If the people involved in corruption should not be let free due to a time delay in getting justice nor due to any legal loophole.

The use of advanced technology as an audit system in the Banking industry would give immense identification of patterns and would raise red flag before a particular deal gets through. The advance detection of leverage deals and manipulative corporate funding would get caught which will create a fear among the bankers that me might get caught.  The entire segment of loan management and credit score system should be linked to the AI, Big data and Block chain technology.  Well where humans fails to learn corporate governance, at least technology might help to get the corporate ethics and governance back into the humans.


AI would amplify the speed of identifying the patterns and anomalies in massive data sets, more value comes from investigating and deducing the reasons behind the pattern or the anomaly.  The audit system needs to upgrade and built the various permutation and combination of financial audit aspects and take the matter forward for building a technology-driven audit system. 

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