Section 35: Audit

3[35. Audit.--(1) The balance sheet and profit and loss account prepared in accordance with section 34 shall be audited by a person who is duly qualified, under the Chartered Accountants Ordinance, 1961 (X of 1961), or any other law for the time being in force, to be an auditor of companies and is borne on the panel of auditors maintained by the State Bank for the purposes of audit of banking companies 4[.The State Bank shall classify the panel of auditors, so maintained, in different categories for different banking companies keeping in view the scope and size of such banking companies.] (2) An auditor shall hold office for a period of three years and shall not be removed from office before the expiry of that period except with the prior approval of the State Bank. 1[(3) If the State Bank is not satisfied with the performance of the auditor of a banking company or the auditor has not fulfilled any of the requirements laid down in this section the State Bank after giving the auditor an opportunity of being heard, may (a) revoke the appointment of external auditors of the banking company; (b) downgrade the category of the auditor in the panel of the auditors; and (c) remove the auditor from the panel of the auditors for a maximum period of five years. (4) The auditors shall report all the matters of material significance to State Bank and reporting of such information and material shall not constitute breach of confidentiality under any law for the time being in force.] 2[(5)] The State Bank may, from time to time, lay down guidelines for the audit of banking companies and the auditors shall be bound to follow those guidelines. 2[(6)] Subject to the provisions of sub-section (3), the auditor shall have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities and penalties imposed on, auditors, of companies by section 145 of the Companies Act, 1913 (VII of 1913). 2[(7)] In addition to the matters which, under the aforesaid Act and the guidelines laid down by the State Bank under sub-section (3), the auditor is required to state in his report, he shall also state-- (a) whether or not the information and explanations required by him have been found to be satisfactory; (b) whether or not the transactions of the banking company which have come to his notice have been with in the powers of the banking company; (c) whether or not the returns received from branch offices of the banking company have been found adequate for the purposes of his audit; (d) whether the profit and loss account shows a true balance of profit and loss for the period covered by such account; and (e) any other matter which he considers should be brought to the notice of the shareholders of the banking company.]

Effective date: 1962-06-07

Related sections