DBS.FID.No.C-11/01.02.00/2002-03

December 31, 2002

Dear Sir,

Pursuant to the directions of the Audit Sub-Committee of the Board for Financial Supervision (BFS), a "Committee on Computer Audit" had been constituted in October 2001 under the Chairmanship of the then Chief General Manager-in-Charge, Department of Banking Supervision with members from Reserve Bank of India, Institute of Chartered Accountants of India and select commercial banks. The mandate of the Committee was to draw up a standardised checklist for conducting Computer Audit in banks so as to enable the banks to ensure that the requisite controls are applied by their computerised branches and the auditors verify them and report thereon. The Committee has since submitted its Report, which was accepted by the Audit Sub-Committee of the BFS.

2. The Committee has classified the possible areas of audit interest in the Information System (IS) environment into 15 broad categories and has prepared ‘standardized checklists’ under each category to facilitate the conduct of computer audit. The issues elaborated in the checklists would give a fair idea about areas that need to be controlled. These checklists would be only in the nature of guidelines and FIs would be free to develop more elaborate checklists to conduct IS Audit suitable to the IT environment in which they operate and propose to operate.

3. Since the standardised checklist recommended by the Committee would, by and large, also be relevant to the FIs for conducting of Computer Audit, we forward herewith two copies of the Report for information and necessary action. The report is also accessible at the RBI website (www.rbi.org.in). This Circular along with the Report may please be placed before the Board of Directors of your institution at its next meeting.

4. Please acknowledge receipt.

Yours faithfully,