Concurrent Audit — What It Is, Why It Exists And How It Is Different From Internal Audit

Concurrent Audit — What it is, Why it Exists and How it is Different From Internal Audit

Okay so if you've ever worked in a bank or have any connection to the banking world you've probably heard the term concurrent audit at some point.

And most people just nod along like they understand what it means. But honestly very few people actually know what it is, why banks do it and how it is different from the regular internal audit that every company does.

So lets just break it down simply. With a real example because that always makes it easier.

First — What Even is a Concurrent Audit?

Lets start with the word itself. Concurrent means happening at the same time.

So a concurrent audit is basically an audit that happens simultaneously — at the same time as the transactions are taking place. Not after the month is over. Not at the end of the year. Right now. As things are happening.

Think of it like this. Imagine a bank branch is processing hundreds of transactions every single day — loans being disbursed, cash being deposited, withdrawals happening, new accounts being opened. A concurrent auditor sits in that branch and checks these transactions almost as they happen. Same day or within a day or two at most.

The whole idea is to catch mistakes and irregularities immediately — before they become bigger problems.

Meet Ramesh — A Branch Manager Who Understood Its Importance the Hard Way

Ramesh manages a mid sized branch of a nationalised bank in Nagpur. Decent branch, good business, busy every single day.

A couple of years back one of his loan officers was processing a bunch of small business loans. Everything looked fine on the surface. Papers were submitted, documents were checked, loans were approved.

But the concurrent auditor sitting in the branch noticed something. Three of those loan accounts had the same address. Different names, different PAN cards, but same address. And the businesses mentioned in the loan applications? None of them could be verified on a quick check.

The auditor flagged it immediately. The loans were put on hold. An investigation started. Turned out it was a fraud attempt — fake borrowers, fake businesses, all trying to get money from the bank.

Because the concurrent auditor caught it on the same day the loans were approved — the money never left the bank. If this had been caught in a regular internal audit three months later the money would have been long gone.

That is exactly why concurrent audit exists.

So How is it Different From Internal Audit?

This is the question most people have and honestly its a fair one because both sound similar.

Internal audit is done periodically. Maybe monthly, quarterly or even annually depending on the organisation. The internal auditor comes in, looks at past transactions, checks if everything was done correctly and gives a report.

Its like a doctor doing a full body checkup once a year. Useful, important, necessary. But if something goes wrong in between those checkups you wont know until the next one.

Concurrent audit on the other hand is like having a doctor sitting right there with you every single day. The moment something looks off — they flag it. Right then.

A few key differences to understand —

• Timing — Internal audit happens after the fact. Concurrent audit happens as transactions occur.
• Purpose — Internal audit checks overall systems and processes. Concurrent audit focuses on individual transactions in real time.
• Who does it — Internal audit is usually done by the bank's own staff or an internal team. Concurrent audit is mostly done by external CAs appointed by the bank.
• Frequency of reporting — Internal audit reports come periodically. Concurrent auditors give reports almost every week or even more frequently.

Who Needs a Concurrent Audit?

Concurrent audit is mostly a banking thing. RBI has made it mandatory for bank branches above a certain business size. Generally branches with a loan portfolio or deposit base above a certain limit are required to have a concurrent auditor.

But its not just banks. Larger NBFCs, some government departments and certain high value treasury operations also use concurrent audits to keep a real time check on things.

Why Does This Matter to You?

Even if you're not in banking this concept matters in a simple way.

If you have money in a bank — and all of us do — concurrent audit is one of the things quietly working in the background to make sure that branch is running properly. That loans are being given correctly. That cash is being handled properly. That nobody is doing anything funny with your deposits.

Its one of those systems you never think about until you realise how much work it is actually doing behind the scenes.