According to the report, the bank has accounted Rs 36.30 as interest on income tax refunds whereas claims for Rs 21.74 crore are yet to be allowed by the income tax department. "Such accounting is not in conforimity with accounting system 9 (AS-9) issued by the Institute of Chartered Accounts of India. AS-9 states: "Where the ability to assess the ultimate collection with reasonable certainty is lacking at the time of raising any claim... it may be appropriate to recognise revenue only when it is reasonably certain that the ultimate collection will be made."

The bank posted a 53 per cent increase in net profit to Rs 14.7 crore in fiscal 1999, up from Rs 9.62 crore in the previous year. Going by the auditors' qualification, the bank would have ended the year with a net loss of Rs 7 crore had it followed the correct accounting practice.

UBI hasalso not ascertained and provided for its liabilty arising on account of wage revision, analysts pointed out. Other public sector banks have made provisions on this account.

The note on account also pointed out: "Certain properties ... were revalued on the basis of report of approved valuers on March 31, 1998, and such revaluation resulted in appreciation in the value of the said premises by Rs 59.43 crore which was credited to the capital reserve-revaluation reserve."

The Calcutta-based bank is one of the three weak banks which have been closely looked into by the Verma panel. Its operating profit has plunged to Rs 46.39 crore in 1998-99 from Rs 164.31 crore in the previous year. UBI chairman Biswajit Chowdhury had said the operating profit has declined sharply because in 1997-98, the bank had gained Rs 110 crore from interest on refund on income tax agianst Rs 36 crore in 1998-99.