critical issues in finalization of financial statements and ifc

CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA

CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA

LUNAWAT & CO.Chartered AccountantsChartered AccountantsChartered AccountantsChartered Accountants

LUNAWAT & CO.Chartered AccountantsChartered AccountantsChartered AccountantsChartered Accountants24242424thththth July 2016, FaridabadJuly 2016, FaridabadJuly 2016, FaridabadJuly 2016, Faridabad24242424thththth July 2016, FaridabadJuly 2016, FaridabadJuly 2016, FaridabadJuly 2016, Faridabad

CRITICAL ISSUES

IN PREPARATION OF

FINANCIAL STATEMENTS

and

INTERNAL FINANCIAL

CONTROLS

CRITICAL ISSUES

IN PREPARATION OF

FINANCIAL STATEMENTS

and

INTERNAL FINANCIAL

CONTROLS

Lunawat & Co.

Annual Annual Annual Annual ReportReportReportReport

Director’s Director’s Director’s Director’s ReportReportReportReport

Auditor’s Auditor’s Auditor’s Auditor’s ReportReportReportReport

Financial Financial Financial Financial statementstatementstatementstatement

ssss

Balance Balance Balance Balance SheetSheetSheetSheet

Profit / Profit / Profit / Profit / LossLossLossLoss

Cash FlowCash FlowCash FlowCash Flow NotesNotesNotesNotes

Lunawat & Co.

FINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTS

�Financial Year Financial Year Financial Year Financial Year –––– 31313131stststst MarchMarchMarchMarch

�Cash Flow for all except OPC, SC, DC. Cash Flow for all except OPC, SC, DC. Cash Flow for all except OPC, SC, DC. Cash Flow for all except OPC, SC, DC.

�Shall Shall Shall Shall be in Schedule III be in Schedule III be in Schedule III be in Schedule III

�Amended Amended Amended Amended w.e.fw.e.fw.e.fw.e.f. 4.9.15 to include . 4.9.15 to include . 4.9.15 to include . 4.9.15 to include

MSMED details under Trade MSMED details under Trade MSMED details under Trade MSMED details under Trade PayablePayablePayablePayable

Lunawat & Co.

BASICS BASICS BASICS BASICS –––– CURRENT VS. NONCURRENT VS. NONCURRENT VS. NONCURRENT VS. NON----CURRENTCURRENTCURRENTCURRENT

� Current Asset Current Asset Current Asset Current Asset ---- satisfies any of following criteria; satisfies any of following criteria; satisfies any of following criteria; satisfies any of following criteria;

� In the company’s normal operating cycle it is; In the company’s normal operating cycle it is; In the company’s normal operating cycle it is; In the company’s normal operating cycle it is;

�Intended for sale; orIntended for sale; orIntended for sale; orIntended for sale; or

�Intended to be consumed; orIntended to be consumed; orIntended to be consumed; orIntended to be consumed; or

�Expected to be realized.Expected to be realized.Expected to be realized.Expected to be realized.

�Held primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; or

� Expected to be realized within 12 months after Expected to be realized within 12 months after Expected to be realized within 12 months after Expected to be realized within 12 months after

reporting date; orreporting date; orreporting date; orreporting date; or

� Cash or cash equivalent unless it is restricted from Cash or cash equivalent unless it is restricted from Cash or cash equivalent unless it is restricted from Cash or cash equivalent unless it is restricted from

being exchanged or used to settle a liability for at being exchanged or used to settle a liability for at being exchanged or used to settle a liability for at being exchanged or used to settle a liability for at

least 12 months after reporting date.least 12 months after reporting date.least 12 months after reporting date.least 12 months after reporting date.

Lunawat & Co.

BASICS BASICS BASICS BASICS ---- CURRENT LIABILITYCURRENT LIABILITYCURRENT LIABILITYCURRENT LIABILITY� Current liability if it satisfies any of the following Current liability if it satisfies any of the following Current liability if it satisfies any of the following Current liability if it satisfies any of the following

criteria; if it is :criteria; if it is :criteria; if it is :criteria; if it is :

� Expected to be settled in the company’s normal Expected to be settled in the company’s normal Expected to be settled in the company’s normal Expected to be settled in the company’s normal

operating cycle; oroperating cycle; oroperating cycle; oroperating cycle; or

�Held primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; or

�Due to be settled within 12 months after reporting Due to be settled within 12 months after reporting Due to be settled within 12 months after reporting Due to be settled within 12 months after reporting

date; ordate; ordate; ordate; or

� The company does not have an unconditional right The company does not have an unconditional right The company does not have an unconditional right The company does not have an unconditional right

to defer settlement of liability for at least 12 to defer settlement of liability for at least 12 to defer settlement of liability for at least 12 to defer settlement of liability for at least 12

months after reporting date. Terms of a liability months after reporting date. Terms of a liability months after reporting date. Terms of a liability months after reporting date. Terms of a liability

that could, at option of counterparty, result in its that could, at option of counterparty, result in its that could, at option of counterparty, result in its that could, at option of counterparty, result in its

settlement by issue of equity do not affect its settlement by issue of equity do not affect its settlement by issue of equity do not affect its settlement by issue of equity do not affect its

classification.classification.classification.classification.

Lunawat & Co.

GENERALGENERALGENERALGENERAL� Balance Sheet Title Balance Sheet Title Balance Sheet Title Balance Sheet Title –––– ‘as at’ or ‘as on’ 31st ‘as at’ or ‘as on’ 31st ‘as at’ or ‘as on’ 31st ‘as at’ or ‘as on’ 31st

March March March March

� Rounding off based on turnover.Rounding off based on turnover.Rounding off based on turnover.Rounding off based on turnover.

�< < < < RsRsRsRs. 100 Crores . 100 Crores . 100 Crores . 100 Crores ---- To the nearest hundreds, To the nearest hundreds, To the nearest hundreds, To the nearest hundreds,

thousands, lakhs or millions or decimal thousands, lakhs or millions or decimal thousands, lakhs or millions or decimal thousands, lakhs or millions or decimal

thereofthereofthereofthereof

�RsRsRsRs. 100 Crores or more . 100 Crores or more . 100 Crores or more . 100 Crores or more ---- To the nearest To the nearest To the nearest To the nearest

lakhs or millions or crores or decimal thereoflakhs or millions or crores or decimal thereoflakhs or millions or crores or decimal thereoflakhs or millions or crores or decimal thereof

� Comparative Comparative Comparative Comparative figures figures figures figures required required required required to be disclosed to be disclosed to be disclosed to be disclosed

for the last reporting for the last reporting for the last reporting for the last reporting periodperiodperiodperiod

Lunawat & Co.

GENERALGENERALGENERALGENERAL

�Linking of notes with B/S & PL Linking of notes with B/S & PL Linking of notes with B/S & PL Linking of notes with B/S & PL

�Name , DIN, designation & address of Name , DIN, designation & address of Name , DIN, designation & address of Name , DIN, designation & address of

signatories to any document signatories to any document signatories to any document signatories to any document

uploaded / filed with ROCuploaded / filed with ROCuploaded / filed with ROCuploaded / filed with ROC

�B/s & PL on letterhead of Auditors!!B/s & PL on letterhead of Auditors!!B/s & PL on letterhead of Auditors!!B/s & PL on letterhead of Auditors!!

�Date of signingDate of signingDate of signingDate of signing

�Payment to shareholders for 2(22)(e) Payment to shareholders for 2(22)(e) Payment to shareholders for 2(22)(e) Payment to shareholders for 2(22)(e)

Lunawat & Co.

FORM OF BALANCE SHEET (PART 1)FORM OF BALANCE SHEET (PART 1)FORM OF BALANCE SHEET (PART 1)FORM OF BALANCE SHEET (PART 1)Particulars Note

No.

Figures as at the

end of the CRP

Figures as at the

end of the PRP

I. EQUITY AND LIABILITIES

(1) Shareholders’ Funds

(a) Share capital

(b) Reserve and Surplus

(c) Money received against share

warrants

1

2

(2) Share application money pending

allotment

3

(3) Non-current Liabilities

(a) Long term borrowings

(b) Deferred tax liabilities (net)

(c) Other long term liabilities

(d) Long term provisions

4

5

6

7

(4) Current Liabilities

(a) Short term borrowings

(b) Trade payables

(c) Other current liabilities

(d) Short term provisions

8

9

10

TOTAL

SHARE CAPITAL & RESERVESSHARE CAPITAL & RESERVESSHARE CAPITAL & RESERVESSHARE CAPITAL & RESERVES� Authorized Authorized Authorized Authorized / Paid up Capital / Paid up Capital / Paid up Capital / Paid up Capital –––– Check with Check with Check with Check with

Master DataMaster DataMaster DataMaster Data

� Reconciliation of no of shares outstanding at Reconciliation of no of shares outstanding at Reconciliation of no of shares outstanding at Reconciliation of no of shares outstanding at

beginning and at end of reporting period.beginning and at end of reporting period.beginning and at end of reporting period.beginning and at end of reporting period.

� RRRRightsightsightsights, preference & restrictions attaching to , preference & restrictions attaching to , preference & restrictions attaching to , preference & restrictions attaching to

each class of shares each class of shares each class of shares each class of shares etc.etc.etc.etc.

� Is Is Is Is conversion of loans into shares in event of conversion of loans into shares in event of conversion of loans into shares in event of conversion of loans into shares in event of

default in repayment default in repayment default in repayment default in repayment –––– NonNonNonNon----cash?cash?cash?cash?

� Share Premium A/c??Share Premium A/c??Share Premium A/c??Share Premium A/c??

Lunawat & Co.

SHARE APPLICATION MONEY SHARE APPLICATION MONEY SHARE APPLICATION MONEY SHARE APPLICATION MONEY ---- DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE

� Terms & conditions & No. of shares proposed to Terms & conditions & No. of shares proposed to Terms & conditions & No. of shares proposed to Terms & conditions & No. of shares proposed to

be issued.be issued.be issued.be issued.

� Amount of premium, if any.Amount of premium, if any.Amount of premium, if any.Amount of premium, if any.

� Period before which the allotment shall be made.Period before which the allotment shall be made.Period before which the allotment shall be made.Period before which the allotment shall be made.

� Whether company has sufficient authorized Whether company has sufficient authorized Whether company has sufficient authorized Whether company has sufficient authorized

share capital to allot shares.share capital to allot shares.share capital to allot shares.share capital to allot shares.

� Period for which the share application money has Period for which the share application money has Period for which the share application money has Period for which the share application money has

been pending beyond the period for allotment as been pending beyond the period for allotment as been pending beyond the period for allotment as been pending beyond the period for allotment as

mentioned in the share application document.mentioned in the share application document.mentioned in the share application document.mentioned in the share application document.

� Reason for which such share application money Reason for which such share application money Reason for which such share application money Reason for which such share application money

is pending for allotment, if so pending.is pending for allotment, if so pending.is pending for allotment, if so pending.is pending for allotment, if so pending.

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�14 14 14 14 ––––NewNewNewNew ---- Whether Co. has made Whether Co. has made Whether Co. has made Whether Co. has made

preferential allotment / PP of shares or preferential allotment / PP of shares or preferential allotment / PP of shares or preferential allotment / PP of shares or

fully or partly fully or partly fully or partly fully or partly convertible convertible convertible convertible deb. during deb. during deb. during deb. during yryryryr. . . .

Whether Whether Whether Whether SSSS. 42 complied & . 42 complied & . 42 complied & . 42 complied & amount amount amount amount raised raised raised raised

used for purposes for which funds were used for purposes for which funds were used for purposes for which funds were used for purposes for which funds were

raised. raised. raised. raised.

� If not, details of amount involved and If not, details of amount involved and If not, details of amount involved and If not, details of amount involved and

nature of nonnature of nonnature of nonnature of non----compliance.compliance.compliance.compliance.

Lunawat & Co.

BORROWINGSBORROWINGSBORROWINGSBORROWINGS� Long Term vs. Short Long Term vs. Short Long Term vs. Short Long Term vs. Short Term Term Term Term

�Directors??Directors??Directors??Directors??

� CC Limits?? Demand Loans??CC Limits?? Demand Loans??CC Limits?? Demand Loans??CC Limits?? Demand Loans??

� Secured /unsecured Secured /unsecured Secured /unsecured Secured /unsecured –––– nature of security to be nature of security to be nature of security to be nature of security to be stated stated stated stated & & & & guaranteed by directors to be shown guaranteed by directors to be shown guaranteed by directors to be shown guaranteed by directors to be shown separately.separately.separately.separately.

� Term of repayment of term loans to be givenTerm of repayment of term loans to be givenTerm of repayment of term loans to be givenTerm of repayment of term loans to be given

� Period of maturity with respect to B/S datePeriod of maturity with respect to B/S datePeriod of maturity with respect to B/S datePeriod of maturity with respect to B/S date

�Number of installments Number of installments Number of installments Number of installments due; due; due; due; AmtAmtAmtAmt of installments dueof installments dueof installments dueof installments due

� Applicable rate of interestApplicable rate of interestApplicable rate of interestApplicable rate of interest

� Period Period Period Period & amount of default in payment of & amount of default in payment of & amount of default in payment of & amount of default in payment of

principal principal principal principal & & & & interest as on interest as on interest as on interest as on B/S B/S B/S B/S datedatedatedate

Lunawat & Co.

OTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIES� The amount shall be classified as:The amount shall be classified as:The amount shall be classified as:The amount shall be classified as:

� Current maturities of long term debtsCurrent maturities of long term debtsCurrent maturities of long term debtsCurrent maturities of long term debts

� Current maturities of finance lease obligationsCurrent maturities of finance lease obligationsCurrent maturities of finance lease obligationsCurrent maturities of finance lease obligations

� Interest accrued but not due on borrowingsInterest accrued but not due on borrowingsInterest accrued but not due on borrowingsInterest accrued but not due on borrowings

� Interest accrued and due on borrowingsInterest accrued and due on borrowingsInterest accrued and due on borrowingsInterest accrued and due on borrowings

� Income received in advanceIncome received in advanceIncome received in advanceIncome received in advance

� Unpaid dividendsUnpaid dividendsUnpaid dividendsUnpaid dividends

� Share Application money due for refund and interest Share Application money due for refund and interest Share Application money due for refund and interest Share Application money due for refund and interest accrued thereon (including advances for allotment of accrued thereon (including advances for allotment of accrued thereon (including advances for allotment of accrued thereon (including advances for allotment of share Capital)share Capital)share Capital)share Capital)

� Unpaid matured deposit and interest thereonUnpaid matured deposit and interest thereonUnpaid matured deposit and interest thereonUnpaid matured deposit and interest thereon

� Unpaid matured debentures and interest thereonUnpaid matured debentures and interest thereonUnpaid matured debentures and interest thereonUnpaid matured debentures and interest thereon

� Other payablesOther payablesOther payablesOther payables

Lunawat & Co.

OTHER CURRENT LIABILITIES OTHER CURRENT LIABILITIES OTHER CURRENT LIABILITIES OTHER CURRENT LIABILITIES � Others payable may include:Others payable may include:Others payable may include:Others payable may include:

� Statutory obligations like, ESI, PF, VAT, CST, etc.Statutory obligations like, ESI, PF, VAT, CST, etc.Statutory obligations like, ESI, PF, VAT, CST, etc.Statutory obligations like, ESI, PF, VAT, CST, etc.

� Liability for purchase of fixed assetsLiability for purchase of fixed assetsLiability for purchase of fixed assetsLiability for purchase of fixed assets

� Contractually reimbursable expensesContractually reimbursable expensesContractually reimbursable expensesContractually reimbursable expenses

� Interest accrued on trade payablesInterest accrued on trade payablesInterest accrued on trade payablesInterest accrued on trade payables

� Expenses Payable.Expenses Payable.Expenses Payable.Expenses Payable.

� TDS PayableTDS PayableTDS PayableTDS Payable

� Trade / Security DepositTrade / Security DepositTrade / Security DepositTrade / Security Deposit

�MarkMarkMarkMark----totototo----market loss on forward and option market loss on forward and option market loss on forward and option market loss on forward and option contractscontractscontractscontracts

�Retention MoniesRetention MoniesRetention MoniesRetention Monies

� Accrued salaries and benefitsAccrued salaries and benefitsAccrued salaries and benefitsAccrued salaries and benefits

Lunawat & Co.

FORM OF BALANCE SHEET (PART 2)FORM OF BALANCE SHEET (PART 2)FORM OF BALANCE SHEET (PART 2)FORM OF BALANCE SHEET (PART 2)Particulars Note

No.

Figures as at the

end of the CRP

Figures as at the

end of the PRP

II. ASSETS

(1)Non-current assets

(a) Fixed assets

(i) Tangible assets

(ii) Intangible assets

(iii) Capital work-in-progress

(iv) Intangible assets under development

(b) Non- current investments

(c) Deferred tax assets (Net)

(d) Long term loans and advances

(e) Other non-current assets

11

12

13

14

15

(2) Current assets

(a) Current investments

(b) Inventories

(c) Trade receivables

(d) Cash and cash equivalents

(e) Short term loans and advances

(f) Other current assets

16

17

18

19

20

TOTAL

FIXED ASSETSFIXED ASSETSFIXED ASSETSFIXED ASSETS

�Fixed Asset on the face of the Balance Fixed Asset on the face of the Balance Fixed Asset on the face of the Balance Fixed Asset on the face of the Balance

Sheet has to be classified as follows:Sheet has to be classified as follows:Sheet has to be classified as follows:Sheet has to be classified as follows:

�Tangible AssetsTangible AssetsTangible AssetsTangible Assets

� Intangible AssetsIntangible AssetsIntangible AssetsIntangible Assets

�SoftwareSoftwareSoftwareSoftware

�Capital workCapital workCapital workCapital work----inininin----progressprogressprogressprogress

� Intangible assets under developmentIntangible assets under developmentIntangible assets under developmentIntangible assets under development

�Capital advances not to be grouped as Capital advances not to be grouped as Capital advances not to be grouped as Capital advances not to be grouped as

Capital WorkCapital WorkCapital WorkCapital Work----inininin----Progress but long term Progress but long term Progress but long term Progress but long term

loans and advancesloans and advancesloans and advancesloans and advances????

Lunawat & Co.

INVENTORIESINVENTORIESINVENTORIESINVENTORIES

�Classification into:Classification into:Classification into:Classification into:� Raw MaterialsRaw MaterialsRaw MaterialsRaw Materials

� WorkWorkWorkWork----inininin----progressprogressprogressprogress

� Finished goodsFinished goodsFinished goodsFinished goods

� StockStockStockStock----inininin----trade (trading goods)trade (trading goods)trade (trading goods)trade (trading goods)

� Stores and sparesStores and sparesStores and sparesStores and spares

� Loose toolsLoose toolsLoose toolsLoose tools

� Others (specifying nature)Others (specifying nature)Others (specifying nature)Others (specifying nature)

� Finished goods should include all goods except Finished goods should include all goods except Finished goods should include all goods except Finished goods should include all goods except

acquired for trading purposesacquired for trading purposesacquired for trading purposesacquired for trading purposes

� GoodsGoodsGoodsGoods----inininin----transit transit transit transit ----disclose under relevant subdisclose under relevant subdisclose under relevant subdisclose under relevant sub----headheadheadhead

� Mode of valuation to be statedMode of valuation to be statedMode of valuation to be statedMode of valuation to be stated

Lunawat & Co.

FORM OF STATEMENT OF PROFIT AND LOSSFORM OF STATEMENT OF PROFIT AND LOSSFORM OF STATEMENT OF PROFIT AND LOSSFORM OF STATEMENT OF PROFIT AND LOSSParticulars Note

No.Figures for

the CRPFigure for the PRP

I. Revenue from operations 21

II. Other income 22

III Total Revenue (I + II)

Iv. Expenses 23

V. Profit before exceptional and extraordinary items and tax (III - IV)

VI. Exceptional items 24

VII. Profit before extraordinary items and tax (V-VI)

VIII. Extraordinary items 25

IX. Profit before tax (VII-VIII)

X. Tax Expenses 26

XI. Profit (loss) for the period from continuing operations (IX-X)

XII Profit (Loss) from the discontinuing business 27

XIII Tax expenses of discontinuing operations 28

XIV. Profit (Loss) from discontinuing operations (after tax) (XII-XIV)

XV. Profit (Loss) for the period (XI+XIV) 29

XVI. Earnings per equity share

Lunawat & Co.

REVENUE FROM OPERATIONSREVENUE FROM OPERATIONSREVENUE FROM OPERATIONSREVENUE FROM OPERATIONS

� For companies other than finance company:For companies other than finance company:For companies other than finance company:For companies other than finance company:

� Sale of ProductsSale of ProductsSale of ProductsSale of Products

� Sale of ServicesSale of ServicesSale of ServicesSale of Services

�Other Operating RevenuesOther Operating RevenuesOther Operating RevenuesOther Operating Revenues

�Less: Excise DutyLess: Excise DutyLess: Excise DutyLess: Excise Duty

� For Finance company:For Finance company:For Finance company:For Finance company:

� InterestInterestInterestInterest

�Other Financial servicesOther Financial servicesOther Financial servicesOther Financial services

� As per AS 9 presentation for excise duty As per AS 9 presentation for excise duty As per AS 9 presentation for excise duty As per AS 9 presentation for excise duty ---- on on on on

face of PLface of PLface of PLface of PL

Lunawat & Co.

OTHER INCOMEOTHER INCOMEOTHER INCOMEOTHER INCOME� To be classified as:To be classified as:To be classified as:To be classified as:

� Interest income (other than for finance company)Interest income (other than for finance company)Interest income (other than for finance company)Interest income (other than for finance company)

�DividendDividendDividendDividend

�Dividend from subsidiary companyDividend from subsidiary companyDividend from subsidiary companyDividend from subsidiary company

�Net gain / loss on sale of investmentsNet gain / loss on sale of investmentsNet gain / loss on sale of investmentsNet gain / loss on sale of investments

�Other nonOther nonOther nonOther non----operating income operating income operating income operating income

� Interest, dividend, etc. to be disclosed separately Interest, dividend, etc. to be disclosed separately Interest, dividend, etc. to be disclosed separately Interest, dividend, etc. to be disclosed separately

for Current as well as Non Current Investmentsfor Current as well as Non Current Investmentsfor Current as well as Non Current Investmentsfor Current as well as Non Current Investments

Lunawat & Co.

EXPENSESEXPENSESEXPENSESEXPENSES

Disclosure on face of the PL:Disclosure on face of the PL:Disclosure on face of the PL:Disclosure on face of the PL:

� Cost of material consumedCost of material consumedCost of material consumedCost of material consumed

� Purchase of stockPurchase of stockPurchase of stockPurchase of stock----inininin----tradetradetradetrade

� Changes in inventories of finished goods Changes in inventories of finished goods Changes in inventories of finished goods Changes in inventories of finished goods

WorkWorkWorkWork----inininin----progress and stock in tradeprogress and stock in tradeprogress and stock in tradeprogress and stock in trade

� Employee benefit expensesEmployee benefit expensesEmployee benefit expensesEmployee benefit expenses

� Finance costFinance costFinance costFinance cost

� Depreciation and amortization expensesDepreciation and amortization expensesDepreciation and amortization expensesDepreciation and amortization expenses

� Other expenses.Other expenses.Other expenses.Other expenses.

Lunawat & Co.

FINANCE COSTFINANCE COSTFINANCE COSTFINANCE COST� Interest expenseInterest expenseInterest expenseInterest expense

� Interest on borrowings, debentures, bonds, etc.Interest on borrowings, debentures, bonds, etc.Interest on borrowings, debentures, bonds, etc.Interest on borrowings, debentures, bonds, etc.

� Finance charges on finance lease are in nature of interestFinance charges on finance lease are in nature of interestFinance charges on finance lease are in nature of interestFinance charges on finance lease are in nature of interest

� Other borrowing costsOther borrowing costsOther borrowing costsOther borrowing costs� Commitment chargesCommitment chargesCommitment chargesCommitment charges

� Loan processing chargesLoan processing chargesLoan processing chargesLoan processing charges

� Guarantee chargesGuarantee chargesGuarantee chargesGuarantee charges

� Loan facilitation chargesLoan facilitation chargesLoan facilitation chargesLoan facilitation charges

� Discounts/ premium on borrowingsDiscounts/ premium on borrowingsDiscounts/ premium on borrowingsDiscounts/ premium on borrowings

� Other ancillary Other ancillary Other ancillary Other ancillary costscostscostscosts

� Applicable net loss on foreign currency transactions to Applicable net loss on foreign currency transactions to Applicable net loss on foreign currency transactions to Applicable net loss on foreign currency transactions to

the extent they are regarded as adjust to interest cost the extent they are regarded as adjust to interest cost the extent they are regarded as adjust to interest cost the extent they are regarded as adjust to interest cost

� Interest on Tax???Interest on Tax???Interest on Tax???Interest on Tax???

Lunawat & Co.

OTHER EXPENSESOTHER EXPENSESOTHER EXPENSESOTHER EXPENSES� All other expenses will be grouped here. Following to be All other expenses will be grouped here. Following to be All other expenses will be grouped here. Following to be All other expenses will be grouped here. Following to be

disclosed separately:disclosed separately:disclosed separately:disclosed separately:

� Consumption of stores and spares Consumption of stores and spares Consumption of stores and spares Consumption of stores and spares

� Power and fuelPower and fuelPower and fuelPower and fuel

� RentRentRentRent

� Repairs to buildingsRepairs to buildingsRepairs to buildingsRepairs to buildings

� Repairs to machineryRepairs to machineryRepairs to machineryRepairs to machinery

� InsuranceInsuranceInsuranceInsurance

� Rates and taxes, excluding taxes on incomeRates and taxes, excluding taxes on incomeRates and taxes, excluding taxes on incomeRates and taxes, excluding taxes on income

� Miscellaneous expensesMiscellaneous expensesMiscellaneous expensesMiscellaneous expenses

� Any expenditure which exceeds 1% of revenue from Any expenditure which exceeds 1% of revenue from Any expenditure which exceeds 1% of revenue from Any expenditure which exceeds 1% of revenue from

operations or Rs.1 L whichever is higher operations or Rs.1 L whichever is higher operations or Rs.1 L whichever is higher operations or Rs.1 L whichever is higher ---- separateseparateseparateseparate

Lunawat & Co.

Lunawat & Co.

NOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTS� Contingent Liabilities Contingent Liabilities Contingent Liabilities Contingent Liabilities / Commitments / Commitments / Commitments / Commitments (to the (to the (to the (to the extent not provided for)extent not provided for)extent not provided for)extent not provided for)

� Broad Broad Broad Broad Heads Heads Heads Heads –––– RM , Income, PurchasesRM , Income, PurchasesRM , Income, PurchasesRM , Income, Purchases

� Value of imports made during the year on CIF Value of imports made during the year on CIF Value of imports made during the year on CIF Value of imports made during the year on CIF

basisbasisbasisbasis::::----

�Raw MaterialsRaw MaterialsRaw MaterialsRaw Materials

�Components (intermediaries & components) & Components (intermediaries & components) & Components (intermediaries & components) & Components (intermediaries & components) &

Spare Parts (for capital equipment)Spare Parts (for capital equipment)Spare Parts (for capital equipment)Spare Parts (for capital equipment)

�Capital GoodsCapital GoodsCapital GoodsCapital Goods

Lunawat & Co.

NOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTS

� Exp. in foreign currency (accrual basis) on:Exp. in foreign currency (accrual basis) on:Exp. in foreign currency (accrual basis) on:Exp. in foreign currency (accrual basis) on:

�RoyaltyRoyaltyRoyaltyRoyalty

� KnowKnowKnowKnow----howhowhowhow

� Professional & consultation feeProfessional & consultation feeProfessional & consultation feeProfessional & consultation fee

� InterestInterestInterestInterest

�OthersOthersOthersOthers

� Dividend if Dividend if Dividend if Dividend if paid in paid in paid in paid in FC (cash Basis):FC (cash Basis):FC (cash Basis):FC (cash Basis):

� Total amount remitted during the year in Total amount remitted during the year in Total amount remitted during the year in Total amount remitted during the year in FCFCFCFC

� Total Total Total Total no. no. no. no. of nonof nonof nonof non----resident shareholdersresident shareholdersresident shareholdersresident shareholders

�NNNNo. o. o. o. of shares held by them on which dividend of shares held by them on which dividend of shares held by them on which dividend of shares held by them on which dividend duedueduedue

� Year to which dividend relatesYear to which dividend relatesYear to which dividend relatesYear to which dividend relates

Lunawat & Co.

NOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTS

�Foreign Exchange Earnings (Accrual Foreign Exchange Earnings (Accrual Foreign Exchange Earnings (Accrual Foreign Exchange Earnings (Accrual

basis):basis):basis):basis):

�Export of goods (calculated on F.O.B. basis)Export of goods (calculated on F.O.B. basis)Export of goods (calculated on F.O.B. basis)Export of goods (calculated on F.O.B. basis)

�Royalty, know how, professional and Royalty, know how, professional and Royalty, know how, professional and Royalty, know how, professional and

consultation feesconsultation feesconsultation feesconsultation fees

� Interest and dividendsInterest and dividendsInterest and dividendsInterest and dividends

�Other income (indicating the nature thereof)Other income (indicating the nature thereof)Other income (indicating the nature thereof)Other income (indicating the nature thereof)

Lunawat & Co.

OTHER DISCLOSURES OTHER DISCLOSURES OTHER DISCLOSURES OTHER DISCLOSURES IN NOTESIN NOTESIN NOTESIN NOTES� To disclose in FS full particulars of:To disclose in FS full particulars of:To disclose in FS full particulars of:To disclose in FS full particulars of:

� Loan given;Loan given;Loan given;Loan given;

� Investment made;Investment made;Investment made;Investment made;

�Guarantee given; or Guarantee given; or Guarantee given; or Guarantee given; or

� Security Provided.Security Provided.Security Provided.Security Provided.

� Purpose for which loan or guarantee or security is Purpose for which loan or guarantee or security is Purpose for which loan or guarantee or security is Purpose for which loan or guarantee or security is

proposed to be proposed to be proposed to be proposed to be utilisedutilisedutilisedutilised by recipient of loan or by recipient of loan or by recipient of loan or by recipient of loan or

guarantee or security [186(4)]guarantee or security [186(4)]guarantee or security [186(4)]guarantee or security [186(4)]

� Contribution during Contribution during Contribution during Contribution during yryryryr to National to National to National to National DefenceDefenceDefenceDefence FundFundFundFund

� AAAAmount contributed to Political Party and name mount contributed to Political Party and name mount contributed to Political Party and name mount contributed to Political Party and name

of party of party of party of party [182(3)][182(3)][182(3)][182(3)]

Lunawat & Co.

OTHER DISCLOSURES OTHER DISCLOSURES OTHER DISCLOSURES OTHER DISCLOSURES IN NOTESIN NOTESIN NOTESIN NOTES

� Public Companies:Public Companies:Public Companies:Public Companies:

�Money received from directorMoney received from directorMoney received from directorMoney received from director

� Private companiesPrivate companiesPrivate companiesPrivate companies

�Money received from directorMoney received from directorMoney received from directorMoney received from director

�Money received from Money received from Money received from Money received from relative of directorrelative of directorrelative of directorrelative of director

Lunawat & Co.

RELATED PARTYRELATED PARTYRELATED PARTYRELATED PARTY

Accounting Accounting Accounting Accounting StandardsStandardsStandardsStandards

AS 18AS 18AS 18AS 18

Companies Companies Companies Companies ActActActAct

S. 2(76)S. 2(76)S. 2(76)S. 2(76)

S. 184S. 184S. 184S. 184 S. 188S. 188S. 188S. 188

Income TaxIncome TaxIncome TaxIncome Tax

40A(2)(b)40A(2)(b)40A(2)(b)40A(2)(b)

Lunawat & Co.

Entities that are to Entities that are to Entities that are to Entities that are to follow ASfollow ASfollow ASfollow AS

Corporate Corporate Corporate Corporate

Companies Companies Companies Companies (Accounting (Accounting (Accounting (Accounting Standards) Standards) Standards) Standards) Rules, 2006Rules, 2006Rules, 2006Rules, 2006

IndIndIndInd ASASASAS ICDSICDSICDSICDS

NonNonNonNon----CorporateCorporateCorporateCorporate

AS issued AS issued AS issued AS issued by ICAIby ICAIby ICAIby ICAI

ICDSICDSICDSICDS

Lunawat & Co.Lunawat & Co.Lunawat & Co.Lunawat & Co.

ACCOUNTING STANDARDSACCOUNTING STANDARDSACCOUNTING STANDARDSACCOUNTING STANDARDS

AS DISCLOSURES IN NOTESAS DISCLOSURES IN NOTESAS DISCLOSURES IN NOTESAS DISCLOSURES IN NOTES�SMC / NonSMC / NonSMC / NonSMC / Non---- SMCSMCSMCSMC

�AS 1AS 1AS 1AS 1

�FS to be prepared FS to be prepared FS to be prepared FS to be prepared in compliance of in compliance of in compliance of in compliance of

ASASASAS

�FS has to be AS compliant:FS has to be AS compliant:FS has to be AS compliant:FS has to be AS compliant:

�FS to disclose deviation from ASFS to disclose deviation from ASFS to disclose deviation from ASFS to disclose deviation from AS

�Reason for deviationReason for deviationReason for deviationReason for deviation

�Financial effect arising of deviationFinancial effect arising of deviationFinancial effect arising of deviationFinancial effect arising of deviation

Lunawat & Co.

AS APPLICABILITYAS APPLICABILITYAS APPLICABILITYAS APPLICABILITYAS

No.

Short Title Corporate Non- Corporate Entities

Non-SMC SMC Level I Level II Level III

1 Accounting Policies Y Y Y Y Y

2 Inventories Y Y Y Y Y

3 Cash Flow Y N (C) Y N N

4 Events after Balance Sheet date Y Y Y Y Y

5 Prior Period Items & Policies Y Y Y Y Y

6 Depreciation Y Y Y Y Y

7 Construction Y Y Y Y Y

9 Revenue Y Y Y Y Y

10 Fixed Assets Y Y Y Y Y

11 Foreign Exchange Y Y Y Y Y

12 Government Grants Y Y Y Y Y

13 Investments Y Y Y Y Y

14 Amalgamations Y Y Y Y Y

15 Employee Benefits Y Partly Y Partly Partly


AS APPLICABILITYAS APPLICABILITYAS APPLICABILITYAS APPLICABILITY16 Borrowing Cost Y Y Y Y Y

17 Segment Y N Y N N

18 Related Party Y Y Y Y N

19 Leases Y Partly Y Partly Partly

20 Earning Per Share Y Partly Y Partly Partly

21 Consolidation Y (listed) N (C) Y (listed) N N

22 Deferred Taxes Y Y Y Y Y

23 Consolidated Statements Y (listed) N (C) Y (listed) N N

24 Discontinuing Operation Y Y Y Y N

25 Interim Reporting Y (listed) N** Y (listed) N** N**

26 Intangible Assets Y Y Y Y Y

27 Interest in Joint Ventures Y (listed) N (C) Y (listed) N N

28 Impairment Y Partly Y Partly Partly

29 Contingency Y Partly Y Partly Partly

30- 32 Financial Instruments N*** N*** **** **** ****


Lunawat & Co.

IFC / IFC / IFC / IFC / ICFRICFRICFRICFRLunawat & Co.

S.S.S.S. ResponsibleResponsibleResponsibleResponsible RemarksRemarksRemarksRemarks

134134134134 Director Director Director Director

ResponsibilityResponsibilityResponsibilityResponsibility

StatementStatementStatementStatement

ListedListedListedListed Co Co Co Co –––– Directors have Directors have Directors have Directors have

laid down IFC to be followed laid down IFC to be followed laid down IFC to be followed laid down IFC to be followed

by the Co. & that such by the Co. & that such by the Co. & that such by the Co. & that such

controls are adequate & controls are adequate & controls are adequate & controls are adequate &

operating effectivelyoperating effectivelyoperating effectivelyoperating effectively

R. R. R. R.

8(5)(viii) 8(5)(viii) 8(5)(viii) 8(5)(viii)

Director Director Director Director

ReportReportReportReport

Details in respect of Details in respect of Details in respect of Details in respect of

adequacy of Internal adequacy of Internal adequacy of Internal adequacy of Internal

Financial controls with Financial controls with Financial controls with Financial controls with

reference to the Financial reference to the Financial reference to the Financial reference to the Financial

Statements Statements Statements Statements



177 177 177 177

(4) (4) (4) (4)

(vii) & (vii) & (vii) & (vii) &

(5)(5)(5)(5)

Audit Audit Audit Audit

CommitteeCommitteeCommitteeCommittee

AC may call for comments of AC may call for comments of AC may call for comments of AC may call for comments of

auditors about IFC before their auditors about IFC before their auditors about IFC before their auditors about IFC before their

submission to Board & may also submission to Board & may also submission to Board & may also submission to Board & may also

discuss related issues with discuss related issues with discuss related issues with discuss related issues with

internal & statutory auditors & internal & statutory auditors & internal & statutory auditors & internal & statutory auditors &

management of Co.management of Co.management of Co.management of Co.

Sch. Sch. Sch. Sch.

IVIVIVIV

Independent Independent Independent Independent

DirectorsDirectorsDirectorsDirectors

To satisfy themselves on integrity To satisfy themselves on integrity To satisfy themselves on integrity To satisfy themselves on integrity

of financial information & ensure of financial information & ensure of financial information & ensure of financial information & ensure

that financial controls & systems that financial controls & systems that financial controls & systems that financial controls & systems

of risk management are robust & of risk management are robust & of risk management are robust & of risk management are robust &

defensibledefensibledefensibledefensible



143 143 143 143

(3)((3)((3)((3)(iiii))))

Auditor Auditor Auditor Auditor


The Company has adequate IFC The Company has adequate IFC The Company has adequate IFC The Company has adequate IFC

system and operatingsystem and operatingsystem and operatingsystem and operating

effectivenesseffectivenesseffectivenesseffectiveness of such controlsof such controlsof such controlsof such controls

ICAIICAIICAIICAI AuditorAuditorAuditorAuditor Guidance Note by ICAI in Guidance Note by ICAI in Guidance Note by ICAI in Guidance Note by ICAI in

September 2015September 2015September 2015September 2015

129(4)129(4)129(4)129(4) Auditor Auditor Auditor Auditor


CFSCFSCFSCFS

Provisions applicable to Provisions applicable to Provisions applicable to Provisions applicable to

preparation, adoption & audit preparation, adoption & audit preparation, adoption & audit preparation, adoption & audit

of FS of a holding co. shall, of FS of a holding co. shall, of FS of a holding co. shall, of FS of a holding co. shall,

mutatis mutandis, apply to mutatis mutandis, apply to mutatis mutandis, apply to mutatis mutandis, apply to

CFS.CFS.CFS.CFS.

1956 ACT1956 ACT1956 ACT1956 ACT

� CARO CARO CARO CARO –––– HHHHas adequate Internal Control procedure as adequate Internal Control procedure as adequate Internal Control procedure as adequate Internal Control procedure

commensurate with the size of Co. and nature of commensurate with the size of Co. and nature of commensurate with the size of Co. and nature of commensurate with the size of Co. and nature of

its business for Purchase of inventory and fixed its business for Purchase of inventory and fixed its business for Purchase of inventory and fixed its business for Purchase of inventory and fixed

assets and for sale of goods & servicesassets and for sale of goods & servicesassets and for sale of goods & servicesassets and for sale of goods & services

� SSSS.... 217217217217((((2222AAAAAAAA)))) ---- DirectorsDirectorsDirectorsDirectors’’’’ ResponsibilityResponsibilityResponsibilityResponsibility StatementStatementStatementStatement

---- havehavehavehave takentakentakentaken properproperproperproper &&&& sufficientsufficientsufficientsufficient carecarecarecare forforforfor

maintenancemaintenancemaintenancemaintenance ofofofof adequateadequateadequateadequate accountingaccountingaccountingaccounting recordsrecordsrecordsrecords inininin

accordanceaccordanceaccordanceaccordance withwithwithwith provisionsprovisionsprovisionsprovisions ofofofof ActActActAct,,,,

� forforforfor safeguardingsafeguardingsafeguardingsafeguarding assetsassetsassetsassets ofofofof CoCoCoCo....

� forforforfor preventingpreventingpreventingpreventing &&&& detectingdetectingdetectingdetecting fraudfraudfraudfraud

� otherotherotherother irregularitiesirregularitiesirregularitiesirregularities.

Lunawat & Co.

INTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROL

� IFC means IFC means IFC means IFC means policies & policies & policies & policies & procedures adopted procedures adopted procedures adopted procedures adopted

by by by by Company for ensuring : Company for ensuring : Company for ensuring : Company for ensuring :

�Orderly Orderly Orderly Orderly & efficient conduct of its business, & efficient conduct of its business, & efficient conduct of its business, & efficient conduct of its business,

including adherence to company’s policiesincluding adherence to company’s policiesincluding adherence to company’s policiesincluding adherence to company’s policies, , , ,

�Safeguarding Safeguarding Safeguarding Safeguarding of its assets, of its assets, of its assets, of its assets,

�Prevention Prevention Prevention Prevention and detection of frauds and detection of frauds and detection of frauds and detection of frauds and errorsand errorsand errorsand errors, , , ,

�Accuracy Accuracy Accuracy Accuracy and and and and completeness completeness completeness completeness of the accounting of the accounting of the accounting of the accounting

records, records, records, records,

�Timely preparation Timely preparation Timely preparation Timely preparation of reliable financial of reliable financial of reliable financial of reliable financial

informationinformationinformationinformation

Lunawat & Co.

ICFRICFRICFRICFR –––– ICAIICAIICAIICAI GUIDANCE NOTE GUIDANCE NOTE GUIDANCE NOTE GUIDANCE NOTE –––– 9/20159/20159/20159/2015

� TTTTerm erm erm erm ‘IFC’ ‘IFC’ ‘IFC’ ‘IFC’ in in in in S. 143(3)(S. 143(3)(S. 143(3)(S. 143(3)(iiii) would relate to ) would relate to ) would relate to ) would relate to ‘IFC ‘IFC ‘IFC ‘IFC

over Fover Fover Fover Financial inancial inancial inancial RRRReportingeportingeportingeporting’’’’ in accordance with in accordance with in accordance with in accordance with

objectives objectives objectives objectives of an audit stated in SA 200 “Overall of an audit stated in SA 200 “Overall of an audit stated in SA 200 “Overall of an audit stated in SA 200 “Overall

Objectives of the Independent Auditor and the Objectives of the Independent Auditor and the Objectives of the Independent Auditor and the Objectives of the Independent Auditor and the

Conduct of an Audit in Accordance with Conduct of an Audit in Accordance with Conduct of an Audit in Accordance with Conduct of an Audit in Accordance with

Standards on Standards on Standards on Standards on Auditing”Auditing”Auditing”Auditing”

� Auditor needs to obtain reasonable assurance to Auditor needs to obtain reasonable assurance to Auditor needs to obtain reasonable assurance to Auditor needs to obtain reasonable assurance to

state:state:state:state:

�WWWWhether hether hether hether an adequate IFC system was an adequate IFC system was an adequate IFC system was an adequate IFC system was maintainedmaintainedmaintainedmaintained &&&&

�WWWWhether hether hether hether such IFC system such IFC system such IFC system such IFC system operated effectively operated effectively operated effectively operated effectively in in in in co. co. co. co.

in all material respects with respect to financial in all material respects with respect to financial in all material respects with respect to financial in all material respects with respect to financial

reporting only.reporting only.reporting only.reporting only.

Lunawat & Co.


� “IFC over “IFC over “IFC over “IFC over Financial Financial Financial Financial RRRReportingeportingeportingeporting” shall mean ” shall mean ” shall mean ” shall mean

� ““““A process designed to provide reasonable A process designed to provide reasonable A process designed to provide reasonable A process designed to provide reasonable

assurance regarding the reliability of financial assurance regarding the reliability of financial assurance regarding the reliability of financial assurance regarding the reliability of financial

reporting and the preparation of financial reporting and the preparation of financial reporting and the preparation of financial reporting and the preparation of financial

statements for external purposes in accordance with statements for external purposes in accordance with statements for external purposes in accordance with statements for external purposes in accordance with

generally accepted accounting principles. generally accepted accounting principles. generally accepted accounting principles. generally accepted accounting principles.

� A A A A company's company's company's company's IFC IFC IFC IFC over financial reporting includes over financial reporting includes over financial reporting includes over financial reporting includes

those policies and procedures those policies and procedures those policies and procedures those policies and procedures that:that:that:that:

1.1.1.1. PPPPertain ertain ertain ertain to the maintenance of records that, in to the maintenance of records that, in to the maintenance of records that, in to the maintenance of records that, in

reasonable detail, accurately and fairly reflect reasonable detail, accurately and fairly reflect reasonable detail, accurately and fairly reflect reasonable detail, accurately and fairly reflect

the transactions and dispositions of the assets the transactions and dispositions of the assets the transactions and dispositions of the assets the transactions and dispositions of the assets

of the companyof the companyof the companyof the company;;;;

Lunawat & Co.


2.2.2.2. Provide reasonable assurance that transactions Provide reasonable assurance that transactions Provide reasonable assurance that transactions Provide reasonable assurance that transactions

are recorded as necessary to permit preparation of are recorded as necessary to permit preparation of are recorded as necessary to permit preparation of are recorded as necessary to permit preparation of

financial statements in accordance with generally financial statements in accordance with generally financial statements in accordance with generally financial statements in accordance with generally

accepted accounting principles, and that receipts accepted accounting principles, and that receipts accepted accounting principles, and that receipts accepted accounting principles, and that receipts

and expenditures of the company are being made and expenditures of the company are being made and expenditures of the company are being made and expenditures of the company are being made

only in accordance with authorisations of only in accordance with authorisations of only in accordance with authorisations of only in accordance with authorisations of

management and directors of the company; andmanagement and directors of the company; andmanagement and directors of the company; andmanagement and directors of the company; and

3.3.3.3. Provide Provide Provide Provide reasonable assurance regarding reasonable assurance regarding reasonable assurance regarding reasonable assurance regarding

prevention or timely detection of unauthorised prevention or timely detection of unauthorised prevention or timely detection of unauthorised prevention or timely detection of unauthorised

acquisition, use, or disposition of the company's acquisition, use, or disposition of the company's acquisition, use, or disposition of the company's acquisition, use, or disposition of the company's

assets that could have a material effect on the assets that could have a material effect on the assets that could have a material effect on the assets that could have a material effect on the

financial statementsfinancial statementsfinancial statementsfinancial statements.

Lunawat & Co.

ICFRICFRICFRICFR –––– AUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENT

� Auditor should report if company Auditor should report if company Auditor should report if company Auditor should report if company has:has:has:has:

� adequate adequate adequate adequate internal control systems in internal control systems in internal control systems in internal control systems in place; andplace; andplace; andplace; and

�whether whether whether whether they were operating effectively they were operating effectively they were operating effectively they were operating effectively asasasas at at at at

balance sheet date.balance sheet date.balance sheet date.balance sheet date.

� Not applicable on interim financial statements, Not applicable on interim financial statements, Not applicable on interim financial statements, Not applicable on interim financial statements,

such as quarterly or halfsuch as quarterly or halfsuch as quarterly or halfsuch as quarterly or half----yearly financial yearly financial yearly financial yearly financial

statements, unless such reporting is required statements, unless such reporting is required statements, unless such reporting is required statements, unless such reporting is required

under any other law or under any other law or under any other law or under any other law or regulationregulationregulationregulation

� Should use a topShould use a topShould use a topShould use a top----down approach to select the down approach to select the down approach to select the down approach to select the

controls to controls to controls to controls to test. It is not test. It is not test. It is not test. It is not necessarily necessarily necessarily necessarily the order the order the order the order in in in in

which which which which auditor auditor auditor auditor will perform will perform will perform will perform auditing auditing auditing auditing proceduresproceduresproceduresprocedures.

Lunawat & Co.

ICFR AUDIT ICFR AUDIT ICFR AUDIT ICFR AUDIT –––– ICAIICAIICAIICAI GUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTELunawat & Co.

PlanningPlanningPlanningPlanning 1.1.1.1. Identify significant account balances / disclosure itemsIdentify significant account balances / disclosure itemsIdentify significant account balances / disclosure itemsIdentify significant account balances / disclosure items

2.2.2.2. Identify & understand significant flows of transactionsIdentify & understand significant flows of transactionsIdentify & understand significant flows of transactionsIdentify & understand significant flows of transactions

3.3.3.3. Identify risk of material misstatementsIdentify risk of material misstatementsIdentify risk of material misstatementsIdentify risk of material misstatements

4.4.4.4. IdentifyIdentifyIdentifyIdentify controls which address risk of material misstatementscontrols which address risk of material misstatementscontrols which address risk of material misstatementscontrols which address risk of material misstatements

5.5.5.5. Identify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGC

Design & Design & Design & Design &

ImplementImplementImplementImplement

ationationationation

6.6.6.6. Assess the design of controlsAssess the design of controlsAssess the design of controlsAssess the design of controls

7.7.7.7. AssessAssessAssessAssess the implementation of controlsthe implementation of controlsthe implementation of controlsthe implementation of controls

Appropriate design & implementation controlsAppropriate design & implementation controlsAppropriate design & implementation controlsAppropriate design & implementation controls

8.8.8.8. Assess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable procedures

9.9.9.9. Plan operative effectiveness testingPlan operative effectiveness testingPlan operative effectiveness testingPlan operative effectiveness testing

Operating Operating Operating Operating

EffectiveneEffectiveneEffectiveneEffectivene

ssssssss

10.10.10.10. Plan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectiveness

11.11.11.11. Perform operative effectiveness testingPerform operative effectiveness testingPerform operative effectiveness testingPerform operative effectiveness testing

12.12.12.12. Assess findings & conclude on effective effectivenessAssess findings & conclude on effective effectivenessAssess findings & conclude on effective effectivenessAssess findings & conclude on effective effectiveness

13.13.13.13. Form opinion on IFCForm opinion on IFCForm opinion on IFCForm opinion on IFC

ReportingReportingReportingReporting 14.14.14.14. Assess impact on Audit OpinionAssess impact on Audit OpinionAssess impact on Audit OpinionAssess impact on Audit Opinion

15.15.15.15. Form audit opinion on financial statementsForm audit opinion on financial statementsForm audit opinion on financial statementsForm audit opinion on financial statements

Prepare and control audit documentationPrepare and control audit documentationPrepare and control audit documentationPrepare and control audit documentation

ContinuousContinuousContinuousContinuous focus on audit qualityfocus on audit qualityfocus on audit qualityfocus on audit quality

COMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLLunawat & Co.

COMPONENTS OF INTERNAL CONTROL COMPONENTS OF INTERNAL CONTROL COMPONENTS OF INTERNAL CONTROL COMPONENTS OF INTERNAL CONTROL –––– SA 315SA 315SA 315SA 315Lunawat & Co.

S. No.S. No.S. No.S. No. ComponentComponentComponentComponent ElementsElementsElementsElements

1111 Control Control Control Control

EnvironmentEnvironmentEnvironmentEnvironment

1.1.1.1. Communication and enforcement of integrity and Communication and enforcement of integrity and Communication and enforcement of integrity and Communication and enforcement of integrity and

ethical Valuesethical Valuesethical Valuesethical Values

2.2.2.2. Commitment to competenceCommitment to competenceCommitment to competenceCommitment to competence

3.3.3.3. Participation by those charged with governanceParticipation by those charged with governanceParticipation by those charged with governanceParticipation by those charged with governance

4.4.4.4. Management’s philosophy and operating styleManagement’s philosophy and operating styleManagement’s philosophy and operating styleManagement’s philosophy and operating style

5.5.5.5. Organisational structureOrganisational structureOrganisational structureOrganisational structure

6.6.6.6. Assignment of authority and responsibilityAssignment of authority and responsibilityAssignment of authority and responsibilityAssignment of authority and responsibility

7.7.7.7. Human resource policies and practicesHuman resource policies and practicesHuman resource policies and practicesHuman resource policies and practices

2222 Entity’s Risk Entity’s Risk Entity’s Risk Entity’s Risk

Assessment Assessment Assessment Assessment

ProcessProcessProcessProcess

1.1.1.1. Management identification of business risks Management identification of business risks Management identification of business risks Management identification of business risks

relevant to the preparation of financial relevant to the preparation of financial relevant to the preparation of financial relevant to the preparation of financial

statementsstatementsstatementsstatements

2.2.2.2. External and internal events, transactions or External and internal events, transactions or External and internal events, transactions or External and internal events, transactions or

circumstances that may occur and adversely circumstances that may occur and adversely circumstances that may occur and adversely circumstances that may occur and adversely

affect an entity’s ability to initiate, record, affect an entity’s ability to initiate, record, affect an entity’s ability to initiate, record, affect an entity’s ability to initiate, record,

process, and report financial data consistent with process, and report financial data consistent with process, and report financial data consistent with process, and report financial data consistent with

the assertions of management in the financial the assertions of management in the financial the assertions of management in the financial the assertions of management in the financial




3333 ControlControlControlControl

ActivitiesActivitiesActivitiesActivities

1.1.1.1. Performance reviewsPerformance reviewsPerformance reviewsPerformance reviews

2.2.2.2. Information processingInformation processingInformation processingInformation processing

3.3.3.3. Physical controlsPhysical controlsPhysical controlsPhysical controls

4.4.4.4. Segregation of dutiesSegregation of dutiesSegregation of dutiesSegregation of duties

5.5.5.5. Authorisation controlsAuthorisation controlsAuthorisation controlsAuthorisation controls

4444 Information Information Information Information

System and System and System and System and

CommunicationCommunicationCommunicationCommunication

1.1.1.1. Information system that:Information system that:Information system that:Information system that:1.1.1.1. Identify and record all valid transactionsIdentify and record all valid transactionsIdentify and record all valid transactionsIdentify and record all valid transactions

2.2.2.2. Describe on timely basis transactions in sufficient Describe on timely basis transactions in sufficient Describe on timely basis transactions in sufficient Describe on timely basis transactions in sufficient

detail to permit proper classification of transactions detail to permit proper classification of transactions detail to permit proper classification of transactions detail to permit proper classification of transactions

for financial reportingfor financial reportingfor financial reportingfor financial reporting

3.3.3.3. Measure value of transactions in a manner that Measure value of transactions in a manner that Measure value of transactions in a manner that Measure value of transactions in a manner that

permits recording their proper monetary value in permits recording their proper monetary value in permits recording their proper monetary value in permits recording their proper monetary value in

financial Statements financial Statements financial Statements financial Statements

4.4.4.4. Determine time period in which transactions Determine time period in which transactions Determine time period in which transactions Determine time period in which transactions

occurred to permit recording of transactions in occurred to permit recording of transactions in occurred to permit recording of transactions in occurred to permit recording of transactions in

proper accounting Period proper accounting Period proper accounting Period proper accounting Period

5.5.5.5. Present properly transactions and related disclosures Present properly transactions and related disclosures Present properly transactions and related disclosures Present properly transactions and related disclosures

in financial statementsin financial statementsin financial statementsin financial statements



4444 Information Information Information Information

System and System and System and System and

CommunicationCommunicationCommunicationCommunication

2.2.2.2. Communicating individual roles and Communicating individual roles and Communicating individual roles and Communicating individual roles and

responsibilitiesresponsibilitiesresponsibilitiesresponsibilities

5555 Monitoring of Monitoring of Monitoring of Monitoring of

ControlsControlsControlsControls

1.1.1.1. Evaluating presence and functioning of Evaluating presence and functioning of Evaluating presence and functioning of Evaluating presence and functioning of

components of internal control.components of internal control.components of internal control.components of internal control.

2.2.2.2. Evaluating and communicating internal Evaluating and communicating internal Evaluating and communicating internal Evaluating and communicating internal

control deficienciescontrol deficienciescontrol deficienciescontrol deficiencies.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING�Take Engagement LetterTake Engagement LetterTake Engagement LetterTake Engagement Letter

�Perform proceduresPerform proceduresPerform proceduresPerform procedures

�Take Representation LetterTake Representation LetterTake Representation LetterTake Representation Letter

�Issue Separate ReportIssue Separate ReportIssue Separate ReportIssue Separate Report

�UnmodifiedUnmodifiedUnmodifiedUnmodified

�ModifiedModifiedModifiedModified

�QualifiedQualifiedQualifiedQualified

�AdverseAdverseAdverseAdverse

�DisclaimerDisclaimerDisclaimerDisclaimer

Lunawat & Co.

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- QUALIFIEDQUALIFIEDQUALIFIEDQUALIFIEDLunawat & Co.

Due to Due to Due to Due to adequacy adequacy adequacy adequacy

(and therefore (and therefore (and therefore (and therefore

operating operating operating operating

effectiveness)effectiveness)effectiveness)effectiveness)

• The Company The Company The Company The Company did not have an appropriate did not have an appropriate did not have an appropriate did not have an appropriate

internal control system internal control system internal control system internal control system for customer acceptance, for customer acceptance, for customer acceptance, for customer acceptance,

credit evaluation and establishing customer credit evaluation and establishing customer credit evaluation and establishing customer credit evaluation and establishing customer

credit limits for sales, which could potentially credit limits for sales, which could potentially credit limits for sales, which could potentially credit limits for sales, which could potentially

result in the Company recognising revenue result in the Company recognising revenue result in the Company recognising revenue result in the Company recognising revenue

without establishing reasonable certainty of without establishing reasonable certainty of without establishing reasonable certainty of without establishing reasonable certainty of

ultimate collectionultimate collectionultimate collectionultimate collection

• ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the

material weakness/material weakness/material weakness/material weakness/eseseses described above on the described above on the described above on the described above on the

achievement of the objectives of the control achievement of the objectives of the control achievement of the objectives of the control achievement of the objectives of the control

criteria, criteria, criteria, criteria, the Company has maintained, in all the Company has maintained, in all the Company has maintained, in all the Company has maintained, in all

material respects, adequate internal financial material respects, adequate internal financial material respects, adequate internal financial material respects, adequate internal financial

controls over financial reporting as on..controls over financial reporting as on..controls over financial reporting as on..controls over financial reporting as on..

• …these material weakness/…these material weakness/…these material weakness/…these material weakness/eseseses do not affect our do not affect our do not affect our do not affect our

opinion on the standalone financial statements opinion on the standalone financial statements opinion on the standalone financial statements opinion on the standalone financial statements

of the Companyof the Companyof the Companyof the Company

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- ADVERSEADVERSEADVERSEADVERSELunawat & Co.

Due to Due to Due to Due to adequacy adequacy adequacy adequacy

(and therefore (and therefore (and therefore (and therefore


effectiveness)effectiveness)effectiveness)effectiveness)


internal control system internal control system internal control system internal control system for customer acceptance, for customer acceptance, for customer acceptance, for customer acceptance,

credit evaluation and …...credit evaluation and …...credit evaluation and …...credit evaluation and …...


internal control system for inventory internal control system for inventory internal control system for inventory internal control system for inventory with regard with regard with regard with regard

to receipts, issue for production and physical to receipts, issue for production and physical to receipts, issue for production and physical to receipts, issue for production and physical

verification. Further, the internal control system verification. Further, the internal control system verification. Further, the internal control system verification. Further, the internal control system

for identification and allocation of overheads to for identification and allocation of overheads to for identification and allocation of overheads to for identification and allocation of overheads to

inventory was also not adequate. These could inventory was also not adequate. These could inventory was also not adequate. These could inventory was also not adequate. These could

potentially result in material misstatements in potentially result in material misstatements in potentially result in material misstatements in potentially result in material misstatements in

the Company’s trade payables, consumption, the Company’s trade payables, consumption, the Company’s trade payables, consumption, the Company’s trade payables, consumption,

inventory and expense account balances.inventory and expense account balances.inventory and expense account balances.inventory and expense account balances.

• …the Company …the Company …the Company …the Company has not maintained adequate has not maintained adequate has not maintained adequate has not maintained adequate

internal financial controls internal financial controls internal financial controls internal financial controls over financial reportingover financial reportingover financial reportingover financial reporting


opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the

CompanyCompanyCompanyCompany

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- QUALIFIEDQUALIFIEDQUALIFIEDQUALIFIEDLunawat & Co.

Qualified Qualified Qualified Qualified ---- Due to Due to Due to Due to


effectivenesseffectivenesseffectivenesseffectiveness

Unmodified Unmodified Unmodified Unmodified –––– On On On On

AdequacyAdequacyAdequacyAdequacy

• The Company’s The Company’s The Company’s The Company’s internal financial controls over internal financial controls over internal financial controls over internal financial controls over

customer acceptancecustomer acceptancecustomer acceptancecustomer acceptance, credit evaluation and , credit evaluation and , credit evaluation and , credit evaluation and

establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales,

were not operating effectively were not operating effectively were not operating effectively were not operating effectively which could which could which could which could

potentially result in the Company recognising potentially result in the Company recognising potentially result in the Company recognising potentially result in the Company recognising

revenue without establishing reasonable revenue without establishing reasonable revenue without establishing reasonable revenue without establishing reasonable

certainty of ultimate collectioncertainty of ultimate collectioncertainty of ultimate collectioncertainty of ultimate collection

• ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the

material weakness/material weakness/material weakness/material weakness/eseseses described above on the described above on the described above on the described above on the


criteria, criteria, criteria, criteria, the Company’s internal financial controls the Company’s internal financial controls the Company’s internal financial controls the Company’s internal financial controls

over financial reporting were operating over financial reporting were operating over financial reporting were operating over financial reporting were operating

effectively as on..effectively as on..effectively as on..effectively as on..



of the Companyof the Companyof the Companyof the Company


Due to Due to Due to Due to operating operating operating operating

effectivenesseffectivenesseffectivenesseffectiveness

Unmodified Unmodified Unmodified Unmodified –––– On On On On

AdequacyAdequacyAdequacyAdequacy

• The Company’s The Company’s The Company’s The Company’s internal financial controls over internal financial controls over internal financial controls over internal financial controls over

customer acceptancecustomer acceptancecustomer acceptancecustomer acceptance, credit evaluation and , credit evaluation and , credit evaluation and , credit evaluation and

establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales,

were not operating effectively were not operating effectively were not operating effectively were not operating effectively which could which could which could which could

potentially result in the Company ….potentially result in the Company ….potentially result in the Company ….potentially result in the Company ….

• The Company’s The Company’s The Company’s The Company’s internal control system internal control system internal control system internal control system for for for for

inventory with regard to receipts, issue for inventory with regard to receipts, issue for inventory with regard to receipts, issue for inventory with regard to receipts, issue for

production and physical verification production and physical verification production and physical verification production and physical verification were not were not were not were not

operating effectivelyoperating effectivelyoperating effectivelyoperating effectively. Further, the internal control . Further, the internal control . Further, the internal control . Further, the internal control

system for identification and allocation of system for identification and allocation of system for identification and allocation of system for identification and allocation of

overheads to inventory overheads to inventory overheads to inventory overheads to inventory was also not operating was also not operating was also not operating was also not operating

effectively.effectively.effectively.effectively. These could potentially result ….These could potentially result ….These could potentially result ….These could potentially result ….

• …Company’s internal financial controls over …Company’s internal financial controls over …Company’s internal financial controls over …Company’s internal financial controls over

financial reporting financial reporting financial reporting financial reporting were not operating effectively were not operating effectively were not operating effectively were not operating effectively


opinion on the financial statements of Companyopinion on the financial statements of Companyopinion on the financial statements of Companyopinion on the financial statements of Company


Due to Due to Due to Due to ---- Essential Essential Essential Essential

components of components of components of components of

internal controls internal controls internal controls internal controls

not adequately not adequately not adequately not adequately

consideredconsideredconsideredconsidered

in the internal in the internal in the internal in the internal

financial controls financial controls financial controls financial controls

established by the established by the established by the established by the

companycompanycompanycompany


internal financial control system over financial internal financial control system over financial internal financial control system over financial internal financial control system over financial

reporting reporting reporting reporting since the internal controls adopted by since the internal controls adopted by since the internal controls adopted by since the internal controls adopted by

the Company did the Company did the Company did the Company did not adequately consider risk not adequately consider risk not adequately consider risk not adequately consider risk

assessment, assessment, assessment, assessment, which is one of the essential which is one of the essential which is one of the essential which is one of the essential

components of internal control, with regard to components of internal control, with regard to components of internal control, with regard to components of internal control, with regard to

the potential for fraud when performing risk the potential for fraud when performing risk the potential for fraud when performing risk the potential for fraud when performing risk

assessmentassessmentassessmentassessment

• …the Company …the Company …the Company …the Company has not maintained adequate has not maintained adequate has not maintained adequate has not maintained adequate

and effective internal financial controls over and effective internal financial controls over and effective internal financial controls over and effective internal financial controls over

financial reportingfinancial reportingfinancial reportingfinancial reporting as on..as on..as on..as on..

• …these material weaknesses …these material weaknesses …these material weaknesses …these material weaknesses do not affect our do not affect our do not affect our do not affect our

opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the

CompanyCompanyCompanyCompany


Resulting in Resulting in Resulting in Resulting in

modified opinion modified opinion modified opinion modified opinion

of standalone of standalone of standalone of standalone

financial financial financial financial


• The Company The Company The Company The Company did not have appropriate internal did not have appropriate internal did not have appropriate internal did not have appropriate internal

controls for reconciliation of physically inventory controls for reconciliation of physically inventory controls for reconciliation of physically inventory controls for reconciliation of physically inventory

with the inventory records, which has resulted in with the inventory records, which has resulted in with the inventory records, which has resulted in with the inventory records, which has resulted in

misstatement of inventory values in the books of misstatement of inventory values in the books of misstatement of inventory values in the books of misstatement of inventory values in the books of

account.…account.…account.…account.…

• because of the effect of the material because of the effect of the material because of the effect of the material because of the effect of the material

weaknesses described above on the weaknesses described above on the weaknesses described above on the weaknesses described above on the


criteria, the Company criteria, the Company criteria, the Company criteria, the Company has not maintained has not maintained has not maintained has not maintained

adequate and effective internal financial controls adequate and effective internal financial controls adequate and effective internal financial controls adequate and effective internal financial controls

over financial reporting as of..over financial reporting as of..over financial reporting as of..over financial reporting as of..

• …these material weakness/…these material weakness/…these material weakness/…these material weakness/eseseses has affected our has affected our has affected our has affected our


of the Company and we have issued a qualified of the Company and we have issued a qualified of the Company and we have issued a qualified of the Company and we have issued a qualified

(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion on the on the on the on the

standalone financial statements.standalone financial statements.standalone financial statements.standalone financial statements.

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMERLunawat & Co.

Due to Due to Due to Due to ----

Framework for Framework for Framework for Framework for

internal financial internal financial internal financial internal financial

control over control over control over control over

financial reporting financial reporting financial reporting financial reporting

notnotnotnot

established but established but established but established but

does not impact does not impact does not impact does not impact

the audit opinion the audit opinion the audit opinion the audit opinion

on financial on financial on financial on financial


• the Company the Company the Company the Company has not established its internal has not established its internal has not established its internal has not established its internal

financial control over financial reporting on financial control over financial reporting on financial control over financial reporting on financial control over financial reporting on

criteria based on or considering the essential criteria based on or considering the essential criteria based on or considering the essential criteria based on or considering the essential

components components components components of internal control stated in the of internal control stated in the of internal control stated in the of internal control stated in the

Guidance Note on Audit of Guidance Note on Audit of Guidance Note on Audit of Guidance Note on Audit of IFCoFRIFCoFRIFCoFRIFCoFR issued by the issued by the issued by the issued by the

ICAI. Because of this reason, ICAI. Because of this reason, ICAI. Because of this reason, ICAI. Because of this reason, we are unable to we are unable to we are unable to we are unable to

obtain sufficient appropriate audit evidence to obtain sufficient appropriate audit evidence to obtain sufficient appropriate audit evidence to obtain sufficient appropriate audit evidence to

provide a basis for our opinion provide a basis for our opinion provide a basis for our opinion provide a basis for our opinion whether the whether the whether the whether the

Company had adequate internal financial Company had adequate internal financial Company had adequate internal financial Company had adequate internal financial

controls over financial reporting and whether controls over financial reporting and whether controls over financial reporting and whether controls over financial reporting and whether

such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating

effectively as at…effectively as at…effectively as at…effectively as at…

• …the …the …the …the disclaimer does not disclaimer does not disclaimer does not disclaimer does not affect affect affect affect our opinion on our opinion on our opinion on our opinion on

the financial statements of the Companythe financial statements of the Companythe financial statements of the Companythe financial statements of the Company


Due to Due to Due to Due to ----Auditor Auditor Auditor Auditor

unable to obtain unable to obtain unable to obtain unable to obtain

sufficient sufficient sufficient sufficient

appropriate audit appropriate audit appropriate audit appropriate audit

evidence onevidence onevidence onevidence on


controls over controls over controls over controls over


but does not but does not but does not but does not

impact auditimpact auditimpact auditimpact audit

opinion on the opinion on the opinion on the opinion on the



• The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over

financial reporting with regard to financial reporting with regard to financial reporting with regard to financial reporting with regard to one of the one of the one of the one of the

significant branches of the Company at _____ significant branches of the Company at _____ significant branches of the Company at _____ significant branches of the Company at _____

were not made available to us were not made available to us were not made available to us were not made available to us to enable us to to enable us to to enable us to to enable us to

determine if the Company has established determine if the Company has established determine if the Company has established determine if the Company has established

adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial

reporting at the aforesaid branch and whether reporting at the aforesaid branch and whether reporting at the aforesaid branch and whether reporting at the aforesaid branch and whether

such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating

effectively as at…effectively as at…effectively as at…effectively as at…

• …the …the …the …the disclaimer does not disclaimer does not disclaimer does not disclaimer does not affect affect affect affect our opinion on our opinion on our opinion on our opinion on

the financial statements of the Companythe financial statements of the Companythe financial statements of the Companythe financial statements of the Company


Due to Due to Due to Due to ----Auditor Auditor Auditor Auditor

unable to obtain unable to obtain unable to obtain unable to obtain

sufficient sufficient sufficient sufficient

appropriate audit appropriate audit appropriate audit appropriate audit

evidence onevidence onevidence onevidence on


controls over controls over controls over controls over


and impacting and impacting and impacting and impacting

auditauditauditaudit

opinion on the opinion on the opinion on the opinion on the



• The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over

financial reporting with regard to financial reporting with regard to financial reporting with regard to financial reporting with regard to the Company the Company the Company the Company

were not made available to us were not made available to us were not made available to us were not made available to us to enable us to to enable us to to enable us to to enable us to

determine if the Company has established determine if the Company has established determine if the Company has established determine if the Company has established

adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial

reporting and whether such internal financial reporting and whether such internal financial reporting and whether such internal financial reporting and whether such internal financial

controls were operating effectively as at…controls were operating effectively as at…controls were operating effectively as at…controls were operating effectively as at…

• … the disclaimer has affected our opinion on the … the disclaimer has affected our opinion on the … the disclaimer has affected our opinion on the … the disclaimer has affected our opinion on the

financial statements of the standalone Company financial statements of the standalone Company financial statements of the standalone Company financial statements of the standalone Company

and and and and we have issued a qualified (/ adverse / we have issued a qualified (/ adverse / we have issued a qualified (/ adverse / we have issued a qualified (/ adverse /

disclaimer of) opinion ondisclaimer of) opinion ondisclaimer of) opinion ondisclaimer of) opinion on the financial the financial the financial the financial

statements.statements.statements.statements.

DOCUMENTATIONDOCUMENTATIONDOCUMENTATIONDOCUMENTATION

� Have checklists, tell articles to cross verifyHave checklists, tell articles to cross verifyHave checklists, tell articles to cross verifyHave checklists, tell articles to cross verify

� Seniors to cross verifySeniors to cross verifySeniors to cross verifySeniors to cross verify

� Take necessary certificates / representation Take necessary certificates / representation Take necessary certificates / representation Take necessary certificates / representation from managementfrom managementfrom managementfrom management

� External ConfirmationsExternal ConfirmationsExternal ConfirmationsExternal Confirmations

� Ensure Compliance of ASsEnsure Compliance of ASsEnsure Compliance of ASsEnsure Compliance of ASs

� Ensure all applicable regulatory Ensure all applicable regulatory Ensure all applicable regulatory Ensure all applicable regulatory compliances including Companies Act, compliances including Companies Act, compliances including Companies Act, compliances including Companies Act, 2013201320132013

� Comply with SAsComply with SAsComply with SAsComply with SAs

� Work not documented is work not done.Work not documented is work not done.Work not documented is work not done.Work not documented is work not done.

Lunawat & Co.

Lunawat & Co.

CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod [email protected]@[email protected]@lunawat.com

+91 9811073867+91 9811073867+91 9811073867+91 9811073867

© 2016 CA. Pramod Jain, Lunawat & Co

critical issues in finalization of financial statements and ifc

Business