The President of India
Report On the Financial Statements
1. We have audited the accompanying financial statements of PUNJAB NATIONAL BANKas at 31st March, 2014, which comprise the Balance Sheet as at March 31, 2014, and Profitand Loss Account and the cash flow statement for the year then ended, and a summary ofsignificant accounting policies and other explanatory information. Incorporated in thesefinancial statements are the returns of 20 branches audited by us and 2550 branchesaudited by branch auditors (including 1 off shore banking unit and 42 other offices) and 4foreign branches audited by local auditors. The branches audited by us and those auditedby other auditors have been selected by the Bank in accordance with the guidelines issuedto the Bank by the Reserve Bank of India. Also incorporated in the Balance Sheet and theProfit and Loss Account are the returns from 3883 branches which have not been subjectedto audit. These unaudited branches account for 9.46 per cent of advances, 31.22 per centof deposits, 8.40 per cent of interest income and 29.05 per cent of interest expenses.
Managements Responsibility for the Financial Statements
2. Management is responsible for the preparation of these financial statements inaccordance with the provisions of Section 29 of the Banking Regulation Act 1949 and todisclose the information as may be necessary to conform to form A & Brespectively of the Third Schedule to the Banking Regulation Act, 1949. These financialstatements comply with the applicable Accounting Standards issued by the Institute ofChartered Accountants of India. This responsibility includes the design, implementationand maintenance of internal control relevant to the preparation of the financialstatements that are free from material misstatement, whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit. We conducted our audit in accordance with the Standards on Auditing issued bythe Institute of Chartered Accountants of India. Those Standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditors judgment, including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the Banks preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of entity's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by management, as well as evaluating the overall presentation of thefinancial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
Emphasis of Matter
6. In accordance with the Standard on Audit [SA] 706 "Emphasis of MatterParagraph", without qualifying our opinion, we draw attention to:
(i) Note No.15 in schedule 18 to the financial statements, which describes deferment ofpension and gratuity liability of the bank to the extent of Rs. 664.73 Crores pursuant tothe exemption granted by the Reserve Bank of India to the public sector banks fromapplication of the provisions of Accounting Standard (AS) 15, Employee Benefits vide itscircular no. DBOD. BP. BC/80/21.04.018/2010-11 on Re-opening of Pension Option toEmployees of Public Sector Banks and Enhancement in Gratuity Limits-Prudential RegulatoryTreatment.
(ii) Note No.20 in schedule 18 to the financial statements, which describes pursuant tothe Reserve Bank of India Notification DBOD.BP.BC.77/21.04.018/2013-14 dated 20.12.2013Deferred Tax Liability of Rs.231.52 crore for the Special Reserve created under section 36(1) (viii) of the Income Tax Act 1961 up to 31.03.2013, not previously charged to Profit& Loss Account, has now been adjusted directly from the Revenue Reserve.
7. In our opinion, as shown by books of bank, and to the best of our information andaccording to the explanations given to us:
(i) the Balance Sheet, read with the notes thereon is a full and fair Balance Sheetcontaining all the necessary particulars, is properly drawn up so as to exhibit a true andfair view of state of affairs of the Bank as at 31st March 2014 in conformity withaccounting principles generally accepted in India;
(ii) the Profit and Loss Account, read with the notes thereon shows a true balance ofprofit, in conformity with accounting principles generally accepted in India, for the yearcovered by the account; and
(iii) the Cash Flow Statement gives a true and fair view of the cash flows for the yearended on that date.
Report on Other Legal and Regulatory Requirements
8. The Balance Sheet and the Profit and Loss Account have been drawn up in Forms"A" and "B" respectively of the Third Schedule to the BankingRegulation Act, 1949.
9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and asrequired by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970,and subject also to the limitations of disclosure required therein, we report that:
(a) We have obtained all the information and explanations which to the best of ourknowledge and belief, were necessary for the purposes of our audit and have found them tobe satisfactory.
(b) The transactions of the Bank, which have come to our notice, have been within thepowers of the Bank.
(c) The returns received from the offices and branches of the Bank have been foundadequate for the purposes of our audit.
10. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementcomply with the applicable accounting standards read in conjunction with the Para onEmphasis of Matter.
|For G S Madhava ||For Borkar & ||For Phillipos & Co |
|Rao & Co ||Muzumdar ||Chartered |
|Chartered ||Chartered ||Accountants |
|Accountants ||Accountants ||FRN : 002650S |
|FRN : 001907S ||FRN : 101569 W || |
|(G Manikya Prasad) ||(Devang Vaghani) ||(C H Sreedharan) |
|Partner (M.No. 020105) ||Partner (M.No. 109386) ||Partner (M.No. 006281) |
|For K N Gutgutia ||For CVK & ||For Ramesh Kapoor |
|& Co ||Associates ||& Co |
|Chartered ||Chartered ||Chartered |
|Accountants ||Accountants ||Accountants |
|FRN : 304153E ||FRN : 101745W ||FRN : 001477N |
|(B R Goyal) ||(A K Pradhan) ||(Ramesh Kapoor) |
|Partner (M.No. 012172) ||Partner (M.No. 032156) ||Partner (M.No. 080725) |
|Date: 13th May 2014 || |
|Place: New Delhi || || |