Larsen & Toubro Infotech Ltd Auditors Report.
The Members of,
Larsen & Toubro Infotech Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Larsen & Toubro Infotech Limited ("the Company"), which comprise the balance sheet as at 31st March 2019, and the statement of profit and loss, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and its profit, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the audit of the standalone financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (I C A I) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters below to be the key audit matters to be communicated in our report.
|Key Audit Matter||Accuracy of recognition, measurement, presentation and disclosures of revenue and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers". Further, onerous obligations in respect of fixed price contracts involves critical estimates.|
|New revenue accounting standard requires disclosures, which involve collation of information in respect of disaggregated revenue, and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.|
|The application of the new revenue accounting standard (Ind AS 115) involves significant judgements/material estimates relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period. Further, in case of fixed price contracts, estimated efforts is a critical estimate to determine revenues. This estimate has a high inherent uncertainty as it requires consideration of progress of the contract and efforts required to complete the remaining performance obligations.|
|Principal Audit Procedures||We assessed the Companys process in relation to overall revenue recognition process. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:|
| Relating to implementation of the new revenue accounting standard specifically, those relating to identification of the distinct performance obligations and determination of transaction price.|
| Recording of efforts incurred and estimation of efforts required to complete the performance obligations.|
| Tested the relevant information technology systems access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard.|
| Tested the access and application controls pertaining to time recording, allocation and control management systems which prevents unauthorised changes to recording of efforts incurred.|
|Principal Audit Procedures|| Selected a sample of continuing and new contracts and performed the following procedures which included enquiry and observation, reperformance and inspection of evidence in respect of operation of controls:|
| Read, analysed and identified the distinct performance obligations in these contracts.|
| Compared such performance obligations with that identified and recorded by the Company.|
| Reviewed contracts terms to determine the transaction price including any variable consideration to determine the appropriate transaction price for computing revenue and to test the basis of estimation of the variable consideration.|
| Samples in respect of revenue recorded for time and material contracts were tested though a review of approved time sheets including customer acceptances, subsequent invoicing and historical trend of collections and disputes.|
| In respect of samples relating to fixed price contracts, progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and contracting systems.|
| Performed a comparison of actual efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract.|
| Reviewed unbilled revenues to identify possible delays in achieving milestones, which require change in estimated efforts to complete the remaining performance obligations.|
| Performed analytical procedures towards:|
| reasonableness of revenue disclosed by type and service offerings.|
| Reasonableness of incurred and estimated efforts.|
| We reviewed the collation of information and the logic of the report generated from the management system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied after the balance sheet date.|
|Migration to new information systems|
|Key Audit Matter||During the year, Information Systems used for managing and recording transactions w.r.t. revenue, HR and treasury operations were changed/upgraded. Impact of errors, if any during the transition required evaluation.|
|The nature of business operations of the Company requires a high degree of reliance on the Information Technology systems. The audit approach relies on the effectiveness of automated controls and controls around interface of different systems. In a scenario of migration to new information systems during the year, robustness of IT general and application controls are critical to ensure that changes to applications and underlying data are made in an appropriate manner. As a part of audit, we need to ensure that the Company has implemented necessary preventive and detective controls across critical IT applications and infrastructure, which are most relevant from the perspective of financial reporting.|
|Principal Audit Procedures||We have reviewed the information systems migration process and Information Technology General Controls (ITGC) with the assistance of IT audit specialists, our procedures included:|
| Testing General IT Controls: Testing general IT controls around system access, change management and computer operations within specific applications pertinent to the financial statements. We assessed whether appropriate policies are in place and adhered to through inspection of supporting evidence. Also, assessed the operation of controls over changes or transactions and testing manual compensating controls, such as reconciliations between systems and other information sources, through re-performance or inspection.|
| Testing Data Migration: We reviewed the managements processes around systems migration in order to ascertain how controls in existing information systems are mapped into new information systems. We also independently tested completeness, validity and accuracy of transaction and master data migrated to new information system.|
| Extended scope: Where general IT controls and compensating manual controls were inadequate or ineffective, we performed additional substantive testing, such as using extended sample sizes and performing data analysis to test the integrity of the transactional level data pertinent to the Companys financial statements.|
Assessment of provisions and contingent liability in respect of compliance with various laws and regulations as applicable
|Key Audit Matter||Adequacy of provisioning and assessing contingent liabilities in respect of compliance with applicable l laws and regulations including Income tax assessments|
|The Companys operations are spread across several jurisdictions including those outside India requiring the Company to ensure compliance with relevant laws and regulations. Recognition of provisions and disclosure of contingent liabilities on account of potential claims in relation to same may require critical evaluation of legal positions/opinions taken by the Company involving complex matter and a high degree of professional judgment.|
|Furthermore, the Companys SEZ unit is eligible for exemption under section 10AA of Indian Income Tax Act, 1961. The Company may have some unsettled tax positions including matters under dispute on account of disallowance of exemption u/s 10A/10AA on profits earned by STPI/SEZ units on onsite export revenue. The evaluation involves significant judgement to determine the possible outcome of these cases.|
|Principal Audit Procedures|| We have evaluated the design and operating controls in relation to the compliance tracker maintained by the Company with respect to compliance with local and international laws regulations.|
| We read the summary of litigation matters provided by management and held discussions with the Companys legal counsel.|
| We have also enquired with some of the Companys external legal advisors with respect to the matters and examined related correspondence including advices for foreign branch compliances and obtained an external legal confirmation, wherever appropriate.|
| In respect of provisions against litigation and the assessment of contingent liabilities, we tested the calculation of the provisions/contingent liability assessment; we reviewed the assumptions against third party data, where available, and assessed the estimates against historical trends. We considered managements judgements on the level of provisioning/recognition of contingent liability as appropriate.|
|Investment in Subsidiaries|
|Key Audit Matter||The carrying amount of the investments in subsidiaries held at cost less impairment represents 8.34 % of the Companys total assets are reviewed annually for impairment|
|Recoverability of investment in subsidiary undertakings|
|The carrying amount of investment is assessed based on financial performance of subsidiaries and projected cash flows, where necessary. This activity requires significant management judgement and estimates.|
|Principal Audit Procedures|| We compared the carrying amount of investments with the relevant subsidiary balance sheet to identify whether their net assets, being an approximation of their minimum recoverable amount were in excess of their carrying amount and assessing whether those subsidiaries have historically been profit-making.|
| For the investments where the carrying amount exceeded the net asset value, compared the carrying amount of the investment with the expected value of the business based on a suitable multiple of the subsidiaries earnings or discounted cash flow analysis.|
| Tested the assumptions and understanding the cash flows based on our knowledge of the Company and the markets in which the subsidiaries operate; and|
| We also considered the adequacy of disclosures in the financial statements relating to the valuation of investments in subsidiaries, including those made with respect to judgments and estimates.|
The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
I dentify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the रAnnexure A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, the Statement of Profit and Loss, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. On the basis of the written representations received from the directors as on 31st March, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019 from being appointed as a director in terms of Section 164(2) of the Act.
f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.
g. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
|For B. K. Khare & Co.|
|Firms Registration Number - 105102W|
|Padmini Khare Kaicker|
|May 2, 2019||Membership No. 044784|
Annexure A to the Independent Auditors Report
(Referred To In Paragraph 1 Under रReport On Other Legal And Regulatory Requirements Section Of Our Report Of Even Date On The Standalone Financial Statements Of Larsen & Toubro Infotech Limited For The Year Ended March 31, 2019)
1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a rotational program for verification of its fixed assets over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. A portion of the fixed assets has been physically verified by the management of the Company during the year in accordance with the above-mentioned program. No material discrepancies were identified on such verification and have been properly accounted for in the books of account.
(c) According to the information and explanations given to us and to the best of our knowledge and belief, the title deeds of the immovable properties are held in the name of the Company.
2. The Company does not hold any physical inventories. Accordingly, paragraph 3(ii) of the Order is not applicable to the Company.
3. According to the information and explanations given to us, the Company has granted unsecured loan, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.
(a) The terms and conditions of the grant of such loans are not prejudicial to the Companys interest;
(b) The schedule of repayment of principal and payment of interest has been stipulated;
(c) There is no overdue amount remaining outstanding as at the year end
4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to loans and investments made.
5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits to which the directives of the Reserve Bank of India and the provisions of Sections 73-76 of the Act and the rules framed there under to the extent modified apply. Accordingly, the provisions of clause 3(v) of the Order are not applicable to the Company and no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.
6. According to the information and explanations given to us, the central government has not prescribed the maintenance of cost records under section 148(1) of the Act for any of the services rendered by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable to the Company.
7. (a) According to the records of the Company examined by us and information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Goods and Service Tax, Provident Fund, Employees State Insurance, Income Tax, Customs Duty, Cess and other statutory dues applicable to it with the concerned authorities. Also refer Note No. 34 forming part of accounts.
(b) According to the information and explanations given to us, dues of goods and service tax, income-tax, sales tax, service tax, excise duty, customs duty and value added tax which have not been deposited on account of any dispute are as follows:
|Name of Statute||Nature of dues||Million*||Period to which amount relates||Forum where pending|
|Central Sales Tax and local sales tax Acts, Service tax||Software exports and service income revenue considered as domestic sales and other classification disputes||11.16||FY2002-03||Maharashtra Sales Tax Tribunal, Mumbai|
|Service tax demand under reverse charge mechanism on the Agency commission paid in foreign currency||1.68||FY 2008-09 to 2013-14||CESTAT|
|West Bengal Value Added Tax||Demand raised based on subcontractor turnover||7.63||FY 2015-16||Senior Joint Commissioner Kolkata South Circle|
|Service Tax||Disallowance of Input Tax Credit||143.85||FY 2008-09 to 2014-15||Appeal to be filed before CESTAT|
|Income-tax Act, 1961||Disallowance of exemption under Income Tax||84.26||FY 2008-09 (AY 2009-10)||ITAT|
|Income Tax Act, 1961||Disallowance of exemption under Income Tax||0.18||FY 2010-11 (AY 2011-12)||Commissioner (Appeals)|
|Disputes regarding calculation of notional interest on transactions with related party and disallowance of FTC||1.21||FY 2010-11|
|Dispute regarding Disallowance of claim on the ground that it is allowable only for 10 consecutive Assessment years.||2.35||FY 2010-11|
|Disputes regarding short fall in tax deducted at source||5.14||FY 2010-11 and 2011-12 (AY 2011-12 and 2012-13)||Honble High Court|
|Disputes regarding exclusion of interest income from section 10A calculation, addition of notional interest on transactions with related party and disallowance of FTC||2.08||FY 2008-09||Assessing Officer|
|(AY 2009-10)||(Assistant Commissioner Of Income Tax)|
|Disallowance of ESOP discount||13.28||FY 2010-11||ITAT|
* Net of pre-deposit paid in getting the stay/appeal admitted
8. Based on the records examined by us and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution and bank. The Company has not taken any loans or borrowings from government and has not issued any debentures.
9. The Company did not raise any money by way of initial public offer, further public offer (including debt instruments) or term loan during the year. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company.
10. Based on the records examined by us and according to the information and explanations given to us, there were no material frauds by the Company or on the Company by its officers or employees noticed or reported during the year.
11. Based on the records examined by us and according to the information and explanations given to us, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.
12. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company and hence paragraph 3(xii) of the Order is not applicable to the Company.
13. Based on the records examined by us and according to the information and explanations given to us, transactions with related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.
14. Based on the records examined by us and according to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable to the company.
15. Based on the records examined by us and according to the information and explanations given to us, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.
16. In our opinion and according to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
|For B. K. Khare & Co|
|Firm Registration No. 105102W|
|Padmini Khare Kaicker|
|Membership No. 044784|
|May 2, 2019|
Annexure B to the Independent Auditors Report
Referred to in paragraph of our report of even date on the standalone financial statements of Larsen & Toubro Infotech Limited for the year ended March 31, 2019.
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Larsen & Toubro Infotech Limited ("the Company") as of March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India ("ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 ("the Act").
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
|For B.K. Khare & Co.|
|Firm Registration No. 105102W|
|Padmini Khare Kaicker|
|Membership No. 044784|
|May 2, 2019|