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Axis Bank Ltd.

BSE: 532215 Sector: Financials
NSE: AXISBANK ISIN Code: INE238A01034
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VOLUME 182367
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P/E 14.82
Mkt Cap.(Rs cr) 222,105
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OPEN 730.15
CLOSE 733.50
VOLUME 182367
52-Week high 866.60
52-Week low 618.10
P/E 14.82
Mkt Cap.(Rs cr) 222,105
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Axis Bank Ltd. (AXISBANK) - Auditors Report

Company auditors report

To

the Members of

Axis Bank Limited

Report on the audit of the Standalone Financial Statements

Opinion

We have audited the Standalone Financial Statements of Axis Bank Limited (the‘Bank') which comprises the Balance Sheet as at March 31 2022 the Profit and LossAccount and the Cash Flow Statement for the year then ended and notes to the StandaloneFinancial Statements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Section 29 of the Banking Regulation Act 1949 as well as the Companies Act 2013(the ‘Act') and circulars and guidelines issued by the Reserve Bank of India in themanner so required for banking companies and give a true and fair view in conformity withthe accounting principles generally accepted in India including the Accounting Standardsprescribed under Section 133 of the Act read with rules made thereunder of the state ofaffairs of the Bank as at March 31 2022 and its profit and its cash flows for the yearended on that date.

Basis of opinion

We conducted our audit in accordance with the Standards on Auditing (‘SAs')specified under Section 143 (10) of the Act. Our responsibilities under those SAs arefurther described in the Auditors' Responsibilities for the Audit of the StandaloneFinancial Statements Section of our report. We are independent of the Bank in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the Standalone FinancialStatements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the Standalone Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current year.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters prescribed below to bethe key audit matters:

Sr. No. Key Audit Matters How the Matter was addressed in our report
1. Information Technology (IT) Systems and controls over financial reporting
The Bank's financial accounting and reporting systems are highly dependent on the effective working of the Core Banking Solution (CBS) and other IT systems linked to the CBS or working independently. Extensive volume variety and complexity of transactions are processed daily and there is a risk that automated accounting procedures and related internal controls may not be accurately designed and operating effectively. There exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being materially misstated. Appropriate IT controls are required to ensure that the IT applications perform as planned and the changes made—are properly authorized tested and controlled. Such controls contribute to risk mitigation of erroneous output data. The audit outcome is heavily dependent on the extent of IT systems and controls. • We have planned designed and carried out the desired audit procedures and sample checks taking into consideration the IT systems of the Bank. The procedures adopted by us are in our opinion adequate to provide reasonable assurance on the adequacy of IT controls in place. Towards this end we obtained an understanding of Bank's IT environment.
• IT audit specialists are an integral part of our engagement team.
• In addition we have also relied on IS audit conducted by Internal Audit department and also the audit of Internal Financial Control over Financial Reporting conducted by Control and Governance Assurance team of the Bank.
We have identified IT Controls Framework as a Key Audit Matter as the Bank's business is highly dependent on technology the IT environment is complex and the design and operating effectiveness of IT controls have a direct impact on its financial reporting process. Review of these controls allows us to provide assurance on the integrity and completeness of data processed through various IT applications which are used for the preparation and presentation of financial reports. • We also tested key automated and manual business cycle controls and logic for system generated reports relevant to the audit;including testing of compensating controls or performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the Standalone Financial Statements.
• We have also carried out independent alternative audit procedures like substantive testing analytical procedures etc. to verify the accuracy of the data generated from the IT system.
2. Income Recognition Asset Classification (IRAC) and provisioning on Loans & Advances and Investments as per the regulatory requirements
Please refer to Note no. 4.4 (a) of Schedule 18 relating to Asset Quality in respect of movement of Non-Performing Assets (NPAs) and related provisions and disclosures with regard to Non Performing Investments (NPI) respectively as also Note no. 2 of Schedule 18 regarding the provisions made due to the potential impact of Covid-19 pandemic. Our audit approach included testing the design operating effectiveness of internal controls and substantive audit procedures in respect of income recognition asset classification and provisioning pertaining to advances and investments. In particular:
The Bank as per its governing framework undertakes the performing and non-performing advances/investments provisions based on Management's assessment of the degree of impairment of the advances subject to and guided by minimum provisioning levels prescribed under RBI guidelines. • We have evaluated and understood the Bank's internal control system in adhering to the relevant RBI guidelines regarding income recognition asset classification and provisioning pertaining to advances and investments;
• We have tested key IT systems/ applications used and their design and implementation as well as operational effectiveness of relevant controls including involvement of manual process
The management of the Bank relies on its automated IT systems to determine asset classification income recognition provisioning for standard and non-performing advances/ investments and for compliance of applicable regulatory guidelines issued by the RBI. The management supplements its assessment by availing services of experts (like independent valuers lawyers legal experts and other professionals) to determine the valuation and enforceability of security of such advances/investments. and manual controls in relation to income recognition asset classification provisioning pertaining to advances and investments and compliances of other regulatory guidelines issued by the RBI;
Compliance of relevant prudential norms issued by the Reserve Bank of India (RBI) in respect of income recognition asset classification and provisioning pertaining to advances as well as those pertaining to investments is a key audit matter due to materiality complexity and uncertainty involved and the current processes at the Bank which requires certain manual interventions management estimates and judgement. • We have test checked advances to examine the validity of the recorded amounts loan documentation examined the statement of accounts indicators of impairment impairment provision for non-performing assets and compliance with income recognition asset classification and provisioning pertaining to advances in terms of applicable RBI guidelines;
• We have evaluated the past trends of management judgement governance process and review controls over impairment provision calculations and discussed the provisions made with the top and senior management of the Bank;
• We have also relied on work done by external experts like valuers lawyers concurrent auditors etc. on specific areas.

Information other than the Standalone Financial Statements and Auditors' Report thereon

The Bank's management and Board of Directors are responsible for the Other Information.The other information comprises the information included in the Annual Report but does notinclude the Standalone Financial Statements Consolidated Financial Statements and ourauditors' report thereon and the Pillar III Disclosures under Basel III CapitalRegulation Leverage Ratio Liquidity Coverage Ratio and Net Stable Funding Ratio. Theother information is expected to be made available to us after the date of this auditors'report.

Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements our responsibilityis to read the Other Information identified above when it becomes available and in doingso consider whether the Other Information is materially inconsistent with the StandaloneFinancial Statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Bank's Board of Directors and Management are responsible for the matters stated inSection 134(5) of the Act with respect to the preparation of these Standalone FinancialStatements that give a true and fair view of the state of affairs profit and cash flowsof the Bank in accordance with the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under Section 133 of the Act provisions ofSection 29 of the Banking Regulation Act 1949 and the circulars and guidelines issued byReserve Bank of India (‘RBI') from time to time. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Bank and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone Financial Statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the Standalone Financial Statements the Management and Board of Directorsare responsible for assessing the Bank's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Management and Board of Directors either intends toliquidate the Bank or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Bank's financialreporting process.

Auditors' Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Bank hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the Standalone Financial Statementsmade by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Bank's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditions maycause a Bank to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matters

The Standalone Financial Statements of the Bank for the previous year ended March 312021 were audited by the predecessor auditors. The auditors have expressed unmodifiedopinion vide their report dated April 27 2021 on such financial statements. Accordinglywe do not express any opinion on the same.

Our opinion on the Standalone Financial Statements is not modified in respect of abovematter.

Report on other legal and regulatory requirements

The standalone balance sheet and the standalone profit and loss account have been drawnup in accordance with the provisions of Section 29 of the Banking Regulation Act 1949 andSection 133 of the Act.

A. As required by sub-section (3) of Section 30 of the Banking Regulation Act 1949 wereport that:

(a) we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose 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; and since the key operations of the Bank are automated with the keyapplications integrated to the core banking systems the audit is carried out centrally asall the necessary records and data required for the purposes of our audit are availabletherein. However during the course of our audit we have visited 82 branches (includingcredit units) to examine the records maintained at such branches for the purpose of ouraudit.

B. Further 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 bestof 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 theBank so far as it appears from our examination of those books;

(c) the standalone balance sheet the standalone profit and loss account and thestandalone cash flow statement dealt with by this Report are in agreement with the booksof account;

(d) in our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act to the extent they are notinconsistent with the accounting policies prescribed by RBI;

(e) on the basis of the written representations received from the directors as on March31 2022 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2022 from being appointed as a director in terms of Section 164 (2) of theAct; and

(f) with respect to the adequacy of the internal financial controls with reference toStandalone Financial Statements of the Bank and the operating effectiveness of suchcontrols refer to our separate Report in RsAnnexure A'.

C. With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. the Bank has disclosed the impact of pending litigations as at March 31 2022 on itsfinancial position in its Standalone Financial Statements - Refer Schedule 12 - ContingentLiabilities to the Standalone Financial Statements;

ii. the Bank has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts - Refer Schedule 5 read with note 5.15 of Schedule 18 to theStandalone Financial Statements in respect of such items as it relates to the Bank;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Bank;

iv. a. The management has represented that to the best of its knowledge and beliefother than as disclosed in the note 5.13 of Schedule 18 to the Standalone FinancialStatements no funds (which are material either individually or in the aggregate) havebeen advanced or loaned or invested (either from borrowed funds or share premium or anyother sources or kind of funds) by the Bank to or in any other person(s) or entity(ies)including foreign entities ("Intermediaries") with the understanding whetherrecorded in writing or otherwise that the Intermediary shall whether directly orindirectly lend or invest in other persons or entities identified in any manner whatsoeverby or on behalf of the Bank ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries.

b. Further the management has represented that to the best of its knowledge andbelief other than as disclosed in the note 5.13 of Schedule 18 to the StandaloneFinancial Statements no funds (which are material either individually or in theaggregate) have been received by the Bank from any person(s) or entity(ies) includingforeign entities ("Funding Parties") with the understanding whether recordedin writing or otherwise that the Bank shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries. Based on such audit procedures thatwere considered reasonable and appropriate in the circumstances nothing has come to ournotice that has caused us to believe that the representations under sub-clause (a) and (b)above contain any material misstatement.

v. As stated in note 5.3 of Schedule 18 to the Standalone Financial Statements theBoard of Directors of the Bank has proposed final dividend for the financial year2021-2022 which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The amount of dividend proposed is in accordance with Section 123 of theCompanies Act.

D. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act:

The Bank is a banking company as defined under Banking Regulation Act 1949.Accordingly the requirements prescribed under Section 197 of the Companies Act 2013 donot apply by virtue of Section 35B(2A) of the Banking Regulation Act 1949.

Annexure A to the Independent Auditors' Report of even date on the Standalone FinancialStatements of Axis Bank Limited for the year ended March 31 2022

Report on the Internal Financial Controls with reference to the aforesaid StandaloneFinancial Statements under Clause (i) of sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")

We have audited the internal financial controls with reference to Standalone FinancialStatements of Axis Bank Limited ("the Bank") as of March 31 2022 in conjunctionwith our audit of the Standalone Financial Statements of the Bank for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Bank's management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Bank considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (‘the Guidance Note') issued by the Institute of CharteredAccountants of India (‘the ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Bank's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013 ("the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Bank's internal financial controlswith reference to Standalone Financial Statements based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (‘the Guidance Note') and the Standards on Auditing (‘theStandards') issued by the ICAI and deemed to be prescribed under Section 143(10) of theAct to the extent applicable to an audit of internal financial controls over financialreporting both issued by the ICAI. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements were established and maintained and whether such controls operated effectivelyin all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to StandaloneFinancial Statements included obtaining an understanding of internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgment including the assessment of the risks ofmaterial misstatement of the Standalone Financial Statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Bank's internal financial controls withreference to Standalone Financial Statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

A Bank's internal financial controls with reference to Standalone Financial Statementsis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of Standalone Financial Statements for externalpurposes in accordance with generally accepted accounting principles. Bank's internalfinancial control with reference to financial statements includes those policies andprocedures that

1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Bank;

2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Standalone Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Bank are being made onlyin accordance with authorisations of management and directors of the Bank; and

3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Bank's assets that could have amaterial effect on the Standalone Financial Statements.

Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference toStandalone Financial Statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to Standalone

Financial Statements to future periods are subject to the risk that the internalfinancial controls with reference to Standalone Financial Statements become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Bank has maintained in all respects an adequate internal financialcontrol system with reference to financial statements and such internal financial controlswith reference to the financial statements were operating effectively as at March 312022 based on internal control over financial reporting criteria established by the Bankconsidering the essential components of internal control stated in the Guidance Note.

For M P Chitale & Co. For CNK & Associates LLP
Chartered Accountants Chartered Accountants
(ICAI FRN 101851W) (ICAI FRN 101961W/W100036)
Ashutosh Pednekar Manish Sampat
Partner Partner
(ICAI M. No. 041037) (ICAI M. No. 101684)
UDIN: 22041037AIAAWV7885 UDIN: 22101684AIAAPL4546
Place: Mumbai Place: Mumbai
Date: April 28 2022 Date: April 28 2022

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