The Members of Bank of Baroda
Independent Auditors Report on the Standalone Financial Statements ofBank of Baroda Opinion
1. We have audited the standalone financial statements of Bank ofBaroda ("the Bank") which comprises the Balance Sheet as at March 31 2019 thestandalone Profit and Loss Account and the standalone Cash Flow Statement for the yearthen ended including summary of significant accounting policies and other explanatoryinformation.
2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Banking Regulation Act 1949 in the manner so required forbank and are in conformity with accounting principles generally accepted in India andgive: a. true and fair view in case of the Balance sheet of the state of affairs of theBank as at 31st March 2019; b. true balance of Profit in case of Profit / Loss accountfor the year ended on that date; and c. true and fair view in case of statement of cashflows for the year ended on that date.
Basis for opinion
3. We conducted our audit in accordance with the Standards on Auditing(the "SAs"). Our responsibilities under those SAs are further described in theAuditor's Responsibilities for the Audit of the standalone financial statements section ofour report. We are independent of the Bank in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements 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.
Key Audit Matters
4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.
|Information Technology (IT) and controls impacting financial reporting ||Our Audit Approach |
|The IT environment is complex and pervasive to the operations of the Bank with regards to the financial reporting process since the same is highly dependent on information technology including automated and manual controls and availability of complete and accurate electronic data due to the size and complexity of the operations. ||We have obtained understanding of the IT related environment of the Bank and had accordingly identified IT applications databases and operating systems to conduct risk assessment which may impact on the financial reporting. |
| ||Our audit procedures in this area included among others: |
| || Testing IT general controls related to User and Application controls Change Management Controls and Data backup. |
|Unauthorized or extensive access rights changes in IT environment operational controls lack of segregation of duties which may cause a risk of misstatement of financial information and could have a material consequence on the completeness and accuracy of the financial statements. || Assessing whether appropriate restrictions were placed on access to core systems through reviewing the permissions and responsibilities of authorised personnel. |
|Due to high level of automation number of integrated / non integrated systems used this is a significant matter for our audit. || Where we identified the need to perform additional procedures we placed reliance on manual compensating controls; such as reconciliations between systems and other information sources or performing additional testing; extended our sample sizes to obtain adequate and appropriate audit evidences. |
|Accuracy in classification of Loans and Advances provision thereon and recognition of income ||Our Audit Approach |
|The net advances of the Bank constitutes of 60.03% of the total assets which is the significant part of the financial statements. Besides following the prudential norms on Income Recognition Asset Classification and Provisioning relating to Advances issued by the Reserve Bank of India ("RBI") the Bank also has certain policies for provisioning on non performing assets. ||We had obtained understanding from the Bank about the controls built in the system checks and balances incorporated with respect to adherence to the RBI guidelines and related Bank's Policies for identification of non performing assets provisioning and had accordingly planned our audit procedures. |
| ||We have audited top 20 domestic branches and have relied on the work done by the branch auditor for other selected by the Bank. domestic and foreign branches |
|Due to reliance placed on data submitted by the borrowers & lead bank for Drawing Power calculations third party for security valuation computation of provisions as per various guidelines issued by the RBI management judgements for impairing advances computation of diminution value for restructured advances and recognition of interest income including in non performing advances; we have considered this to be a key audit matter. ||Our audit procedures with respect to our audit of top 20 domestic branches focused on |
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| || ?? Review of design and operating effectiveness of key controls around the process of loan performance monitoring which includes basis of assessing drawing power and security valuations. |
| || ?? For non-performing advances on sample basis we have performed loan file reviews to inspect financial particulars existence of security and assessed the adequacy of the provisions recognized in the books of accounts including valuation of collateral and the cash flows. |
|?? || Verification of interest income credited on a monthly basis with the input data such as principal amounts contractual interest rates currencies and maturity dates were tested through substantive testing and tracing to source documents. |
| || Besides above we have also referred to the reports of the concurrent auditor and other audits conducted by the Bank. |
| || In addition to the branches audited by us we have carried out the Assessment of design implementation and operating effectiveness of controls of IT System used with respect to the classification of advances recognition of income and provisioning pertaining to non performing advances. |
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5. Incorporated in these standalone financial statements are thereturns of 20 branches and 1 Specialized Integrated Treasury Branch audited by us 3045branches audited by statutory branch auditors and 34 foreign branches audited Thebranches audited by us and those audited by other auditors have been selected by the Bankin accordance with the guidelines issued to the Bank by the Reserve Bank of India. Alsoincorporated in the Balance Sheet and the Profit and Loss Account are the returns from2487 domestic branches and 4 foreign branches which have not been subjected to audit.These unaudited branches account for 7.87 percent of advances 16.32 percent of deposits5.13 percent of interest income and 15.27 percent of interest expenses.
6. The Bank's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the financial statements and our auditor's report thereon.The Annual Report is expected to be made available to us after the date of this auditor'sreport.
7. Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.
8. In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially 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 and take appropriate actions necessitated by the circumstances and theapplicable laws and regulations.
Responsibilities of Management and Those Charged With Governance forthe Standalone Financial Statements
9. The bank's Management Board of Directors are responsible for thepreparation of these standalone financial statements that give a true and fair view of thestate of affairs profit and cash flow of the Bank in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified by theInstitute of Chartered Accountants of India (ICAI) as applicable to banks provision 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 alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Bank and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.
10. In preparing the standalone financial statements management andBoard of Directors are responsible for assessing the Bank's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Bank or tocease operations or has no realistic alternative but to do so. The Board of Directors isalso responsible for overseeing the Bank's financial reporting process.
Auditor's responsibilities for the audit of the Standalone FinancialStatements
11. Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with the SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with the SAs we exerciseprofessional judgment and maintain professional scepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
b. Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances but not for thepurpose of expressing an opinion on whether the Company has in place an adequate internalfinancial control system over financial reporting and the operating effectiveness of suchcontrols.
c. Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
d. Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theBank's ability to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the standalone financial statements or if such disclosures are inadequateto modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Bank tocease to continue as a going concern.
e. Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements
12. The Balance Sheet and the profit and loss account have been drawnup in accordance with the provisions of Section 29 of the Banking Regulation Act 1949 andas per the Accounting Standards issued by ICAI: 13. As required by the Banking Companies(Acquisition and Transfer of Undertakings) Act 1970 we report that;
(a) We have obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit and havefound them to be satisfactory;
(b) The transactions of the Bank which have come to our notice havebeen within the powers of the Bank; and
(c) The returns received from the offices and branches of the Bank havebeen found adequate for the purposes of our audit;
14. We further report that:
(a) in our opinion proper books of account as required by law havebeen kept by the Bank so far as it appears from our examination of those books and properreturns adequate for the purposes of our audit have been received from branches notvisited by us.
(b) The Balance Sheet and Profit and Loss account and Cash flowstatements dealt with by this report are in agreement with the books of account andreturns;
(c) The reports on the accounts of the branch offices audited by branchauditors of the Bank under section 29 of the Banking Regulation Act 1949 have been sentto us and have been properly dealt with by us in preparing this report; and
(d) In our opinion the Balance Sheet the Profit and Loss Account andthe Statement of Cash Flows comply with the applicable accounting standards to the extentthey are not inconsistent with the accounting policies prescribed by RBI.
|For Kalyaniwalla & Mistry LLP. ||For Singhi & Co. ||For G M Kapadia & Co. ||For S R Dinodia & Co. LLP. |
|Chartered Accountants ||Chartered Accountants ||Chartered Accountants ||Chartered Accountants |
|FRN:104607W / W100166 ||FRN : 302049E ||FRN : 104767W ||FRN : 001478N / N500005 |
|(Daraius Fraser) ||(Rajiv Singhi) ||(Atul Shah) ||(Sandeep Dinodia) |
|Partner ||Partner ||Partner ||Partner |
|M No. 042454 ||M No. 053518 ||M No. 039569 ||M No. 083689 |
Date: 22nd May 2019
DECLARATION OF AUDIT REPORT WITH UNMODIFIED OPINION
We hereby declare that Auditor Report on Standalone Annual Accounts ofthe Bank for the Financial Year ended 31st March
2019 contain unmodified opinion.
|G Ramesh ||P S Jayakumar |
|Head (Corp. A/Cs & Taxation) and CFO ||Managing Director & CEO |
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