The Members of
CLIO INFOTECH LTD.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion
We have audited the accompanying financial statements of Clio Infotech Ltd. ("theCompany") which comprise the balance sheet as at March 31 2021 and the Statementof Profit and Loss and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of 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 financial statements give the information required by theCompanies Act 2013 ('Act') in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2021 its Profit / Loss and cash flows for the yearended on that date.
Basis for opinion
We conducted our audit in accordance with the standards on auditing specified undersection 143 (10) of the Companies Act 2013. Our responsibilities under those Standardsare further described in the auditor's responsibilities for the audit of the financialstatements section of our report. We are independent of the Company in accordance with thecode of ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the code of ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
We have determined the matters below to be key audit matters to be communicated in ourreport:
Key audit matters
Expected credit loss allowances
Recognition and measurement of impairment of financial assets involve significantmanagement judgement. With the applicability of Ind AS 109 credit loss assessment is nowbased on expected credit loss (ECL) model. The Company's impairment allowance is derivedfrom estimates including the historical default and loss ratios. Management exercisesjudgement in determining the quantum of loss based on a range of factors. The mostsignificant areas are loan staging criteria calculation of probability of default / lossand consideration of probability weighted scenarios and forward looking macroeconomicfactors. There is a large increase in the data inputs required by the ECL
How the matter was addressed in our Audit
In view of the significance of the matter we applied the following audit procedures ontest check basis in this area among others to obtain reasonable audit assurance:
We evaluated management's process and tested key controls around thedetermination of extent of requirement of expected credit loss allowances includingrecovery process & controls implemented in the company for trade receivables and otherfinancial assets. It was explained to us by the management that the control existsrelating to the recovery of receivables including those aging for large model. Thisincreases the risk of completeness and accuracy of the data that has been used to createassumptions in the model. In some cases data is unavailable and reasonable alternativeshave been applied to allow calculations to be performed. As per management opinionthere is no expected credit loss in several financial assets including the tradereceivables and other financial assets of the Company and all are on fair value based onthe assessment and judgement made by the board of the company.
Only Income earned by the company is Interest Income. Same is recognized on timelybasis & only upon there is no uncertainty as to its measurability or collectability.
Appropriateness of Current and Non-Current Classification periods and in the opinion ofthe board there is no requirement making expected credit loss allowance.
We have also reviewed the management response and representation on recoveryprocess initiated for sample receivables and based on the same we have place reliance onthese key controls for the purposes of our audit.
We have verified the process to identify the impact of the new revenue accountingstandard. After reviewing the same we inform that there is no material impact of newrevenue accounting standard and the Company can continue with its existing accountingpractice.
Performed confirmation procedures & obtained the same.
For the purpose of current & non-current classification the Company has consideredits normal operating cycle as 12 Months and the same is based on services providedacquisition of assets or inventory their realization in cash and cash equivalents. Theclassification is either done on basis of documentary evidence and if not then on thebasis of managements best estimate of period in which asset would be realized or liabilitywould be settled
Information other than the financial statements and auditors' report thereon
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.
Management's responsibility for the financial statements
The Company's board of directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the accounting standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The board of directors are also responsible for overseeing the Company's financialreporting process.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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 auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure "A" a statement on the mattersspecified 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 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 theCompany so far as it appears from our examination of those books;
(c) The balance sheet the statement of profit and loss and the cash flow statementdealt with by this report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the accountingstandards 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 March31 2021 taken on record by the board of directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting;
(g) With respect to the other matters to be included in the Auditor's 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;
a. The Company does not have any pending litigations which would impact its financialposition.
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
c. There has not been an occasion in case of the Company during the year under reportto transfer any sums to the Investor Education and Protection Fund. The question of delayin transferring such sums does not arise
ANNEXURE A TO AUDITORS' REPORT
[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditors Report of even date]
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
1. In respect of its fixed assets
a) The Company has maintained the proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information
b) As explained to us the Company has a program of verification to cover all the itemsof fixed assets in a phased manner. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us read with Note 51 to the financial statements there is nopending material discrepancies based on such verification.
c) As explained to us there are no immovable properties held by the company.
2. In respect of its inventories
Inventory represents securities held as stock-in-trade. As explained to us inventorieshave been verified and reconciled during the year by the management at reasonableintervals. As informed to us no material discrepancies were noticed on verification ofinventories by the management as compared to book records.
3. The company has granted loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013:
a) the terms and conditions of the grant of such loans are not otherwise prejudicial tothe company's interest;
b) According to the information and explanations given to us the loans given by thecompany are repayable on demand. As informed repayment of Principal amount and interest(if agreed) has been received during the year whenever demanded by the company.
c) There is no overdue amount for more than ninety days in respect of loans to theparties covered in the above register.
4. According to the information and explanations given to us and based on ourexamination of the records of the Company in respect of loans investments guaranteesand security given/ made by the company during the year the company has complied withthe provisions of section 185 & 186 of the Companies Act 2013.
5. The Company has not accepted any deposits from the public covered under thedirectives issued by the Reserve Bank of India and the provisions of Section 73 to 76 orany other relevant provisions of the Companies Act 2013 and the rules framed thereunder.Further no order has been passed by Company Law Board or National Company Law Tribunal orReserve Bank of India or any court or any other tribunal on the company. Hence Paragraph3(v) of the Order is not applicable.
6. The Central Government of India has not prescribed the maintenance of cost recordsunder sub-section (1) of Section 148 of the Companies Act 2013 for any of the products ofthe Company.
7. In respect of Statutory Dues:
a) According to the information and explanations given to us and based on the recordsof the company examined by us the company is generally regular in depositing theundisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand any other statutory dues to the appropriate authorities in India.
b) According to the information and explanations given to us there was no outstandingstatutory dues as on the last day of the financial year concerned for a period of morethan six months from the date they became payable.
c) According to the information and explanations given to us and based on the recordsof the company examined by us there are no dues of income tax or sales tax or service taxor duty of customs or duty of excise or value added tax which have not been deposited onaccount of any disputes
8. According to the records of the company examined by us and as per the informationand explanations given to us the company has not defaulted in repayment of loans orborrowings to any financial institution banks or government. The company has also notissued debentures. Hence Paragraph 3 (viii) of the Order is not applicable.
9. According to the records of the company examined by us and as per the informationand explanations given to us the Company did not raise any money by way of initial publicoffer or further public offer (including debt instruments) during the year and the termloans raised during the year were applied for the purpose for which those were raised.
10. During the course of our examination of the books and records of the companycarried in accordance with the auditing standards generally accepted in India we haveneither come across any instance of fraud on or by the Company noticed or reported duringthe course of our audit nor have we been informed of any such instance by the Management.
11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions of Sec197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with sections 177 and 188 of Companies Act 2013 where applicable and thedetails have been disclosed in the Financial Statements etc. as required by theapplicable accounting standards
14. The company has not made preferential allotment or private placement of shares orfully or partly convertible debentures during the year under review.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) isnot applicable.
16. According to the information and explanations given to us the Company is notengaged in any nonbanking financing activities as per the prescribed criteria and theexisting registration under Section 45-IA of the Reserve Bank of India Act 1934 is in theprocess of cancellation.
ANNEXURE B TO AUDITORS' REPORT
[Referred to in Clause (f) in paragraph 2 under 'Report on Other Legal and RegulatoryRequirements' in the Independent Auditors Report of even date]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of CLIOINFOTECH LTD. (" 'the Company") as of March 31 2021 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in general in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were found operating effectively as at March 31 2021based on the internal control over financial reporting criteria established by theCompany. However the same needs to be further improved and formally documented in view ofthe size of the company and nature of its business considering the essential componentsof internal control stated in the Guidance Note on Audit of Internal Financial Controlsover Financial Reporting issued by the Institute of Chartered Accountants of India.
| ||For PAREKH SHAH & LODHA |
|UDIN: 21410227AAAADJ2530 ||Chartered Accountants Firm Registration No.: 107487W |
|Place: Mumbai ||Ashutosh Dwivedi (Partner) |
|Date: 29th June 2021 ||M. No.: 410227 |