TO THE MEMBERS OF
Report on the Audit of the Financial Statements M/S.FOURTH GENERATION INFORMATIONSYSTEMS LIMITED
We have audited the accompanying financial statements of M/S.FOURTH GENERATIONINFORMATION SYSTEMS LIMITED ("the Company") which comprise the Balance Sheet asat March 31 2021 the Statement of Profit and Loss (including other comprehensiveincome) and the Statement of Cash Flows for the year ended on that date and a summary ofthe significant accounting policies and other explanatory 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 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards)Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312021 its loss total comprehensive incomeand its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
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.
|Key Audit Matters ||How the Matter was addressed in Audit |
|Accuracy of recognition measurement presentation & disclosures of revenue ||Principal Audit Procedures |
|A major portion of revenue of the company consists of revenue from contracts with customers in respect of security services and housekeeping services. || Our audit procedures include testing and evaluation of internal control system implemented in respect of revenue and related activities. Our audit also consists of performing analytical procedures review of contracts and agreements with the customers to understand the performance obligations of the parties. |
|Revenue is measured at the fair value of consideration received or receivable. Revenue is recognized when the control is transferred to the customer and when the Company has completed its performance obligations under the contracts. || We have also performed testing of key controls over the contract process including contract monitoring measurement of critical elements of the contract based on which revenue is recognizedinvoicing and authorizations over certain systems used to generate the information. |
|Further the contractual terms also determines the measurement and recognition of revenue and profit. The Company is therefore required to make operational and financial assumptions. ||The basis for the evaluation of internal control has been Company's internal control framework for financial reporting. |
|Judgments include: ||We have performed the following audit procedures: |
| Interpretation of contract terms; ||Obtained a sample of contracts to confirm that revenue had been appropriately recognized. Tested the revenue recognized with supporting documentation which includes attendance records customer acceptance reviewing customer correspondence where necessary and ensuring cut-off had been appropriately applied. |
| Allocation of revenue to performance conditions; and ||Based on our audit no significant observations have been noted which have resulted in reporting to the audit committee. Our overall conclusion is that there are in all material respects proper processes in place to recognize the correct billed and unbilled revenue in the financial statement. |
| Combining of obligations where the services are related. ||Our audit approach was a combination of test of internal control s an d substantive procedures which included the following: |
| || Evaluate and test the controls for managing trade receivables like credit limits and subsequent recovery |
| || Assessing the recoverability of long out Standings |
| || Evaluation of status of disputes and possibility of recovery |
| || Seek independent confirmations and apply alternate audit procedures in case of non replies. |
| ||Conclusion Our procedures did not identify any material exceptions. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexure to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report there on.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion there on.
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 section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India referred to in Section 133 of Companies Act 2013 read withthe Companies (Indian Accounting standard) Rules 2015. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
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 responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Financial Statements
Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the Accounting estimates made by management aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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 significance in the audit of the financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh thepublic interest benefits of such communication
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 issued by thedepartment of company affairs in terms of section 143 (11) of the companies Act 2013and on the basis of our examination of the books and records as we considered appropriateand according to the information and explanation given to us we give in the"Annexure B" a statement on the matters specified in paragraph 3 and 4 of theOrder to the extent applicable.
2. As required by section 143(3) of the Companies Act 2013 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 purpose of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.
c) The Balance Sheet and Statement of Profit and Loss including Other comprehensiveincome and Cash flow Statement dealt with by this Report are in agreement with the booksof account.
d) In our opinion the aforesaid financials comply with the Accounting Standardsspecified under of Section 133 of the Companies Act 2013 read with relevant rules issuedthereunder
e) On the basis of written representations received from the directors as on March312021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312021 from being appointed as a director in terms of subsection (2) of section 164 of the Companies Act 2013.
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 A"; and
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 opinion and to the best of our information and according to theexplanations given to us:
i) There are no pending litigations for or against the Company which would impact itsfinancial position.
ii) The Company does not have any derivatives contracts. Further there are no long termcontracts for which provisions for any material foreseeable losses is required to be made.
iii) There are no amounts pending that are required to be transferred to InvestorEducation and Protection Fund.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of M/s. Fourth Generation InformationSystems Limited of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/s. FourthGeneration Information Systems Limited("the Company") as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company are responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10)of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 includedobtaining an understanding of internal financial controls over financial reportingassessing 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 auditor's judgment including the assessment of the risks ofmaterial misstatement 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 internal financial controls system overfinancial reporting of the Company.
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 statement for external purpose in accordance with generallyaccepted accounting principles. A company's internal financial controls 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.
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.
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements'section of our report to the Members of M/S. FOURTH GENERATION INFORMATION SYSTEMSLIMITED of even date)
i. In respect of the Company's fixed assets:
The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
The Company has a program of verification to cover all the items of fixed assetsin a phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
According to the information and explanations given to us the records examinedby us and based on the examination of the conveyance deeds / registered sale deed Providedto us we report that the title deeds comprising all the immovable properties of landand buildings which are freehold are held in the name of the Company as at the balancesheet date.
ii. In respect of the Company's Inventories:
As explained to us the physical verification of inventories excluding stockslying with third parties have been conducted at reasonable intervals by the Managementduring the year. In case of inventories lying with third parties certificates of stocksholding have been received.
In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
In our opinion and according to the information and explanations given to usthe Company has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification of stocks as compared to book records.
iii. The Company has not granted any loans secured or unsecured to companies firms orother Parties covered in the register maintained under section 189 of the Companies Act.Thus Clause 3(iii) of the Order is not applicable.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
v. The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
vi. As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.
vii. According to the information and explanations given to us in respect of statutorydues:
The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities.
There were no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income Tax Goods and Service Tax Customs Duty Cess andother material statutory dues in arrears as at March 312021 for a period of more than sixmonths from the date they became payable .
viii. Based on our Audit procedures and on the information and explanations given bythe management we are of the opinion that the company has not defaulted in repayment ofdues to a financial institutions banks or debenture holders.
ix. Money raised by way of term loan were applied for the purpose for which it wasraised. The Company has not raised moneys by way of initial public offer or further publicoffer.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud on the Company by its officers oremployees has been noticed or reported during the year.
xi. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Companies Act.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For NSVR & ASSOCIATES LLP. |
| ||Chartered Accountants |
| ||Firm's Registration Number: 008801S/S200060 |
| ||Sd/- |
| ||CA.N. SRINIVASU |
| ||Partner |
|Place : Hyderabad ||Membership number: 209453 |
|Date: 12.06.2021 ||UDIN: 21209453AAAAFP2592 |