The Members of Indian Bank
Report onAudit of the Standalone Financial Statements
1. We have audited the standalone financial statements of Indian Bankwhich comprise the Balance Sheet as at 31 March 2019 the Statement of Profit and Loss andthe Statement of Cash Flows for the year then ended and notes to financial statementsincluding a summary of significant accounting policies and other explanatory informationin which are included returns for the year ended on that date of 20 branches and theIntegrated Treasury Branch audited by us and 1744 branches audited by statutory branchauditors and 3 foreign branches of which two have been audited and one branch for whichaudit is yet to be completed by the local foreign auditors. The branches audited by us andthose audited by other auditors have been selected by the Bank in accordance with theguidelines issued to the Bank by the Reserve Bank of India. Also included in the BalanceSheet the Statement of Profit and Loss and Statement of Cash Flows are the returns from1107 branches which have not been subjected to audit. These unaudited branches account for4.91 percent of advances 14.76 per cent of deposits 2.58 per cent of interest income and8.37 per cent of interest expenses.
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 and:
a) the Balance Sheet read with the notes thereon is a full and fairBalance Sheet containing all the necessary particulars is properly drawn up so as toexhibit a true and fair view of the state of affairs of the Bank as at 31st March 2019;
b) the Profit and Loss Account read with the notes thereon shows atrue balance of profit/loss and
c) the Cash Flow Statement gives a true and fair view of the cash flowsfor the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing(SAs) issued by ICAI. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Bank in accordance with the code of ethics issued by theInstitute of Chartered Accountants of India together with ethical requirements that arerelevant to our audit of the financial statements as in The Banking Regulations Act 1949and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the code of ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Valuation of securities:
In respect of mortgage / Hypothecation of Fixed assets of the borrowervaluation is a key component. For arriving at the value of securities we verify valuationreport for fixed assets.
The concern that arises in the above matter is that the valuation incase of fixed assets is adopted for the current year based on earlier years' reportscoupled with variations in valuations done by different valuers.
Resolution for the matter:
The inherent deficiency in adopting an earlier year's valuation forcurrent year provisioning was brought to the attention of the management and discussedwith those charged with governance. It was explained by the management that RBI'sguidelines provide that a valuation made in respect of Fixed assets is valid for 3 years.As a prudent measure it was decided that updated valuation nearer to the date of thefinancials will be arranged. Further as per the Bank's policy properties accepted assecurities for advances of Rs.5 crores and above will be valued by two independent valuersand if the difference in valuation between the two valuers is more than 15% suchvaluation exercise will be repeated with the new valuer till it reaches a consensus.
Based on this the valuations furnished were adopted for the currentyear .
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
5. The Bank's Board of Directors is responsible with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Bank in accordance withthe accounting principles generally accepted in India including the Accounting Standardsissued by ICAI and provisions of Section 29 of the Banking Regulation Act 1949 andcirculars and guidelines issued by the Reserve Bank of India ('RBI') from time to time.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Bank and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible forassessing the Bank's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Bank or to cease operations or has norealistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Statements
6. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's 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 financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain 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.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
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 financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the bank to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 financialstatements of the current period and are therefore the key audit matters.
We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
7. We did not audit the financial statements / information of 1107branches included in the standalone financial statements of the Bank whose financialstatements / financial information reflect total assets of Rs.9993.86 crore as at 31stMarch 2019 and total revenue of Rs. 768 crore for the year ended on that date asconsidered in the standalone financial statements. The financial statements / informationof these branches have been audited by the branch auditors whose reports have beenfurnished to us and in our opinion in so far as it relates to the amounts and disclosuresincluded in respect of branches is based solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
8. The Balance Sheet and the Profit and Loss Account have been drawn upin accordance with Section 29 of the Banking Regulation Act 1949; 9. Subject to thelimitations of the audit indicated in paragraphs 5 to 7 above and as required by theBanking Companies (Acquisition and Transfer of Undertakings) Act 1970/1980 and alsosubject to the limitations of disclosure required therein we report that: a) We haveobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit and have found them to besatisfactory;
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. 10. We further report that:
a) in our opinion proper books of account as required by law have beenkept 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 the Profit and Loss Account and the Statement ofCash Flows dealt with by this report are in agreement with the books of account and withthe returns received from the branches not visited by us;
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 ouropinion the Balance Sheet the Profit and Loss Account and the Statement of Cash Flowscomply with the applicable accounting standards to the extent they are not inconsistentwith the accounting policies prescribed by RBI.
|For GANDHI MINOCHA & CO ||For P A M S & ASSOCIATES ||For P S SUBRAMANIA IYER & CO |
|Chartered Accountants ||Chartered Accountants ||Chartered Accountants |
|FR No.000458N ||FR No. 316079E ||FR No.004104S |
|BHUPINDER SINGH ||SATYAJIT MISHRA ||V SWAMINATHAN |
|Partner ||Partner ||Partner |
|(M. No 092867) ||(M. No.057293) ||(M No. 022276) |
|For M THOMAS & CO ||For K C Mehta and Co |
|Chartered Accountants ||Chartered Accountants |
| ||FR No: 106237W |
|FR No.004408S || |
| || |
|R MURALI ||CHIRAG BAKSHI |
|Partner ||Partner |
|(M No. 080972) ||(M No. 047164) |
Place : Chennai
Date : 14th May 2019