To the Members of Newgen Software Technologies Limited
Report on the Audit of the Standalone Financial
Statements
Opinion
1. We have audited the accompanying standalone financial statements ofNewgen Software Technologies Limited (‘the Company') which comprise the BalanceSheet as at 31 March 2022 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Cash Flow and the Statement of Changes in Equity for the yearthen ended and a summary of the 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 Companies Act 2013 (‘the Act') in the manner so requiredand give a true and fair view in conformity with the Indian Accounting Standards(‘Ind AS') specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 and other accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2022 and its profit(including other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial 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 ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate 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 thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
5. We have determined the matters described below to be the key auditmatters to be communicated in our report.
| Key audit matter | How our audit addressed the key audit matter |
| A. Revenue recognition for software implementation services | Our audit work included but was not restricted to the following procedures: |
| Refer Note 3(i)(ii) for accounting policy and 27 of notes forming part of the Standalone Financial Statements. | a) Obtained an understanding of the systems processes and controls implemented by management for recording and calculating revenue and the associated unbilled revenue unearned revenue and deferred revenue balances. |
| The Company earns revenue from software implementation services wherein it has entered into various fixed-price contracts for which revenue is recognised by the Company using the percentage of completion computed as per the Input method prescribed under Ind AS 115 Revenue from Contracts with Customers. The said revenue recognition accounting policy involves exercise of significant judgement by the management and the following factors requiring significant auditor attention: | b) Tested the design and operating effectiveness of related manual controls and involved auditor's experts to assess key information technology (IT) controls over the IT environment in which the business systems operate including access controls segregation of duties program change controls program development controls and IT operation controls; |
| • High estimation uncertainty relating to determination of the progress of each contract efforts incurred till date and additional efforts required to complete satisfaction of the performance obligation | c) Selected a sample of contracts and performed a performed the following procedures: |
| |
| • Determination of unbilled revenue receivables and unearned revenue related to these contracts as at the end of reporting period Considering the materiality of the amounts involved and significant degree of judgement and subjectivity involved in the estimates as mentioned above we have identified revenue recognition from fixed price contracts as a key audit matter for the current year audit. | - Inspected key terms including price deliverables timetable and milestones set out in the contract for selected sample of contracts and identified the distinct performance obligations. |
| - Tested project management tool for budgeted efforts and related percentage completion milestones and establishing accuracy of milestones based on actualisation of efforts for delivered projects. |
| - Tested the details of activities completed with those stated in the customer contract details of activities completed as provided by the project head and confirmation/acceptance of completion of such activities by the customer. |
| d) Evaluated the appropriateness of disclosures made in the financial statements with respect to revenue recognised during the year as required by applicable Indian Accounting Standards. |
| B. Trade receivables and provision for expected credit losses | Our audit work included but was not restricted to the following procedures: |
| Refer note 3(e) for significant accounting policy and note 43(C)(ii) for credit risk disclosures. Trade receivables and unbilled revenue comprise a significant portion of the current financial assets of the Company. As at 31 March 2022 the Company has reported trade receivable of Rs 18864.30 lacs (net of provision for expected credit loss of Rs 3134.11 lacs). | a) Obtained an understanding of the process adopted and controls implemented by the Company for calculation recording and monitoring of the impairment loss recognised for expected credit loss; |
| The Company applies simplified approach permitted by Ind AS 109 - Financial Instruments which requires lifetime expected credit losses to be recognised from the date of initial recognition of receivables. The Company analyses the trend of trade receivables under different ageing bracket for previous years and calculate weighted average loss rate basis such movement in ageing brackets. | b) Assessed and tested the design and operating effectiveness of key controls over completeness and accuracy of the key inputs and assumptions |
| The estimate of expected credit loss involves judgement as the management factors the past history as above market conditions and forward looking estimates as at each reporting date. | considered for calculation recording and monitoring of the impairment loss recognised. Also evaluated the controls over the modelling process validation of data and related approvals; |
| Considering this area inherently involves significant area of judgement and subjectivity followed with discussions with TCWG at regular intervals we have identified this as a key audit matter. | c) Considered the Company's accounting policies for estimation of expected credit loss on trade receivables and unbilled revenue and assessing compliance with the policies in terms of Ind AS 109; |
| d) Inquired with management about the conditions leading to and their assessment of recoverability of dues from the customers and also referred to the available communication if any between them. |
| e) Assessed on a sample basis that items in the receivables ageing report were classified within the correct ageing bracket by comparing individual items in the report with underlying documentation which included sales invoices proof of delivery and customers sign offs; |
| f) Analysed the methodology used by the management and considered the credit and payment history of specific parties to determine the trend used for arriving at the expected credit loss provision and co-related to our understanding of the debtor's financial condition the industry in which debtor operates. |
| g) Since the assumptions and inputs used for calculating ECL is based on historical data we assessed whether such historical experience was representative of current circumstances. |
| h) Tested the accuracy and completeness of underlying data for "expected credit loss model". |
| i) Evaluated responses to direct confirmation request circulated to customers and ensured the reconciling items have been adequately recorded in the books of account; |
| j) Obtained written representations from management and those charged with governance on whether they believe significant assumptions used in calculation of expected credit losses are reasonable. |
| k) Assessed the adequacy of disclosures made by the management in the financial statements to reflect the expected credit loss provision trade and other receivables. |
Information other than the Financial Statements and Auditor's Reportthereon
6. The Company's Board of Directors are responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor's reportthereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
7. The accompanying standalone financial statements have been approvedby the Company's Board of Directors. The Company's Board of Directors are responsible forthe matters stated in section 134(5) of the Act with respect to the preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance including other comprehensive incomechanges in equity and cash flows of the Company in accordance with the Ind AS specifiedunder section 133 of the Act and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
8. In preparing the financial statements the Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intend to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
9. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
10. 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 Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone financial statements.
11. As part of an audit in accordance with Standards on Auditingspecified under section 143(10) of the Act we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
• 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;
• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system with reference tostandalone financial statements in place and the operating effectiveness of such controls;
• 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 theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's 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 auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern;
• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation;
• Obtain sufficient appropriate audit evidence regarding thestandalone financial statements of the Company to express an opinion on the financialstatements.
12. 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.
13. We also provide those charged with governance with a statement thatwe have 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.
14. From the matters communicated with those charged with governancewe determine 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.
Other Matter
15. The standalone financial statements of the Company for the yearended 31 March 2021 were audited by the predecessor auditor B S R & Associates LLP(Chartered Accountants) who have expressed an unmodified opinion on those standalonefinancial statements vide their audit report dated 25 May 2021.
Report on Other Legal and Regulatory Requirements
16. As required by section 197(16) of the Act based on our audit wereport that the Company has paid remuneration to its directors during the year inaccordance with the provisions of and limits laid down under section 197 read withSchedule V to the Act.
17. As required by the Companies (Auditor's Report) Order 2020(‘the Order') issued by the Central Government of India in terms of section 143(11)of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.
18. Further to our comments in Annexure I as required by section143(3) of the Act based on our audit we report to the extent applicable that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our auditof the accompanying standalone financial statements;
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;
c) The standalone financial statements dealt with by this report are inagreement with the books of account;
d) In our opinion the aforesaid standalone financial statements complywith Ind AS specified under section 133 of the Act;
e) On the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2022 from being appointed as a director in terms of section164(2) of the Act;
f) With respect to the adequacy of the internal financial controls withreference to standalone financial statements of the Company as on 31 March 2022 and theoperating effectiveness of such controls refer to our separate Report in Annexure IIwherein we have expressed an unmodified opinion; and
g) With respect to the other matters to be included in the Auditor'sReport in accordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (asamended) in our opinion and to the best of our information and according to theexplanations given to us:
i. the Company does not have any pending litigations which would impactits financial position as at 31 March 2022;
ii. the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as at 31 March2022;
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended 31 March 2022;
iv. a. The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or securities premium or any other sources or kind of funds) by the Companyto or in any persons or entities including foreign entities (‘the intermediaries')with the understanding whether recorded in writing or otherwise that the intermediaryshall whether directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever by or on behalf of the Company (‘the UltimateBeneficiaries') or provide any guarantee security or the like on behalf the UltimateBeneficiaries;
b. The management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities (‘the Funding Parties') with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party (‘Ultimate Beneficiaries') or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonableand appropriate in the circumstances nothing has come to our attention that causes us tobelieve that the management representations under sub-clauses (a) and (b) above containany material misstatement.
v. The dividend declared or paid during the year ended 31 March 2022 bythe Company is in compliance with section 123 of the Act
For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
| Neeraj Goel |
| Partner |
| Place: Gurugram | Membership No.: 099514 |
| Date: 03 May 2022 | UDIN: 22099514AIHYBB9827 |
Annexure I
referred to in Paragraph 17 of the Independent Auditor's Report ofeven date to the members of Newgen Software Technologies Limited on the standalonefinancial statements for the year ended 31 March 2022
In terms of the information and explanations sought by us and given bythe Company and the books of account and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we report that:
(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant and equipmentand right of use assets.
(B) The Company has maintained proper records showing full particularsof intangible assets.
(b) The Company has a regular program of physical verification of itsproperty plant and equipment and right of use assets under which the assets arephysically verified in a phased manner over a period of two years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Inaccordance with this program certain property plant and equipment and right of useassets were verified during the year and no material discrepancies were noticed on suchverification.
(c) The title deeds of all the immovable properties held by the Company(other than properties where the Company is the lessee and the lease agreements are dulyexecuted in favour of the lessee) are held in the name of the Company.
(d) The Company has not revalued its Property Plant and Equipment andright of use assets or intangible assets during the year.
(e) No proceedings have been initiated or are pending against theCompany for holding any benami property under the Benami Transactions (Prohibition) Act1988 (45 of 1988)and rules made thereunder. Accordingly reporting under clause 3(i)(e) ofthe Order is not applicable to the Company.
(ii) (a) The Company does not hold any tangible inventory. Accordinglyreporting under clause 3(ii) (a) of the Order is not applicable to the Company.
(b) The Company has a working capital limit in excess of Rs 5 croresanctioned by banks based on the security of current assets. The quarterlyreturns/statements in respect of the working capital limits have been filed by theCompany with such banks and such returns/statements are in agreement with the books ofaccount of the Company for the respective periods which were not subject to audit/review.
(iii) (a) The Company has provided loans or advances in the nature ofloans to 1 company. The details of the same are given below:
| Particulars | Guarantees | Security | Loans | Advances in nature of loans |
| Aggregate amount during the year Subsidiaries | | | 34450000 | |
| Balance outstanding as at balance sheet date - Subsidiaries | | | 34450000 | |
(b) The investments made and terms and conditions of the grant of allloans are not prima facie prejudicial to the Company's interest.
(c) In respect of loans granted by the Company the schedule ofrepayment of principal and the payment of the interest has not been stipulated andaccordingly we are unable to comment as to whether the repayments/receipts of principalinterest are regular.
(d) There is no overdue amount in respect of loans or advances in thenature of loans granted to such companies firms LLPs or other parties.
(e) The Company has not granted any loan or advance in the nature ofloan which has fallen due during the year. Further no fresh loans were granted to anyparty to settle the overdue loans/advances in nature of loan.
(f) The Company has granted loan which are repayable on demand orwithout specifying any terms or period of repayment as per details below:
| Particulars | All Parties | Promoters | Related Parties |
| Aggregate of loans/ advances in nature of loan | | | |
| • Repayable on demand (A) | 34450000 | - | 34450000 |
| • Agreement does not specify any terms or period of repayment (B) | | | |
| Total (A+B) | 34450000 | - | 34450000 |
| Percentage of loans/ advances in nature of loan to the total loans | 100% | | 100% |
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 186 of the Act inrespect of loans investments guarantees and security as applicable. Further theCompany has not entered into any transaction covered under section 185.
(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits or there is no amount which hasbeen considered as deemed deposit within the meaning of sections 73 to 76 of the Act andthe Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordingly reportingunder clause 3(v) of the Order is not applicable to the Company.
(vi) The Central Government has not specified maintenance of costrecords under sub-section (1) of section 148 of the Act in respect of Company'sproducts/business activity. Accordingly reporting under clause 3(vi) of the Order is notapplicable.
(vii) (a) In our opinion and according to the information andexplanations given to us the Company is regular in depositing undisputed statutory duesincluding goods and services tax provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand other material statutory dues as applicable with the appropriate authorities.Further no undisputed amounts payable in respect thereof were outstanding at the year-endfor a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us thereare no statutory dues referred to in subclause (a) above that have not been deposited withthe appropriate authorities on account of any dispute.
(viii) According to the information and explanations given to us notransactions were surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961 (43 of 1961) which have not been recorded inthe books of accounts.
(ix) (a) According to the information and explanations given to us theCompany does not have any loans or other borrowings from any lender. Accordinglyreporting under clause 3(ix) of the Order is not applicable to the Company.
(b) According to the information and explanations given to us includingrepresentation received from the management of the Company and on the basis of our auditprocedures we report that the Company has not been declared a willful defaulter by anybank or financial institution or other lender.
(c) In our opinion and according to the information and explanationsgiven to us the Company has not raised any money by way of term loans during the year andthere has been no utilisation during the current year of the term loans obtained by theCompany during any previous years. Accordingly reporting under clause 3(ix)(c) of theOrder is not applicable to the Company.
(d) In our opinion and according to the information and explanationsgiven to us the Company has not raised any funds on short term basis during the year orin any previous year. Accordingly reporting under clause 3(ix) (d) of the Order is notapplicable to the Company.
(e) According to the information and explanations given to us and on anoverall examination of the financial statements of the Company the Company has not takenany funds from any entity or person on account of or to meet the obligations of itssubsidiaries.
(f) According to the information and explanations given to us theCompany has not raised any loans during the year on the pledge of securities held in itssubsidiaries.
(x) (a) The Company has not raised any money by
way of initial public offer or further public offer (including debtinstruments) during the year. Accordingly reporting under clause 3(x)(a) of the Order isnot applicable to the Company.
(b) According to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or (fullypartially or optionally) convertible debentures during the year. Accordingly reportingunder clause 3(x)(b) of the Order is not applicable to the Company.
(xi) (a) To the best of our knowledge and according to the informationand explanations given to us no fraud by the Company or on the Company has been noticedor reported during the period covered by our audit.
(b) No report under section 143(12) of the Act has been filed with theCentral Government for the period covered by our audit.
(c) According to the information and explanations given to us includingthe representation made to us by the management of the Company there are nowhistle-blower complaints received by the Company during the year..
(xii) The Company is not a Nidhi Company and the Nidhi Rules 2014 arenot applicable to it. Accordingly reporting under clause 3(xii) of the Order is notapplicable to the Company.
(xiii) The Company has not entered into any transactions with therelated parties covered under Section 177 or Section 188 of the Act. Accordinglyreporting under clause 3(xiii) of the Order is not applicable to the Company.
(xiv) (a) In our opinion and according to the information andexplanations given to us the Company has an internal audit system as required undersection 138 of the Act which is commensurate with the size and nature of its business.
(b) We have considered the reports issued by the Internal Auditors ofthe Company till date for the period under audit.
(xv) According to the information and explanation given to us theCompany has not entered into any non-cash transactions with its directors or personsconnected with them and accordingly provisions of section 192 of the Act are notapplicable to the Company.
(xvi) (a) The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934. Accordingly reporting under clause 3(xvi)of the Order is not applicable to the Company.
(b) The Company has not conducted any NonBanking Financial or HousingFinance activities during the year without a valid Certificate of Registration (CoR) fromthe RBI as per the Reserve Bank of India Act 1934.
(c) According to the information and explanations given to us theCompany is not a Core Investment Company (CIC) as defined in the regulations made by theRBI. Accordingly reporting under clause 3(xvi)(c) of the Order is not applicable to theCompany.
(d) Based on the information and explanations given to us and asrepresented by the management of the Company the Group (as defined in Core InvestmentCompanies (Reserve Bank) Directions 2016) does not have any CIC.
(xvii) The Company has not incurred any cash loss in the current aswell as the immediately preceding financial year.
(xviii) There has been no resignation of the statutory auditors duringthe year. Accordingly reporting under clause 3(xviii) of the Order is not applicable tothe Company.
(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realisation of financialassets and payment of financial liabilities other information accompanying the standalonefinancial statements our knowledge of the plans of the Board of Directors and managementwe are of the opinion that no material uncertainty exists as on the date of the auditreport that Company is capable of meeting its liabilities existing at the date of balancesheet as and when they fall due within a period of one year from the balance sheet date.We however state that this is not an assurance as to the future viability of thecompany. We further state that our reporting is based on the facts up to the date of theaudit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the company as and when they fall due.
(xx) According to the information and explanations given to us theCompany does not have any unspent amount in respect of any ongoing or other than ongoingproject as at the expiry of the financial year. Accordingly reporting under clause 3(xx)of the Order is not applicable to the Company.
(xxi) The reporting under clause 3(xxi) is not applicable in respect ofaudit of standalone financial statements of the Company. Accordingly no comment has beenincluded in respect of said clause under this report.
| For Walker Chandiok & Co LLP Chartered Accountants Firm's Registration No.: 001076N/N500013 |
| Place: Gurugram Date: 03 May 2022 | Neeraj Goel Partner Membership No.: 099514 UDIN : 22099514AIHYBB9827 |
Annexure II
Independent Auditor's Report on the internal financial controls withreference to the standalone financial statements under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 (‘the Act')
1. In conjunction with our audit of the standalone financial statementsof Newgen Software Technologies Limited (‘the Company') as at and for the year ended31 March 2022 we have audited the internal financial controls with reference to financialstatements of the Company as at that date.
Responsibilities of Management and Those Charged with Governance forInternal Financial Controls
2. The Company's Board of Directors is responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting (‘the Guidance Note')issued by the Institute ofChartered Accountants ofIndia (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the Company's business including adherence to the 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 Act.
Auditor's Responsibility for the Audit of the Internal FinancialControls with Reference to Standalone Financial Statements
3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI prescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements and theGuidance Note 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 standalone financial statements were established andmaintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements includes obtaining anunderstanding of such internal financial controls assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to standalone financial statements.
Meaning of Internal Financial Controls with Reference to StandaloneFinancial Statements
6. A company's internal financial controls with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to standalone financial statementsinclude those policies and procedures that (1) pertain to the maintenance of records thatin reasonable detail accurately and fairly reflect the transactions and dispositions ofthe assets of the company; (2) provide reasonable assurance that transactions are recordedas necessary to permit preparation of standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorisations of management and directorsof the company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with Reference toStandalone Financial Statements
7. Because of the inherent limitations ofinternal financial controlswith reference to standalone financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to standalone financial statements to future periods aresubject to the risk that the internal financial controls with reference to standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchcontrols were operating effectively as at 31 March 2022 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote issued by the ICAI.
| For Walker Chandiok & Co LLP Chartered Accountants Firm's Registration No.: 001076N/N500013 |
| Place: Gurugram Date: 03 May 2022 | Neeraj Goel Partner Membership No.: 099514 UDIN: 22099514AIHYBB9827 |
