The Members of RailTel Corporation of India Ltd.
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of RailTel Corporationof India Limited ("the Company") which comprise the Standalone Balance Sheet asat March 31 2021 the Standalone Statement of Profit and Loss (including OtherComprehensive Income) the Standalone Statement of Changes in Equity and StandaloneStatement of Cash Flows for the year then ended and notes to the Standalone financialstatements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "standalone financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 its profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone 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 (ICAI) togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.
Emphasis of Matter
We draw attention to item no. 32 Note No. 43 to the accompanying standalone financialresults which describes the uncertainties due to outbreak of Covid-19 pandemic and themanagement's assessment of its impact on the business operations of the company.
However our opinion is not modified in respect of matter stated above as Emphasis ofMatter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report -
|Key Audit Matter ||How our audit addressed the key audit matters |
|1. Expected Credit Loss for Trade Receivables (As described in item No. 27 of Note No. 43 of the standalone financial statements) || |
|The company has applied simplified approach to measure ECL for trade receivables which allows for lifetime expected credit losses to be recognised from initial recognition of the receivables. The company determines the expected credit losses on trade receivables by using a provision matrix that is based on historical credit loss experience adjusted for forward looking factors to the debtors and the economic environment. ||We have obtained an understanding of the company's credit policy along with the applications controls associated with the accuracy of the information included in the debtors ageing report. |
|Recognition and measurement of expected credit loss involves significant management judgement. These includes: ||We evaluated the company's process of ECL calculation. |
| Identification of exposures where there is a significant increase in credit risk ||We assessed the reasonableness of the assumptions used in ECL calculation by comparing them with the historic data adjusted for current market condition and forward-looking information. |
| Completeness and timing of recognition of default in accordance with the credit policy of the company ||We have also considered the disclosures made by the company under the head credit risk. |
| Estimation of Forward-Looking Adjustments ||Based on the above procedure performed the management estimations and judgement in ECL were found to be reasonable. |
|Based on such analysis the company has recorded an allowance aggregating to Rs. 12523 Lakhs as at 31st March 2021 as included in the standalone financial statements. || |
|Due to significance of trade receivables and the complexity involved in the ECL calculation this was considered as a key audit matter. || |
|2. Contingent Liabilities || |
|There are a number of litigations pending before various forums against the Company and the management's judgement is required for estimating the amount to be disclosed as contingent liability. ||We have adopted the following audit procedures-Understood and tested the design and operating effectiveness of controls as established by the management for obtaining all relevant information for pending litigation cases |
|We identified this as a key audit matter because the estimates on which these amounts are based involve a significant degree of management judgement in interpreting the cases and it may be subject to management bias. ||Discussed with the management any material developments and latest status of legal matters |
|(Refer item no. 24.1(a) of note no. 43 to the standalone financial statements) ||Read various correspondences and related documents pertaining to litigation cases and performed substantive procedures on calculations supporting the disclosure of contingent liabilities |
| ||Assessed the adequacy and completeness of disclosures |
| ||Based on the above procedure performed the estimations and disclosure of contingent liabilities are considered to be adequate and reasonable. |
|3 Modified Audit Procedures carried out in the light of continuing COVID-19 pandemic || |
|Due to the continuing COVID-19 pandemic lockdown declared and travel restrictions imposed by the Government / Local Authorities during the period of our audit audit could not be conducted by visiting the premises of the Company. ||Wherever physical access was not possible necessary records/ reports/ documents/ certificates were made available to us by company through digital medium and email communications. To this extent the audit process was carried out on the basis of such documents reports and records made available to us which were relied upon as audit evidence for conducting the audit and reporting for the current period. |
|As we could not gather audit evidence in person/ Physically and personal interaction with the officials at company either fully or partially we have identified such modified audit procedures as Key Audit Matter. ||Accordingly we modified our audit procedures as follows: |
|Carried out verification of scanned copies of the documents certificates and the related records made available to us through electronic communications. ||Conducted verification of necessary records Documents received through electronic communications in respect of company wherever physical access was not possible. |
| ||Accordingly our audit procedures were modified to carry out remotely. |
| ||Making enquiries and gathering necessary audit evidence through Video Conferencing dialogues and discussions over phone calls/conference calls electronic communications and similar communication channels. |
| ||Discussions and resolution of audit observations telephonically/through electronic communications instead of face-to-face interaction with the concerned/designated officials. |
Information Other than the Standalone Financial Statements and Auditor's 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 company'sAnnual Report but does not include the standalone financial statements and our auditor'sreport thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information when it becomes available to us and in doing soconsider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated.
When we read such other information as and when made available to us and if we concludethat there is a material misstatement therein we are required to communicate the matterto those charged with governance. We have nothing to report in this regard.
Responsibilities of Management's and those charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) ofthe Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company'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 Company or to cease operations or has norealistic alternative 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 Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.
We did not audit the separate financial statements of Eastern Region Western regionand Southern Region included in these standalone financial statements; whose financialstatements reflect total assets of Rs. 148555 Lakhs total liabilities of Rs. 79284 Lakhsas at 31st March 2021 and total revenues of Rs. 99493 Lakhs for the year ended on thatdate as considered in these standalone financial statements. The company had preparedseparate set of statutory financial statements of these regional offices for the yearended 31st March 2021 in accordance with accounting principles generally accepted in Indiaand which have been audited by other auditors appointed by the CAG under generallyaccepted auditing standards applicable in India. Our opinion in so far as it relates tothe amounts and disclosures in respect of these regional offices is solely based onreports of other regional auditors. Our opinion is not qualified in respect of thismatter. Further Audit of the financial statements of Northern Region and Corporate Officehave been audited by us.
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 section 143 (11) of the Act and onthe basis of such checks of the books and records of the company as we consideredappropriate and according to information and explanation given to us we give in the "Annexure-A"a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. The Comptroller and Auditor General of India has issued directions indicating theareas to be examined in terms of sub-section (5) of Section 143 of the Companies Act 2013.On the basis of written representation received from the management we give our report onthe matters specified in the "Annexure - B"
3. 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 purpose 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 standalone financial statements i.e. Balance Sheet Statement of Profit andLoss including the Statement of Other Comprehensive Income the statement of Cash Flow andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
e) Pursuant to the notification no. G.S.R. No. 463(E) dated 05th June 2015 issued byMinistry of Corporate Affairs Government of India the provisions of section 164(2) ofthe Companies Act 2013 regarding disqualification of directors are not applicable to thecompany being a government company.
f) We are enclosing herewith a report in "Annexure-C" for our opinionon adequacy of internal financial controls system in place in the Company and theoperating effectiveness of such controls
g) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by theMinistry of Corporate Affairs Government of India provisions of Section 197 of theCompanies Act 2013 are not applicable to the Company being a Government Company; and
h) 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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Financial Statements - Refer Item No. 24.1(a) to Note no. 43 to theStandalone Financial Statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for all material foreseeable losses on long-term contracts includingderivative contracts.
iii. During the year there is no requirement of any amount to be transferred of anunclaimed dividend to the Investor Education and Protection fund under section 124(5) ofthe Companies Act 2013.
Annexure-A" to the Independent Auditor's Report on the Standalone FinancialStatements of RailTel Corporation of India Ltd.
The Annexure referred to in paragraph 1 under the heading Report on Other Legaland Regulatory Requirements' section of our report of even date on the Standalonefinancial statement of the Company for the year ended 31 March 2021 we report that:
(i) (a) The Company has maintained proper records showing full particulars with respectto most of its fixed assets and is in the process of updating the quantitativeidentification marks and situation details with respect to certain fixed assets in therecords maintained by the Company.
(b) The Company has a program of verification of fixed assets to cover all the items ina 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 during the year as part ofthe internal audit the internal auditors have carried out the physical verification offixed assets of the Company. As per their report no material discrepancies have beenidentified during the course of physical verification.
(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except the following -
|Particulars ||Building |
|Total Number of cases ||1 |
|Whether Leasehold / Freehold ||Leasehold |
|Gross Block as at 31.03.2021 ||Rs. 11299 Lakhs |
|Net Block as at 31.03.2021 ||Rs. 10394 Lakhs |
|Remarks ||Regd. Office Building including residential flats at Kidwai Nagar Delhi where possession was handed over in 2018-19 but lease deed is yet to be executed between the company and NBCC |
(ii) (a) In our opinion the management has conducted physical verification ofinventory at reasonable intervals
during the year
(b) The procedures for physical verification followed by the management are reasonableand adequate in relation to the size of the Company and nature of its business.
(c) The Company has maintained proper quantitative records of its inventory and nomaterial discrepancies were noticed on physical verification.
(iii) According to the information and explanation given to us the Company has notgranted any loans secured or unsecured to companies firms Limited Liability Partnershipsor other parties covered in register maintained under section 189 of Companies Act 2013.In view of this sub clauses (a) (b) and (c) of clause 3(iii) of the Order are notapplicable.
(iv) According to the information and explanations given to us the Company has not madeany loans investments guarantee and security in terms of Section 185 and 186 ofCompanies Act 2013. Accordingly clause 3(iv) of the Order is not applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of section 73 to76 or any other relevant provisions of the Companies Act 2013 and the rules framed thereunder consequently the directives issued by the Reserve Bank of India and provisions ofthe Companies Act 2013 and rules framed there under are not applicable.
(vi) We have reviewed the books of accounts maintained by the Company pursuant to therules made by the Central Government for the maintenance of Cost records under section148(1) of the Companies Act 2013 and are of the opinion that the prescribed accounts andrecords have been made and maintained. As explained by the management Cost records aremaintained by the management and cost audit is conducted every year by the cost auditor.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax value added tax duty of customs service tax Goods and Service tax cess andother material statutory dues have been regularly deposited during the year by the Companywith the appropriate authorities. As explained to us there are no outstanding statutorydues as at the last day of the financial year i.e. 31 March 2021 for a period of morethan six months from the date they became payable.
(b) According to the information and explanations given to us there are no materialdues of provident fund income-tax sales tax value added tax duty of customs servicetax Goods and Service tax cess which have not been deposited with the appropriateauthorities on account of any dispute except as under-
|Name of the Statute ||Nature of Dues ||Forums where dispute is pending ||Amount Due ||Period to which the amount relates |
|1 Service Tax ||Levy of service tax on consideration received for maintaining electricity and power at major railway stations Non-payment of service tax on service rendered to Associated enterprises non-reversal of cenvat credit on common input services received for providing taxable as well as exempted services Difference in reconciliation for the period 2011-14. Order no. 70 & 71/2015-16. ||Tribunal Hyderabad ||505.09 ||2011-14 |
|2 Telangana VAT ||Form-VAT 203 dated 17-10-2016. Demand for penalty for not disclosing transaction (Rly. Deposit works) in time for which Railtel has already paid VAT with interest in 2013 and 2014 for works in 2008-2013. ||Appellate Deputy Commissioner Hyderabad ||34.63 ||2008-2013 |
|3 Service Tax ||Classification of Railway deposit works under works contract tax. Department contention is service tax payable on 13% service charge for the period 2008-2011. Stay order provided by CESTAT. ||Tribunal Hyderabad ||320.07 ||2008-2011 |
|4 Income Tax Act 1961 ||TDS demand due to short deduction of TDS. ||TDS (Commissioner) ||0.27 ||2010-11 to 2012-13 |
|5 RVAT Act ||Levy of entry Tax and demand raised under the act. ||RVAT Department ||5.41 ||2015-16 |
|6 RVAT Act ||Levy of entry Tax and demand raised under the act. ||RVAT Department ||12.46 ||2016-17 |
|7 Income Tax Act 1961 ||Appeal filed against AO's order for AY 2016-17 for making additions on account of disallowance for "Exp booked in FY 2016-17 and claimed in FY 15-16 for avoiding prior period expenses in FY 2016-17" & Rs. 10 Lakh u/s 14A rule 8D an amount equal to 1% of Annual Avg. of Investments in REL ||CIT(A) New Delhi ||144.09 ||AY 2016-17 |
|8 Income Tax Act 1961 ||TDS demand due to short deduction of TDS. ||TDS (Commissioner) ||0.09 ||2010-1111-1219-20 |
|9 UP VAT Act ||Demand raised on assessment. ||UPVAT Department ||56.23 ||FY 2014-15 |
|10 HVAT Act ||Demand raised on assessment. ||HVAT Department ||7.74 ||FY 2015-16 |
|11 MVAT ||Demand raised on assessment for FY 2013-14 ||MVAT Department ||203 ||FY 2013-14 |
|12 GST ||Regarding Excess ITC Claimed ||GST-BIHAR ||33.71 ||FY 2018-19 |
|13 GST ||Regarding Excess ITC Claimed ||GST-BIHAR ||17.4 ||FY 2019-20 |
|14 GST ||Regarding Excess ITC Claimed ||GST-CHHATIS- GARH ||222.19 ||FY 2018-19 |
|15 GST ||ITC Claimed but Not-Utilized and subsequently Reversed without utilized ||GST-Tripura ||9.4 ||FY 2017-18 |
| ||Total || ||1370.81 || |
(viii) According to the information and explanations provided to us and based on ourexamination of the records of the Company the Company has not availed any loan orborrowing from any financial institution banks government or from others. Accordinglyparagraph 3(viii) of the Order is not applicable.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loan. Accordingly paragraph 3(ix) ofthe Order is not applicable.
(x) According to the information and explanations given to us by the management nofraud by the Company or on the Company by its officers or employees has been referred bythe Company's Vigilance department during the year
(xi) In view of the exemption given in terms of Notification No. G.S.R. No. 463(E)dated 5th June 2015 issued by the Ministry of Corporate Affairs the provisions of section197 read with schedule V to the Companies Act 2013 regarding managerial remuneration arenot applicable to the Company.
(xii) According to the information and explanations provided to us and based on ourexamination of the records of the Company the Company is not a Nidhi Company.Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations provided to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of Companies Act 2013 wherever applicable.
(xiv) According to the information and explanation provided to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment/ private placement of shares or fully or partly convertible debentures duringthe year. Therefore the provisions of clause 3(xiv) of the Order are not applicable tothe Company.
(xv) According to the information and explanation provided to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Therefore provisions of 3(xv)of the Order are not applicable.
(xvi) The Company is not required to be registered under section 45 IA of the ReserveBank of India Act 1934. Therefore the provisions of clause 3(xvi) of the Order are notapplicable to the Company.
|Directions ||Reply |
|1 Whether the company has system in place to process all the accounting transactions through IT systemRs. If yes the implication of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implication if any may be stated. ||Yes the company has implemented Oracle- ERP system which is processing all the accounting transactions. Since no accounting transactions are processed outside IT system company is not prone to any such risk and hence there is no financial implication of it. |
|2 Whether there are any restructuring of an existing loans or cases of waiver/ write off of debts/ loans/ interest etc. made by a lender to the company due to company's inability to repay the loanRs. If yes the financial impact may be stated. ||The company has not availed any loan from any bank or financial institution. |
|3 Whether funds received / receivable for specific schemes from Central / State agencies were properly accounted for / utilised as per its term and conditionsRs. List the cases of deviation. ||The company is in receipt of subsidy in respect of the following project - |
| ||a) Rural Wi-Fi Project - The company is in receipt of subsidy from Universal Service Obligation Fund (USOF) to the tune of Rs. 1256 lakhs till 31.03.2021 for Rural wi-fi project. The said subsidy has been properly accounted for and utilised as per its terms and conditions and for the project for which it has been received. No deviation observed. |
| ||b) NE-1 & NE-2 project - the company has received subsidy of Rs. 3146 lakhs from USOF till 31.03.2021 against the execution of the project. The said subsidy has been properly accounted for and utilised as per its terms and conditions and for the project for which it has been received. No deviation observed. |
The above information has been verified based on the information and explanationsfurnished to us at Corporate Office.
Annexure-C to the Independent Auditor's Report on the Standalone Financial Statementsof RailTel Corporation of India Ltd.
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 RailtelCorporation of India Ltd. ("the Company") as of March 31 2021 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
In our opinion the Company has maintained in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2021 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
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 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 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.
|For Suresh Chandra & Associates |
|Chartered Accountants |
|FRN 001359N |
|UDIN - 21091514AAAAAL4922 |
|(CA Anjula Gupta) |
|M. No.: 091514 |
|Place: New Delhi |
|Date: 25.06.2021 |