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Virtualsoft Systems Ltd.

BSE: 531126 Sector: IT
NSE: N.A. ISIN Code: INE237C01016
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NSE 05:30 | 01 Jan Virtualsoft Systems Ltd
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VOLUME 5
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OPEN 4.03
CLOSE 4.03
VOLUME 5
52-Week high 4.45
52-Week low 1.90
P/E
Mkt Cap.(Rs cr) 4
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Virtualsoft Systems Ltd. (VIRTUALSOFTSYS) - Auditors Report

Company auditors report

To the Members of VirtualSoft Systems Limited Report on the Audit ofthe Standalone Financial Statements

Opinion

We have audited the standalone financial statements of VirtualsoftSystems Limited("the Company") which comprise the balance sheet as at 31stMarch 2021 and the statement of Profit and Loss(including other comprehensive income)Statement of Changes in Equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2021 its profit/loss(including other comprehensive income) changes inequity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Information other than the financial statements and auditors'report thereon

The Company's board of directors is responsible for the preparation ofthe other information. The other information comprises the information included in theBoard's Report including Annexures to Board's Report but does not include the financialstatements and our auditor's report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Key Audit Matter

Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.

The key audit matter How the matter was addressed in our audit
Revenue is recognized in accordance with Ind AS 115 net of discounts incentives and rebates accrued by the Company's customers based on sales. Audit Procedure Applied Our audit included but was not limited to the following procedures:
• Understanding the policies and procedures applied to revenue recognition including an analysis of the effectiveness of controls related to revenue recognition processes employed by the Company.
• Carrying out substantive analytical procedures analysing the actual performance of revenue and cost of sales related to discounts incentives and rebates etc.
• Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
• Analysing and discussing with management significant contracts including contractual terms and conditions related to discounts incentives and rebates used in the related estimates.
• Reviewing disclosures included in the notes to the accompanying financial statements.

Emphasis of Matter

Attention is invited to Note No. 7 under Explanatory Notes to FinancialStatements regarding amortization of intangible assets. The company has not provided foramortization of CRM Software and Website under development

Attention is invited to Note No. 10 under Explanatory Notes toFinancial Statements regarding investment in subsidiary. The Company is showing investmentin the subsidiary at cost whereas the subsidiary is continuously in heavy losses and alsohas negative net worth.

Attention is invited to Note No. 44 under Explanatory Notes toFinancial Statements regarding the financial statements being prepared on a going concernbasis notwithstanding the fact that the company's net worth is eroded (Net Worth as on31st March 2021 is minus Rs. 86264846/-and accumulated losses as on 31st March 2021 isminus Rs.183558746/-).Moreover the company is continuously suffering heavy losses.These events cast significant doubt on the ability of the Company to continue as a goingconcern.

Attention is invited towards the company's profitability which is underheavy and continuous losses and therefore no deferred tax provisions have been made as noprofit is foreseen in the near future.

Attention is invited regarding taken on lease assets and liabilitiesand therefore no deferred tax provisions have been made as no profit is foreseen in thenear future.

Our opinion is not modified in respect of this matter.

Other Information

The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditors'report thereon.

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

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; 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 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.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

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 thefinancial 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 control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue 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 describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013 we give in the 'Annexure A' a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

A) As required by Section 143 (3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

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 Balance Sheet the Statement of Profit and Loss and the CashFlow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2021 from being appointed as a director interms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in 'Annexure B'.

B) B) With respect to the other matters to be included in theAuditor's Report in accordance 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. The Company has disclosed the impact of pending litigations on itsfinancial position 43 to the Standalone Financial Statements.

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. Followings are the instances of delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company:

Year Amount(Rs)
1997-1998 43850/-
1996-1997 27390/-

C) With respect to the matter to be included in the Auditor'sReport under section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under section 197(16) whichare required to be commented upon by us.

The Annexure referred to in paragraph 1 of Our Report on "OtherLegal and Regulatory Requirements".

We report that:

i. In respect of fixed assets

a. The company has maintained proper records showing full particularsincluding quantitative details and situation of its fixed assets.

b. As explained to us fixed assets have been physically verified bythe management at reasonable intervals; no material discrepancies were noticed on suchverification.

a. According to the information and explanations given to us point (c)is not applicable as the company does not have any immovable properties.

ii. In respect of its Inventories:

a) As informed and represented to us there were no inventories lyingwith the company which were required to be physically verified during the year by themanagement at reasonable intervals.

b) As the company does not have inventory point (b) is not applicable.

iii. In respect of loans granted by the company:

a) The company has not granted any loans secured or unsecured toCompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act 2013.

b) Accordingly para (iii)(b) and para 3(iii) (c) of the order is notapplicable to the Company in respect of repayment of the principal amount and interest.

iv. In our opinion and according to the information and explanationsgiven to us the company has complied with provisions of section 185 and 186 of theCompanies Act 2013 with respect to respect of loans and investments made.

v In our opinion and according to the information and explanationsgiven to us the company has not accepted any deposits from the public during the year.Therefore the provisions of sections 73 to 76 of the Companies Act 2013 and the rulesframed there under are not applicable to the Company.

vi. We have been informed by the management that no cost records havebeen prescribed by the Central Government under sub-section (1) of section 148 of theCompanies Act 2013 for any of the products sold or services rendered by the company.

vii. According to the information and explanations given to us and onthe basis of books of accounts the company is not regular in depositing undisputedstatutory dues including Service Tax Goods and Service Tax Income Tax and othermaterial statutory dues as applicable with appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Income Tax Sales Tax ServiceTax Goods and Service tax and Excise Duty were outstanding as on 31st of March 2021 fora period of more than six months from the date they became payable.

According to the information and explanations given to us there is noamount payable in respect of income tax service tax sales tax goods and service taxcustoms duty excise duty value added tax and cess whichever applicable which have notbeen deposited on account of any dispute as at March 31 2021.

viii. In our opinion and according to the information and explanationsgiven by the management the Company has not taken any loans from financial institutionsor banks so there is no default in repayment of dues to financial institutions or banks orbond holders.

ix. According to the information and explanations given to us wereport that no fraud by the company or any fraud on the Company by its officers oremployees has been noticed or reported during the year.

x. Based on our audit procedures and according to the information givenby the management the money raised by way of initial public offer or further public offer(including debt instruments) and term loans have been applied for the purpose for whichthey were obtained.

xi. According to the information and explanations given to us and basedon our examination of records of the company The company has not paid/provided formanagerial remuneration in the financial year under consideration.

xii. According to the information and explanations given to us Thecompany is not a Nidhi Company. Therefore clause xii) of the order is not applicable tothe company.

xiii. According to the information and explanations given to us alltransactions with the related parties are in compliance with sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards.

xiv. In our opinion and according to information and explanations givento us and based on our examination of the records the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review.

xv. In our opinion and according to information and explanations givento us the company has not entered into non-cash transactions with directors or personsconnected with him. Accordingly para 3(xv) of the order is not applicable.

xvi. The company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

Annexure- B to the Auditors' Report

((Referred to in paragraph 1(A)(f) under 'Report on Other Legal andRegulatory Requirements' section of our report of even date)

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of Virtualsoft 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.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that

1. pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

2. provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

3. provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has 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 312021 based onthe 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.

For KRISHNA NEERAJ & ASSOCIATES
Chartered Accountants
FRN: 023233N
CA. Krishna K. Neeraj
Partner
Membership No. 506669
New Delhi
Date: 30/06/2021

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