STANDARD AUDITING
Page 1
“STANDARDS AUDITING FOLLOWED BY TATA
STEEL COMPANY ”
SUBMITTED BY
NAME: Ms. JEENAL N. RATHOD
CLAS...
STANDARD AUDITING
Page 2
RAJASTHANI SAMMELAN‟S
Ghanshyamdas Saraf College
Affiliated to University of Mumbai
REACCREDITED ...
STANDARD AUDITING
Page 3
ACKNOWLEDGEMENT
I take this opportunity to thank the UNIVERSITY OF MUMBAI for
giving me a chance ...
STANDARD AUDITING
Page 4
DECLARATION
I Miss JEENAL NAVARATNA RATHOD a student of
Ghanshyamdas Saraf College of Arts and Co...
STANDARD AUDITING
Page 5
INDEX
Sr. No TITLE Page.
No.
CHAPTER 1
1.1 Executive Summary (Preface) 6
1.2 Objectives of the St...
STANDARD AUDITING
Page 6
CHAPTER 1
1.1Executive Summary:
Tata Steel, established in 1907 is the flagship company of the $ ...
STANDARD AUDITING
Page 7
1.2OBJECTIVES OF THE STUDY:
Since Auditing Standard is one of the most important aspects of
Audit...
STANDARD AUDITING
Page 8
CHAPTER 2
2.1. STANDARD AUDITING
Standards on Quality Control (SQCs)
SQC 1, ―Quality Control for ...
STANDARD AUDITING
Page 9
SA 250 (Revised) under the Clarity Project, ―Consideration of Laws and
Regulations in an Audit of...
STANDARD AUDITING
Page 10
Considerations for Selected Items‖
SA 505 (Revised) issued under the Clarity Project, ―External ...
STANDARD AUDITING
Page 11
the Independent Auditor’s Report"
SA 706 issued under the Clarity Project, ―Emphasis of Matter P...
STANDARD AUDITING
Page 12
Historical Financial Information
3000-3699 Standards on Assurance Engagements (SAEs)
3000-3399 A...
STANDARD AUDITING
Page 13
2.2. Generally Accepted Auditing Standards:
Generally Accepted Auditing Standards, or GAAS are s...
STANDARD AUDITING
Page 14
2. The auditor must obtain a sufficient understanding of the entity and
its environment, includi...
STANDARD AUDITING
Page 15
Clarity Project:
In 2004, a project was begun to clarify and converge the standards with
the Int...
STANDARD AUDITING
Page 16
CHAPTER 3
3.1. COMPANY PROFILE
TATA STEEL:
Tata Steel, formerly known as TISCO and Tata Iron and...
STANDARD AUDITING
Page 17
NatSteel Holdings produces about 2 MTPA of steel products across its
regional operations in seve...
STANDARD AUDITING
Page 18
overhead cranes to high precision components, including a rocket launch
pad for the Indian Space...
STANDARD AUDITING
Page 19
Achievements/ recognition:
Tata Steel stall bags first prize in 'Heavy Industry' category at Dog...
STANDARD AUDITING
Page 20
3.2. AUDITORS' REPORT:
TO THE MEMBERS OF TATA STEEL LIMITED:
1. We have audited the attached Bal...
STANDARD AUDITING
Page 21
(a) we have obtained all the information and explanations which to the
best of our knowledge and...
STANDARD AUDITING
Page 22
ANNEXURE TO THE AUDITORS' REPORT:
(i) Having regard to the nature of the Company's business/acti...
STANDARD AUDITING
Page 23
(c) In our opinion and according to the information and explanations given
to us, the Company ha...
STANDARD AUDITING
Page 24
the best of our knowledge and belief and according to the information. and
explanations given to...
STANDARD AUDITING
Page 25
Excise Duty, Cess and other material statutory dues applicable to it with
the appropriate author...
STANDARD AUDITING
Page 26
Scheme has been contested by the Company and full payment has not been
noticed during the year. ...
STANDARD AUDITING
Page 27
companies covered in the Registermaintained under Section 301 of the
Companies Act, 1956.
(xvi) ...
STANDARD AUDITING
Page 28
3.3. STANDARD AUDITING FOLLOWED BY TATA
STEEL COMAPNY
SA 220 “Quality Control for an Audit of Fi...
STANDARD AUDITING
Page 29
4. Engagement teams are entitled to rely on the firm’s system of quality
control, unless informa...
STANDARD AUDITING
Page 30
judgments the engagement team made and the conclusions they reached in
formulating the report.
(...
STANDARD AUDITING
Page 31
(i) Network firm – A firm or entity that belongs to a network.
(j) Network – A larger structure:...
STANDARD AUDITING
Page 32
Requirements
Leadership Responsibilities for Quality on Audits
The engagement partner shall take...
STANDARD AUDITING
Page 33
Such employee should be a member of the Institute of Chartered
Accountants of India.Quality Cont...
STANDARD AUDITING
Page 34
(a) The direction, supervision and performance of the audit engagement in
compliance with profes...
STANDARD AUDITING
Page 35
Engagement Quality Control Review
For audits of financial statements of listed entities, and tho...
STANDARD AUDITING
Page 36
control reviewer, on performing an engagement quality control review, shall
also consider the fo...
STANDARD AUDITING
Page 37
Documentation
The auditor shall document:
(a) Issues identified with respect to compliance with ...
STANDARD AUDITING
Page 38
SA 501- “Audit Evidence Specific Considerations for
Selected Items”
Introduction
Scope of this S...
STANDARD AUDITING
Page 39
When inventory is material to the financial statements, the auditor shall
obtain sufficient appr...
STANDARD AUDITING
Page 40
If attendance at physical inventory counting is impracticable, the auditor
shall perform alterna...
STANDARD AUDITING
Page 41
If the auditor assesses a risk of material misstatement regarding litigation
or claims that have...
STANDARD AUDITING
Page 42
The auditor shall obtain sufficient appropriate audit evidence regarding the
presentation and di...
STANDARD AUDITING
Page 43
auditors for the external auditor’s purposes, the external auditor shall
evaluate whether:
(a) T...
STANDARD AUDITING
Page 44
SA 610 “Using The Work of Internal Auditors”
Introduction
Scope of this SA
1. This Standard on A...
STANDARD AUDITING
Page 45
Effective Date:
This SA is effective for audits of financial statements for periods
beginningon ...
STANDARD AUDITING
Page 46
entity’s strategic risk management and internal control system. Internal
audit, therefore, provi...
STANDARD AUDITING
Page 47
3.4.COMMENTS ON STANDARD AUDITING
FOLLOWED BY TATA STEEL COMPANY
1. We have obtained all informa...
STANDARD AUDITING
Page 48
CHAPTER 4
4.1.CONCLUSION:
In accordance with SA issued by ICAI for the auditors to audit the
com...
STANDARD AUDITING
Page 49
4.2.BIBLIOGRAPHY:
 Internet
 www.icai.org
 www.investopedia.com
 www.wikipedia.com
 www.tat...
Upcoming SlideShare
Loading in...5
×

Tata steel

615

Published on

Published in: Education, Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
615
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
26
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Tata steel

  1. 1. STANDARD AUDITING Page 1 “STANDARDS AUDITING FOLLOWED BY TATA STEEL COMPANY ” SUBMITTED BY NAME: Ms. JEENAL N. RATHOD CLASS: M.COM PART – II ACCOUNTS (SEM IV) SUBMITTED TO UNIVERSITY OF MUMBAI PROJECTED GUIDE: Mrs. Dr. NATIK PODDAR RAJATHANI SAMMELAN‟S GHANSHYAMDAS SARAF GIRL‟S COLLEGE, AFFILLIATED TO UNIVERSITY OF MUMBAI REACCREDITED BY NAAC WITH “A” GRADE & DURGADEVI SARAF JUNIOR COLLEGE ( ARTS & COMMERCE) S.V.ROAD MALAD (W) MUMBAI – 400064 YEAR: 2013-14
  2. 2. STANDARD AUDITING Page 2 RAJASTHANI SAMMELAN‟S Ghanshyamdas Saraf College Affiliated to University of Mumbai REACCREDITED BY NAAC WITH „A‟ GRADE R. S. Campus, S. V. Road, Malad (W), Mumbai: 400 064 Year: 2013-2014 CERTIFICATE I Prof. Dr. Natika Poddar here by certify that Ms. Jeenal Navratana Rathod a student of Ghanshyamdas Saraf College of M.COM PART II ACCOUNT (Semester IV) has completed Project on “STANDARDS AUDITING FOLLOWED BY TATA STEEL COMPANY” in the Academic year 2013-2014. Thus information submitted is true and Original to the best of my Knowledge. External Examiner: Principal: Date: Project Co-ordinator: College Seal: Date:
  3. 3. STANDARD AUDITING Page 3 ACKNOWLEDGEMENT I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me a chance to do this Project. I express my sincere gratitude to the Principal Mrs. Sujata Karmarkar, course co-ordinator and Guide Prof. Mrs. Dr. Natika Poddar, our librarian and other teachers for their constant support and helping me for completing the project. I am also grateful to my friends for giving support in my project. Lastly, I would like to thank each and every person who helped me in completing the project especially MY PARENTS. Date: Signature of the Student :
  4. 4. STANDARD AUDITING Page 4 DECLARATION I Miss JEENAL NAVARATNA RATHOD a student of Ghanshyamdas Saraf College of Arts and Commerce, Malad (W) M.COM PART II ACCOUNT (Semester IV) hereby declare that I have completed project on “STANDARDS AUDITING FOLLOWED BY TATA STEEL COMPANY” in the academic Year 2013-2014. This information submitted is true and original to best of my Knowledge. Date : Signature of the Student:
  5. 5. STANDARD AUDITING Page 5 INDEX Sr. No TITLE Page. No. CHAPTER 1 1.1 Executive Summary (Preface) 6 1.2 Objectives of the Study 7 CHAPTER 2 2.1 Standard Auditing (SA) 8-12 2.2 Generally Accepted Auditing Standard (GAAS) 13-15 CHAPTER 3 3.1 TATA STEEL Company profile 16-19 3.2 Auditor’s Reports of TATA STEEL Company 20-27 3.3 Standard Auditing Followed by TATA STEEL Company 28-46 3.4 Comments on Standard Auditing Followed by TATA STEEL Company 47 CHAPTER 4 4.3 Conclusion 48 4.6 Bibliography 49
  6. 6. STANDARD AUDITING Page 6 CHAPTER 1 1.1Executive Summary: Tata Steel, established in 1907 is the flagship company of the $ 17.8 billion Tata Group, one of India’s largest and most respected business houses. It is currently the world’s sixth largest steel producer. Tata Steel is the world 6th largest steel company with an existing annual crude steel production capacity of 30 Million Tones Per Annum (MTPA). Tata Steel has a balanced global presence in over 50 developed European and fast growing Asian markets, with manufacturing units in 26 countries. This report, deals with the analysis of Auditors report on basis of financial statement of TATA steel which is followed Auditing standards for Tata Steel, The report integrates the Auditing standards which is generally followed in India. This report has contained various types of Auditing Standard followed by company. i.e. TATA Steel has followed SA 220- ―Quality Control for an Audit of Financial Statements‖, 501 –―Audit Evidence—Specific Considerations for Selected Items‖, SA 610- ―Using The Work of Internal Auditors‖. There are This Three main Auditing standard Followed By TATA steel Company. Hence, In this report we have show various Auditing standard followed by auditor in India and making audit report of company on basis of follow Accounting and Auditing standard of India and also show Generally Accepted Auditing Standards (GAAS) of India.
  7. 7. STANDARD AUDITING Page 7 1.2OBJECTIVES OF THE STUDY: Since Auditing Standard is one of the most important aspects of Auditors report, it enables to study in-depth the Various Auditing Standard Followed in Audit report of Company; so that as a student of Finance Advanced Auditing it gives me a chance to study the Auditing standard followed of the industry. It offers scope to understand various aspects of Auditing standard and all these aspects are reflected in this report. The estimation of required Auditing Standard is differs from organization to organization. So doing this project in an industry will help in knowing more about the Auditing Standard, its preparation and execution. The study has the following objectives:- 1. To see whether the Auditing Standard in ―TATA STEEL‖ is an effective one. 2. To find out the extent of the need and adequacy of the Auditing Standard of the firm. 3. To evaluate or analyze the organizational financial discipline and fiscal soundness. 4. To find out the variance attained in related to projected and actual figure. 5. To see the Auditing Standard of the company. 6. To see the Various Auditing Standard followed in India. 7. To see the Auditing Standard is properly maintained. 8. To see the Generally Accepted Auditing Standards (GAAS) of India.
  8. 8. STANDARD AUDITING Page 8 CHAPTER 2 2.1. STANDARD AUDITING Standards on Quality Control (SQCs) SQC 1, ―Quality Control for Firms that Perform Audit and Reviews of Historical Financial Information, and other Assurance and Related Services Engagements‖ Announcement on Amendment to SQC 1 - Retention Period for Engagement Documentation (Working Papers) Audits and Reviews of Historical Financial Information New/Revised Standards (Auditing, Review and Others) issued under the Clarity Project: 100-199 Introductory Matters 200-299 General Principles and Responsibilities SA 200 (Revised) issued under the Clarity Project, ―Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing‖ SA 210 (Revised) under the Clarity Project, ―Agreeing the Terms of Audit Engagements‖ SA 220 (Revised)issued under the Clarity Project , ―Quality Control for an Audit of Financial Statements‖ SA 230 (Revised) under the Clarity Project, ―Audit Documentation‖ SA 240 (Revised) under the Clarity Project, ―The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements‖
  9. 9. STANDARD AUDITING Page 9 SA 250 (Revised) under the Clarity Project, ―Consideration of Laws and Regulations in an Audit of Financial Statements‖ SA 260 (Revised) under the Clarity Project, ―Communication with Those Charged with Governance‖ SA 265 issued under the Clarity Project, ―Communicating Deficiencies in Internal Control to Those Charged With Governance and Management‖ SA 299 (AAS 12), ―Responsibility of Joint Auditors‖ 300-499 Risk Assessment and Response to Assessed Risks SA 300 (Revised) under the Clarity Project, ―Planning an Audit of Financial Statements‖ • SA 315 under the Clarity Project, ―Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment‖ SA 320 (Revised) issued under the Clarity Project, ―Materiality in Planning and Performing an Audit‖ SA 330 under the Clarity Project, ―The Auditor’s Responses to Assessed Risks‖ SA 402 (Revised) issued under the Clarity Project, ―Audit Considerations Relating to an Entity Using a Service Organization‖ SA 450 issued under the Clarity Project, ―Evaluation of Misstatements Identified During the Audit‖ 500-599 Audit Evidence SA 500 (Revised) under the Clarity Project, ―Audit Evidence‖ SA 501 (Revised)issued under the Clarity Project, ―Audit Evidence—Specific
  10. 10. STANDARD AUDITING Page 10 Considerations for Selected Items‖ SA 505 (Revised) issued under the Clarity Project, ―External Confirmations‖ SA 510 (Revised) under the Clarity Project, ―Initial Audit Engagements – Opening Balances‖ SA 520 (Revised) issued under the Clarity Project, ―Analytical Procedures‖ SA 530 (Revised) under the Clarity Project, ―Audit Sampling‖ SA 540 (Revised) under the Clarity Project, ―Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures‖ SA 550 (Revised) under the Clarity Project, ―Related Parties‖ SA 560 (Revised) under the Clarity Project, ―Subsequent Events‖ SA 570 (Revised) under the Clarity Project, ―Going Concern‖ SA 580 (Revised) under the Clarity Project, ‖Written Representations‖ 600-699 Using Work of Others SA 600 (AAS 10), ―Using the Work of Another Auditor‖ SA 610 (Revised) issued under the Clarity Project, ―Using The Work of Internal Auditors‖ SA 620 (Revised) issued under the Clarity Project, ―Using the Work of an Auditor’s Expert‖ 700-799 Audit Conclusions and Reporting SA 700 (Revised) issued under the Clarity Project, ―Forming an Opinion and Reporting on Financial Statements SA 705 issued under the Clarity Project, ―Modifications to the Opinion in
  11. 11. STANDARD AUDITING Page 11 the Independent Auditor’s Report" SA 706 issued under the Clarity Project, ―Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report" SA 710 (Revised) issued under the Clarity Project, ―Comparative Information—Corresponding Figures and Comparative Financial Statements‖ SA 720 under the Clarity Project, ―The Auditor’s Responsibility in Relation to Other Information in Documents Containing Audited Financial Statements‖ 800-899 Specialized Areas SA 800 issued under the Clarity Project, ―Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks‖ SA 805 issued under the Clarity Project, ―Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement‖ SA 810 issued under the Clarity Project, ―Engagements to Report on Summary Financial Statements‖ 2000-2699 Standards on Review Engagements (SREs) SRE 2400 (Revised), ―Engagements to Review Financial Statements SRE 2410 ―Review of Interim Financial Information Performed by the Independent Auditor of the Entity‖ General Clarifications issued General Clarification (GC)-AASB/2/2004 on SA 210 General Clarification (GC)-AASB/1/2002 on SA 620 Assurance Engagements Other Than Audits or Reviews of
  12. 12. STANDARD AUDITING Page 12 Historical Financial Information 3000-3699 Standards on Assurance Engagements (SAEs) 3000-3399 Applicable to All Assurance Engagements 3400-3699 Subject Specific Standards SAE 3400 (AAS 35), ―The Examination of Prospective Financial Information‖ SAE 3402, ―Assurance Reports on Controls At a Service Organization‖ Related Services 4000-4699 Standards on Related Services (SRSs) SRS 4400 (AAS 32), ―Engagements to Perform Agreed-upon Procedures Regarding Financial Information‖ SRS 4410 (AAS 31), ―Engagements to Compile Financial Information‖
  13. 13. STANDARD AUDITING Page 13 2.2. Generally Accepted Auditing Standards: Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory. In the United States, the standards are promulgated by the Auditing Standards Board, a division of the American Institute of Certified Public Accountants (AICPA). Section 150 states that there are 10 standards: 3 general standards, 3 fieldwork standards, and 4 reporting standards. These standards are issued and clarified Statement of Accounting Standards, with the first issued in 1972 to replace previous guidance. Typically, the first number of the AU section refers to which standard applies. However, in 2012 the Clarity Project significantly revised the standards and replaced AU Section 150 with AU Section 200, which does not explicitly discuss the 10 standards. In the United States, the Public Company Accounting Oversight Board develops standards (Auditing Standards or AS) for publicly traded companies since the 2002 passage of the Sarbanes-Oxley Act; however, it adopted many of the GAAS initially. The GAAS continues to apply to non- public companies. General: 1. The auditor must maintain independence in mental attitude in all matters related to the audit. 2. The auditor must have adequate technical training & proficiency to perform the audit. 3. The auditor must exercise due professional care during the performance of the audit and the preparation of the report. Standards of Field Work: 1. The auditor must adequately plan the work and must properly supervise any assistants.
  14. 14. STANDARD AUDITING Page 14 2. The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. 3. The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit. Standards of Reporting: 1. The auditor must state in the auditor's report whether the financial statements are presented in accordance with generally accepted accounting principles. 2. The auditor must identify in the auditor's report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period. 3. When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor's report. 4. The auditor must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed, in the auditor's report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor's report. In all cases where an auditor's name is associated with financial statements, the auditor should clearly indicate the character of the auditor's work, if any, and the degree of responsibility the auditor is taking, in the auditor's report.
  15. 15. STANDARD AUDITING Page 15 Clarity Project: In 2004, a project was begun to clarify and converge the standards with the International Standards in Auditing (ISAs). Many of the AU sections are being remapped as part of the Clarity Project. In October 2011, SAS 122 was issued which superseded all previous SAS as except 51, 59, 65, 87, and 117-20. In the interim period, these new AU sections are referred to as AU-C until 2014.[6] The AICPA provides a list of the AU-C standards. ISAs: International Standards on Auditing are developed by the International Auditing and Assurance Standards Board of the International Federation of Accountants. Derivatives of ISAs are used in the audit of several other jurisdictions, including the United Kingdom.
  16. 16. STANDARD AUDITING Page 16 CHAPTER 3 3.1. COMPANY PROFILE TATA STEEL: Tata Steel, formerly known as TISCO and Tata Iron and Steel Company Limited, Established in 1907, Tata Steel, the flagship company of the Tata group is the first integrated steel plant in Asia and is now the world`s second most geographically diversified steel producer and a Fortune 500 Company. Backed by 100 glorious years of experience in steel making, Tata Steel is the world 6th largest steel company with an existing annual crude steel production capacity of 30 Million Tones Per Annum (MTPA). Tata Steel has a balanced global presence in over 50 developed European and fast growing Asian markets, with manufacturing units in 26 countries. It was the vision of the founder; Jaksetic Nusserwanji Tata, that on February 27, 1908, the first stake was driven into the soil of Sakchi. His vision helped Tata Steel overcome several periods of adversity and strive to improve against all odds. Tata Steel`s Jamshedpur (India) Works has a crude steel production capacity of 6.8 MTPA which is slated to increase to 10 MTPA by 2010. The Company also has proposed three Greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh in India with additional capacity of 23 MTPA and a Greenfield project in Vietnam. Through investments in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a manufacturing and marketing network in Europe, South East Asia and the pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in 2008, has operations in the UK, the Netherlands, Germany, France, Norway and Belgium. Tata Steel Thailand is the largest producer of long steel products in Thailand, with a manufacturing capacity of 1.7 MTPA. Tata Steel has proposed a 0.5 MTPA mini blast furnace project in Thailand.
  17. 17. STANDARD AUDITING Page 17 NatSteel Holdings produces about 2 MTPA of steel products across its regional operations in seven countries. Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has also entered the steel building and construction applications market. The iron ore mines and collieries in India give the Company a distinct advantage in raw material sourcing. Tata Steel is also striving towards raw materials security through joint ventures in Thailand, Australia, Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signed an agreement with Steel Authority of India Limited to establish a 50:50 joint venture company for coal mining in India. Also, Tata Steel has bought 19.9% stake in New Millennium Capital Corporation, Canada for iron ore mining. Exploration of opportunities in titanium dioxide business in Tamil Nadu, Ferro-chrome plant in South Africa and setting up of a deep- sea port in coastal Orissa are integral to the Growth and Globalization objective of Tata Steel. Tata Steel India is the first integrated steel company in the world, outside Japan, to be awarded the Deming Application Prize 2008 for excellence in Total Quality Management. Business divisions of the company: Bearings Division : Manufactures ball bearings, double row self-aligning bearings, magneto bearings, clutch release bearings and tapered roller bearings for two wheelers, fans, water pumps, etc. Ferro Alloys and Minerals Division : Operates chrome mines and has units for making Ferro chrome and Ferro manganese. It is one of the largest players in the global Ferro chrome market. Agric Division : Tata Agric is the first organized manufacturer in India of hand tools and implements for application in agriculture. Tata Growth Shop (TGS) : Has designed, developed, manufactured, erected and commissioned thousands of tones of equipment ranging from
  18. 18. STANDARD AUDITING Page 18 overhead cranes to high precision components, including a rocket launch pad for the Indian Space and Research Organization. Tubes Division : The biggest steel tube manufacturer with the largest market share in India, it aspires to strengthen its market presence by expanding and modernizing its commercial and precision tube manufacturing capacity. Wire Division : A pioneer in the manufacture of steel wires in India, it produces coated and uncoated wires, branded as Tata Iron. The division also operates a wholly owned subsidiary in Sri Lanka. Joint ventures and Associates: Corus- Europe second largest steel maker with operations in the UK and mainland Europe Tinplate Company of India Limited (TCIL) Tao Rolls Limited Tata Ryerson Limited (TRYL) Tata Refractoriness Limited (TRL) Tata Sponge Iron Limited (TSIL) Tata Metallic’s Tata Pigments Limited Jamshedpur Injection Powder Limited (Jamison) TM International Logistics Limited (TMILL) junction services limited TRF Limited Jamshedpur Utility and Service Company Limited (JUSCO) The Indian Steel and Wire Products Limited (ISWP) Tata BlueScope Steel Limited Dharma Port Company, Orissa Hooghly Met Coke & Power Company Lanka Special Steel Limited Silo Eastern Company Limited NatSteel Holdings (NSH) Tata Steel Thailand Tata Steel KZN- South Africa Tata NYK : A joint venture with Nippon Yusen Kabushiki K
  19. 19. STANDARD AUDITING Page 19 Achievements/ recognition: Tata Steel stall bags first prize in 'Heavy Industry' category at Dog Mela-2011, Ranchi , March 17, 2011 Tata Steel has won `The Business world Most Respected Company Award 2011?óÔé¼Ôäó in the Metals category. TATA Steel received two awards under the Ashtray Keel Protsahan Puraskar for its remarkable contribution spanning several decades in the field of sports in 2009. Tata Steel India awarded the Deming Application Prize 2008 for excellence in Total Quality Management. It is the first integrated steel company in the world, outside Japan to get this award. World Steel Dynamics has ranked Tata Steel as the world's best steel maker (for two consecutive years) in its annual listing in February 2006. Tata Steel has been conferred the Prime Minister of India's Trophy for the Best Integrated Steel Plant five times. It has been awarded Asia's Most Admired Knowledge Enterprise award five times in 2003, 2004, 2006, 2007 and 2008. Conferred the prestigious Global Business Coalition Award for Business Excellence in the Community in recognition of its pioneering work in the field of HIV/ AIDS awareness. Tata Steel works has been conferred the prestigious social accountability (SA) 8000 certification by social. Accountability international (SAI), USA. It is the first steel company in the world to receive this certificate. Corporate Sustainability Report of Tata Steel hailed by United Nation's Environment Programme (UNEP) and Standard and poor as strongest, submitted by any corporate house from emerging economies. Best governed company Award 2006 for setting high standards in governance practices. Tata Steel won 'Award for Corporate Social Responsibility in Public health' by US Indian Business Council (USIBC), Population Services International (PSI) and the center for Strategic and International Studies (CSIS) in 2007.
  20. 20. STANDARD AUDITING Page 20 3.2. AUDITORS' REPORT: TO THE MEMBERS OF TATA STEEL LIMITED: 1. We have audited the attached Balance Sheet of TATA STEEL LIMITED ("the Company") as at 31 March, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
  21. 21. STANDARD AUDITING Page 21 (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept 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 Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) in our opinion and to the best of our information and according to the explanations given to us, the said financial statements give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2012; (ii) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors and taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March, 2012 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
  22. 22. STANDARD AUDITING Page 22 ANNEXURE TO THE AUDITORS' REPORT: (i) Having regard to the nature of the Company's business/activities/result, clauses (x), (xii), (xiii) and (xiv) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) Some of the fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (iii) In respect of its inventory: (a) As explained to us, the inventories of finished and semi-finished goods and raw materials at Works, Mines and Collieries were physically verified during the year by the Management. In respect to stores and spare parts and stocks at stockyards and with consignment/conversion agents, the Company has a programme of verification of stocks over a three year period. In our opinion, having regard to the nature and location of the stocks, the frequency of verification is reasonable. In case of materials lying with third parties, certificates confirming stocks have been received for stocks held. (b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.
  23. 23. STANDARD AUDITING Page 23 (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. (iv) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has granted loans aggregating Rs.167.22 crores to one party during the year. At the year-end, there is no balance outstanding and the maximum amount involved during the year was Rs. 3,720.38 crores. (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (c) The receipts of principal amounts and interest have been regular/as per stipulations. (d) There were no loans outstanding as at the year-end, and therefore clause (iii) (d) of paragraph 4 of CARO is not applicable. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses (iii) (e) to (iii) (g) of paragraph 4 of CARO are not applicable. (v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to
  24. 24. STANDARD AUDITING Page 24 the best of our knowledge and belief and according to the information. and explanations given to us: (a) The particulars of contracts or arrangements referred to Section 301 that needed tobe entered in the Register maintained under the said Section have been so entered. (b) Where each of such transaction is in excess of Rs. five lakhs in respect of anyparty, the transactions have been made at prices which are prima facie reasonable havingregard to the prevailing market prices at the relevant time. (vii) In our opinion and according to the information and explanations given to us, theCompany has complied with the provisions of Sections 58A and 58AA or any other relevantprovisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public. According to the informationand explanations given to us, no order has been passed by the Company Law Board or theNational Company Law Tribunal or the Reserve Bank of India or any Court or any otherTribunal. (viii) In our opinion, the Company has an adequate internal audit system commensuratewith the size and the nature of its business. (ix) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Governmentunder Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, primafacie, the prescribed cost records have been maintained. We have, however, not made adetailed examination of the cost records with a view to determining whether they areaccurate or complete. (x) According to the information and explanations given to us in respect of statutorydues: (a) The Company has generally been regular in depositing undisputed statutory dues,including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax,Wealth Tax, Service Tax, Customs Duty,
  25. 25. STANDARD AUDITING Page 25 Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. We are informed that the Comp any intends to obtain exemption from operations of Employees' State Insurance Act at alllocations and necessary steps have been taken by the Company. We are also informed that actions taken by the authorities at some locations to bring the employees of the Company under the Employees' State Insurance. Name of the Statute (Nature of Dues) Forum where Dispute is pending Period to which the amount relates Amount involved (Rs. In crores) Supreme Court 1990-91 & 1993-94 9.68 Customs Act High Court 2002-03 0.03 Commissioner 1993-94 3.92 Supreme Court 2004-05 235.48 High Court 1988-89, 1989-90, 2000-01 & 2003- 04 to 2008-09 14.54 Central Excise Act Tribunal 1990-91, 1992-93, 1996-97 & 1998- 99 to 2012-13 755.32 Commissioner 1988-89, 1989-90 & 1993-94 to 2012-13 14.17 Deputy Commissioner 1985-86, 1986-87 & 1998-99 0.18 Assistant Commissioner 1983-84 to 2005-06 0.85 Supreme Court 2006-07 to 2011-12 25.59 High Court 1973-74, 1991-92, 1992-93, 1994- 95, 1996-97, 1999-2000 to 2005-06, 2007-08 to 2009-10 & 2012-13 119.31 Sales Tax Tribunal 1980-81, 1981-82, 1984-85, 1987- 88, 1989-90, 1995-96 & 1997-98 to 2011-12 71.97 Commissioner 1983-84, 1984-85, 1988-89 to 1998- 99 & 2008-09 to 2011-12 248.58 Deputy Commissioner 1983-84, 1984-85, 1988-89 to 1998- 99 & 2008-09 to 2011-12 116.94 Assistant Commissioner 1973-74, 1980-81,1983-84 to 1997- 98, 1998-99 & 2000-01 to 2011-12 26.85 Cess on royalty, education, welfare etc. 1956-57 to 1993-94, 1999-2000 to 7.66 High Court 2001-02, 2003-04 to 2005-06 & 2007-08 to 2012-13
  26. 26. STANDARD AUDITING Page 26 Scheme has been contested by the Company and full payment has not been noticed during the year. made of the contributions demanded. (b) There were no undisputed amounts payable in respect of Provident Fund, InvestorEducation and Protection Fund, Employees' State Insurance, Income-tax, Sales Tax, WealthTax, Service Tax, Customs Duty, Excise duty, Cess and other material statutory dues in arrears as at 31 March, 2013 for a period of more than six months from the date they became payable, except for collection of sales tax which we are informed are refundable to customers because they have been collected in excess or which have been collected pending receipt of necessary certificates from the customers. (c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,Excise Duty and Cess which have not been deposited as on 31 March, 2013 on account ofdisputes are given below: (xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in the repayment of dues to banks, financial institutions anddebenture holders. (xii) In our opinion and according to the information and explanations given to us, theterms and conditions of the guarantees given by the Company for loans taken by others frombanks and financial institutions are not, prima facie, prejudicial to the interests of theCompany. (xiii) In our opinion and according to the information and explanations given to us,the term loans have been applied by the Company during the year for the purposes for whichthey were obtained, other than temporary deployment pending application. (xiv) In our opinion and according to the information and explanations given to us, andon an overall examination of the Balance Sheet of the Company, we report that funds raisedon short-term basis have, prima facie, not been used during the year for long- terminvestment. (xv) According to the information and explanations given to us, the Company has notmade preferential allotment of shares to parties and
  27. 27. STANDARD AUDITING Page 27 companies covered in the Registermaintained under Section 301 of the Companies Act, 1956. (xvi) According to the information and explanations given to us, during the periodcovered by our audit report, the Company had issued unsecured debentures which did notrequire creation of any charge or security. (xvii) The Management has disclosed the end use of money raised by public issue in Note2 to the financial statements and we have verified the same. (xviii) To the best of our knowledge and according to the information and explanationsgiven to us, no fraud by the Company and no material fraud on the Company has been noticedor reported during the year.
  28. 28. STANDARD AUDITING Page 28 3.3. STANDARD AUDITING FOLLOWED BY TATA STEEL COMAPNY SA 220 “Quality Control for an Audit of Financial Statements” Introduction: Scope of this SA 1. This Standard on Auditing (SA) deals with the specific responsibilities of the auditor regarding quality control procedures for an audit of financial statements. Italso addresses, where applicable, the responsibilities of the engagement quality control reviewer. This SA is to be read in conjunction with relevant ethical requirements. System of Quality Control and Role of Engagement Teams 2. Quality control systems, policies and procedures are the responsibility of the audit firm. Under SQC 1, the firm has an obligation to establish and maintaina system of quality control to provide it with reasonable assurance that: (a) The firm and its personnel comply with professional standards and regulatory and legal requirements; and (b) The reports issued by the firm or engagement partners are appropriate in the circumstance. Within the context of the firm’s system of quality control, engagement teams have a responsibility to implement quality control procedures that are applicable to the audit engagement and provide the firm with relevant information to enable the functioning of that part of the firm’s system of quality control relating to independence.
  29. 29. STANDARD AUDITING Page 29 4. Engagement teams are entitled to rely on the firm’s system of quality control, unless information provided by the firm or other parties suggests otherwise. Effective Date 5. This SA is effective for audits of financial statements for periods beginning on or after April 1, 2010. Objective 6. The objective of the auditor is to implement quality control procedures at the engagement level that provide the auditor with reasonable assurance that: (a) The audit complies with professional standards and regulatory and legal requirements; and (b) The auditor’s report issued is appropriate in the circumstances. Definitions For purposes of the SAs, the following terms have the meanings attributed below: (a) Engagement partner – the partner or other person in the firm who is a member of the Institute of Chartered Accountants of India and is in full time practice and is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body. (b) Engagement quality control review – a process designed to provide an objective evaluation, before the report is issued, of the significant
  30. 30. STANDARD AUDITING Page 30 judgments the engagement team made and the conclusions they reached in formulating the report. (c) Engagement quality control reviewer – a partner, other person4 in the firm, suitably qualified external person, or a team made up of such individuals, with sufficient and appropriate experience and authority to objectively evaluate, before the report is issued, the significant judgments the engagement team made and the conclusions they reached in formulating the report. However, in case the review is done by a team of individuals, such team should be headed by a member of the Institute. (d) Engagement team – all personnel performing an engagement, including any experts contracted by the firm in connection with that engagement. (e) Firm – a sole practitioner/proprietor, partnership, or any such entity of professional accountants, as may be permitted by law. (f) Inspection – in relation to completed engagements, procedures designed to Such other person should be a member of the Institute of Chartered Accountants of India.Quality Control for an Audit of Financial Statements provide evidence of compliance by engagement teams with the firm’s quality control policies and procedures. (g) Listed entity – an entity whose shares, stock or debt are quoted or listed on a recognized stock exchange, or are traded under the regulations of a recognized stock exchange or other equivalent body. (h) Monitoring – a process comprising an ongoing consideration and evaluation of the firm’s system of quality control, including a periodic inspection of a selection of completed engagements, designed to enable the firm to obtain reasonable assurance that its system of quality control is operating effectively.
  31. 31. STANDARD AUDITING Page 31 (i) Network firm – A firm or entity that belongs to a network. (j) Network – A larger structure: (i) That is aimed at cooperation, and (ii) That is clearly aimed at profit or cost-sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand name, or a significant part of professional resources. (k) Partner – any individual with authority to bind the firm with respect to the performance of a professional services engagement. (l) Personnel – partners and staff. (m) Professional Standards – Engagement Standards, as defined in the ―Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and Related Services‖, issued by the Institute of Chartered Accountants of India and relevant ethical requirements as contained in the Code of Ethics issued by the Institute. (n) Relevant ethical requirements – Ethical requirements to which the engagement team and engagement quality control reviewer are subject, which ordinarily comprise the Code of Ethics of the Institute of Chartered Accountants of India related to an audit of financial statements. (o) Staff – professionals, other than partners, including any experts which the firm employs.Handbook of Auditing Pronouncements-I.A (p) Suitably qualified external person–an individual outside the firm with the capabilities and competence to act as an engagement partner, for example a partner or an employee5 (with appropriate experience) of another firm.
  32. 32. STANDARD AUDITING Page 32 Requirements Leadership Responsibilities for Quality on Audits The engagement partner shall take responsibility for the overall quality on each audit engagement to which that partner is assigned. (Ref: Para. A3) Relevant Ethical Requirements Throughout the audit engagement, the engagement partner shall remain alert, through observation and making inquiries as necessary, for evidence of non-compliance with relevant ethical requirements by members of the If matters come to the engagement partner’s attention through the firm’s system of quality control or otherwise that indicate that members of the engagement team have not complied with relevant ethical requirements, the engagement partner, in consultation with others in the firm, shall determine the appropriate action. Independence The engagement partner shall form a conclusion on compliance with Independence requirements that apply to the audit engagement. In doing so, the engagement partner shall: (a) Obtain relevant information from the firm and, where applicable, network firms, to identify and evaluate circumstances and relationships that create threats to independence; (b) Evaluate information on identified breaches, if any, of the firm’s independence policies and procedures to determine whether they create a threat to independence for the audit engagement; and (c) Take appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the audit engagement, where withdrawal is permitted by law
  33. 33. STANDARD AUDITING Page 33 Such employee should be a member of the Institute of Chartered Accountants of India.Quality Control for an Audit of Financial Statements or regulation. The engagement partner shall promptly report to the firm any inability to resolve the matter for appropriate action. (Ref: Para. A5-A7) Acceptance and Continuance of Client Relationships and Audit Engagements The engagement partner shall be satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and audit engagements have been followed, and shall determine that conclusions reached in this regard are appropriate. If the engagement partner obtains information that would have caused the firm to decline the audit engagement had that information been available earlier, the engagement partner shall communicate that information promptly to the firm, so that the firm and the engagement partner can take the necessary action. Assignment of Engagement Teams The engagement partner shall be satisfied that the engagement team, and any auditor’s experts who are not part of the engagement team, collectively have the appropriate competence and capabilities to: (a) Perform the audit engagement in accordance with professional standards and regulatory and legal requirements; and (b) Enable an auditor’s report that is appropriate in the circumstances to be issued. Engagement Performance Direction, Supervision and Performance The engagement partner shall take responsibility for:
  34. 34. STANDARD AUDITING Page 34 (a) The direction, supervision and performance of the audit engagement in compliance with professional standards and regulatory and legal requirements; and (Ref: Para. A13-A15, A20) (b) The auditor’s report being appropriate in the circumstances. Reviews The engagement partner shall take responsibility for reviews being performed in accordance with the firm’s review policies and procedures. (Ref: Para. A16-A17, A20)Handbook of Auditing Pronouncements-I.A On or before the date of the auditor’s report, the engagement partner shall, through a review of the audit documentation and discussion with the engagement team, be satisfied that sufficient appropriate audit evidence has been obtained to support the conclusions reached and for the auditor’s report to be issued. (Ref: Para. A18-A20) Consultation 18. The engagement partner shall: (a) Take responsibility for the engagement team undertaking appropriate consultation on difficult or contentious matters; (b) Be satisfied that members of the engagement team have undertaken appropriate consultation during the course of the engagement, both within the engagement team and between the engagement team and others at the appropriate level within or outside the firm; (c) Be satisfied that the nature and scope of, and conclusions resulting from, such consultations are agreed with the party consulted; and (d) Determine that conclusions resulting from such consultations have been implemented. (Ref: Para. A21-A22)
  35. 35. STANDARD AUDITING Page 35 Engagement Quality Control Review For audits of financial statements of listed entities, and those other audit engagements, if any, for which the firm has determined that an engagement quality control review is required, the engagement partner shall: (a) Determine that an engagement quality control reviewer has been appointed; (b) Discuss significant matters arising during the audit engagement, including those identified during the engagement quality control review, with the engagement quality control reviewer; and (c) Not date the auditor’s report until the completion of the engagement quality control review. (Ref: Para. A23-A25) The engagement quality control reviewer shall perform an objective evaluation of the significant judgments made by the engagement team, and thec onclusions reached in formulating the auditor’s report. This evaluation shall involve: Quality Control for an Audit of Financial Statements (a) Discussion of significant matters with the engagement partner; (b) Review of the financial statements and the proposed auditor’s report; (c) Review of selected audit documentation relating to the significant judgments the engagement team made and the conclusions it reached; and (d) Evaluation of the conclusions reached in formulating the auditor’s report and consideration of whether the proposed auditor’s report is appropriate. For audits of financial statements of listed entities, the engagement quality
  36. 36. STANDARD AUDITING Page 36 control reviewer, on performing an engagement quality control review, shall also consider the following: (a) The engagement team’s evaluation of the firm’s independence in relation to the audit engagement; (b) Whether appropriate consultation has taken place on matters involving differences of opinion or other difficult or contentious matters, and the conclusions arising from those consultations; and (c) Whether audit documentation selected for review reflects the work performed in relation to the significant judgments made and supports the conclusions reached. Differences of Opinion If differences of opinion arise within the engagement team, with those consulted or, where applicable, between the engagement partner and the engagement quality control reviewer, the engagement team shall follow the firm’s policies and procedures for dealing with and resolving differences of opinion. Monitoring An effective system of quality control includes a monitoring process designed to provide the firm with reasonable assurance that its policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively. The engagement partner shall consider the results of the firm’s monitoring process as evidenced in the latest information circulated by the firm and, if applicable, other network firms and whether deficiencies noted in that information may affect the audit engagement. (Ref: Para A32-A34)Handbook of Auditing Pronouncements-I.A
  37. 37. STANDARD AUDITING Page 37 Documentation The auditor shall document: (a) Issues identified with respect to compliance with relevant ethical requirements and how they were resolved. (b) Conclusions on compliance with independence requirements that apply to the audit engagement, and any relevant discussions with the firm that support these conclusions. (c) Conclusions reached regarding the acceptance and continuance of client relationships and audit engagements. (d) The nature and scope of, and conclusions resulting from, consultations undertaken during the course of the audit engagement. (Ref: Para. A35) The engagement quality control reviewer shall document, for the audit engagement reviewed, that: (a) The procedures required by the firm’s policies on engagement quality control review have been performed; (b) The engagement quality control review has been completed on or before the date of the auditor’s report; and (c) The reviewer is not aware of any unresolved matters that would cause the reviewer to believe that the significant judgments the engagement team made and the conclusions they reached were not appropriate.
  38. 38. STANDARD AUDITING Page 38 SA 501- “Audit Evidence Specific Considerations for Selected Items” Introduction Scope of this SA 1. This Standard on Auditing (SA) deals with specific considerations by the auditor in obtaining sufficient appropriate audit evidence in accordance with and other relevant SAs, with respect to certain aspects of inventory, litigation and claims involving the entity, and segment information in an audit of financial statements. Effective Date 2. This SA is effective for audits of financial statements for periods beginning on or after April 1, 2010. Objective 3. The objective of the auditor is to obtain sufficient appropriate audit evidence regarding the: (a) Existence and condition of inventory; (b) Completeness of litigation and claims involving the entity; and (c) Presentation and disclosure of segment information in accordance with the applicable financial reporting framework. Requirements Inventory
  39. 39. STANDARD AUDITING Page 39 When inventory is material to the financial statements, the auditor shall obtain sufficient appropriate audit evidence regarding the existence and condition of inventory by: (a) Attendance at physical inventory counting, unless impracticable, to: (Ref: Para. A1-A3) (i) Evaluate management’s instructions and procedures for recording and controlling the results of the entity’s physical inventory counting; 3 SA330, ―The Auditor’s Responses to Assessed Risks‖. SA500, ―Audit Evidence‖.Audit Evidence—Specific Considerations for Selected Items (ii) Observe the performance of management’s count procedures (iii) Inspect the inventory; (iv) Perform test counts; (b) Performing audit procedures over the entity’s final inventory records to determine whether they accurately reflect actual inventory count results. If physical inventory counting is conducted at a date other than the date of the financial statements, the auditor shall, in addition to the procedures required by paragraph 4, perform audit procedures to obtain audit evidence about whether changes in inventory between the count date and the date of the financial statements are properly recorded. If the auditor is unable to attend physical inventory counting due to unforeseen circumstances, the auditor shall make or observe some physical counts on an alternative date, and perform audit procedures on intervening transactions.
  40. 40. STANDARD AUDITING Page 40 If attendance at physical inventory counting is impracticable, the auditor shall perform alternative audit procedures to obtain sufficient appropriate audit evidence regarding the existence and condition of inventory. If it is not possible to do so, the auditor shall modify the opinion in the auditor’s report in accordance with SA 705 When inventory under the custody and control of a third party is material to the financial statements, the auditor shall obtain sufficient appropriate audit evidence regarding the existence and condition of that inventory by performing one or both of the following: (a) Request confirmation from the third party as to the quantities and condition of inventory held on behalf of the entity. (Ref: Para. A15) (b) Perform inspection or other audit procedures appropriate in the circumstances. (Ref: Para. A16) Litigation and Claims The auditor shall design and perform audit procedures in order to identify litigation and claims involving the entity which may give rise to a risk of material misstatement, including: 5 SA705, ―Modifications to the Opinion in the Independent Auditor’s Report‖. Handbook of Auditing Pronouncements-I.A (a) Inquiry of management and, where applicable, others within the entity, including in-house legal counsel; (b) Reviewing minutes of meetings of those charged with governance and correspondence between the entity and its external legal counsel; and (c) Reviewing legal expense accounts.
  41. 41. STANDARD AUDITING Page 41 If the auditor assesses a risk of material misstatement regarding litigation or claims that have been identified, or when audit procedures performed indicate that other material litigation or claims may exist, the auditor shall, in addition to the procedures required by other SAs, seek direct communication with the entity’s external legal counsel. The auditor shall do so through a letter of inquiry, prepared by management and sent by the auditor, requesting the entity’s external legal counsel to communicate directly with the auditor. If law, regulation or the respective legal professional body prohibits the entity’s external legal counsel from communicating directly with the auditor, the auditor shall perform alternative audit procedures. (a) management refuses to give the auditor permission to communicate or meet with the entity’s external legal counsel, or the entity’s external legal counsel refuses to respond appropriately to the letter of inquiry, or is prohibited from responding; and (b) the auditor is unable to obtain sufficient appropriate audit evidence by performing alternative audit procedures, the auditor shall modify the opinion in the auditor’s report in accordance with SA 705. Written Representations The auditor shall request management and, where appropriate, those charged with governance to provide written representations that all known actual or possible litigation and claims whose effects should be considered when preparing the financial statements have been disclosed to the auditor and appropriately accounted for and disclosed in accordance with the applicable financial reporting framework. Segment Information
  42. 42. STANDARD AUDITING Page 42 The auditor shall obtain sufficient appropriate audit evidence regarding the presentation and disclosure of segment information in accordance with the applicable financial reporting framework by: (Ref: Para. A26) Audit Evidence—Specific Considerations for Selected Items 5 SA 501 (a) Obtaining an understanding of the methods used by management in m determining segment information, and: (Ref: Para. A27) (i) Evaluating whether such methods are likely to result in disclosure in accordance with the applicable financial reporting framework; and (ii) Where appropriate, testing the application of such methods; and (b) Performing analytical procedures or other audit procedures appropriate in the circumstances.SA 610 nature, timing or extent of the external auditor’s procedures, the external auditor shall consider: (a) The nature and scope of specific work performed, or to be performed, by the internal auditors; (b) The assessed risks of material misstatement at the assertion level for particular classes of transactions, account balances, and disclosures; and (c) The degree of subjectivity involved in the evaluation of the audit evidence gathered by the internal auditors in support of the relevant assertions. Using Specific Work of the Internal Auditors In order for the external auditor to use specific work of the internal auditors, the external auditor shall evaluate and perform audit procedures on that work to determine its adequacy for the external auditor’s purposes. To determine the adequacy of specific work performed by the internal
  43. 43. STANDARD AUDITING Page 43 auditors for the external auditor’s purposes, the external auditor shall evaluate whether: (a) The work was performed by internal auditors having adequate technical training and proficiency; (b) The work was properly supervised, reviewed and documented; (c) Adequate audit evidence has been obtained to enable the internal auditors to draw reasonable conclusions; (d) Conclusions reached are appropriate in the circumstances and any reports prepared by the internal auditors are consistent with the results of the work performed; and (e) Any exceptions or unusual matters disclosed by the internal auditors are properly resolved. Documentation When the external auditor uses specific work of the internal auditors, the external auditor shall document conclusions regarding the evaluation of the adequacy of the work of the internal auditors, and the audit procedures performed by the external auditor on that work, in accordance with paragraph.
  44. 44. STANDARD AUDITING Page 44 SA 610 “Using The Work of Internal Auditors” Introduction Scope of this SA 1. This Standard on Auditing (SA) deals with the external auditor’s responsibilities regarding the work of internal auditors when the external auditor has determined, in accordance with SA 315,3 that the internal audit function is likely to be relevant to the audit. 2. This SA does not deal with instances when individual internal auditors provide direct assistance to the external auditor in carrying out audit procedures or where, in terms of the applicable legal and regulatory framework, it is not permissible for the internal auditor to provide access to his working papers to the third parties. Relationship between the Internal Audit Function and the External Auditor 3. The role and objectives of the internal audit function are determined by management and, where applicable, those charged with governance. While the objectives of the internal audit function and the external auditor are different, some of the ways in which the internal audit function and the external auditor achieve their respective objectives may be similar. 4. Irrespective of the degree of autonomy and objectivity of the internal audit function, such function is not independent of the entity as is required of the external auditor when expressing an opinion on financial statements. The external auditor has sole responsibility for the audit opinion expressed, and that responsibility is not reduced by the external auditor’s use of the work of the internal auditors.
  45. 45. STANDARD AUDITING Page 45 Effective Date: This SA is effective for audits of financial statements for periods beginningon or after April 1, 2010. Objectives The objectives of the external auditor, where the entity has an internal audit function that the external auditor has determined is likely to be relevant to the audit, are to determine: (a) Whether, and to what extent, to use specific work of the internal auditors; and (b) If so, whether such work is adequate for the purposes of the audit. SA 315, ―Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment,‖ paragraph 23.Handbook of Auditing Pronouncements-I.A Definitions For purposes of the SAs, the following terms have the meanings attributed below: (a) Internal audit function – An appraisal activity established or provided as a service to the entity. Its functions include, amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of internal control. The Preface to the Standards on Internal Audit, issued by the Institute of Chartered Accountants of India, issued in November 2004 describes internal audit as ―an independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the
  46. 46. STANDARD AUDITING Page 46 entity’s strategic risk management and internal control system. Internal audit, therefore, provides assurance that there is transparency in reporting, as a part of good governance.‖ (b) Internal auditors – Those individuals who perform the activities of the internal audit function. Internal auditors may belong to an internal audit department or equivalent function. Requirements Determining Whether and to What Extent to Use the Work of the Internal Auditors The external auditor shall determine: (a) Whether the work of the internal auditors is likely to be adequate for purposes of the audit; (b) If so, the planned effect of the work of the internal auditors on the nature, timing or extent of the external auditor’s procedures. In determining whether the work of the internal auditors is likely to be adequate for purposes of the audit, the external auditor shall evaluate: (a) The objectivity of the internal audit function; (b) The technical competence of the internal auditors; (c) Whether the work of the internal auditors is likely to be carried out with due professional care; and (d) Whether there is likely to be effective communication between the internal auditors and the external auditor. In determining the planned effect of the work of the internal auditors on the Using the Work of Internal Auditors
  47. 47. STANDARD AUDITING Page 47 3.4.COMMENTS ON STANDARD AUDITING FOLLOWED BY TATA STEEL COMPANY 1. We have obtained all information and explanations, which is to the best of Auditor knowledge and belief, were necessary for the purpose of Standard Auditing followed by TATA STEEL Company. 2. We have found The Auditor has followed SA 220- ―Quality Control for an Audit of Financial Statements‖, 501 –―Audit Evidence—Specific Considerations for Selected Items‖, SA 610- ―Using The Work of Internal Auditors‖. 3. In our opinion, the balance sheet, the profit and loss statement and cash flow statement dealt with by this report comply with Auditing and Accounting Standards referred to in sub –section (3C) of Section 211 of the companies Act, 1956. 4. Attention is invited to the following notes to Auditing statement : a) TATA STEEL Company has followed Auditing Standard of India which is applicable for all company in India which is Audited. Hence TATA STEEL Company is 6th largest Company of India steel. b) TATA STEEL audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. c) An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
  48. 48. STANDARD AUDITING Page 48 CHAPTER 4 4.1.CONCLUSION: In accordance with SA issued by ICAI for the auditors to audit the company report. The International Auditing Standards Committee and the Accounting Standard board of the Institute of Chartered Accountants of India have developed standard accounting and auditing practices to guide the. accountants and auditors in the day to day work The later developments in auditing pertain to the use of computers in accounting and auditing. Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory. TATA STEEL Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. TATA Steel has followed SA 220- ―Quality Control for an Audit of Financial Statements‖, 501 –―Audit Evidence—Specific Considerations for Selected Items‖, SA 610- ―Using The Work of Internal Auditors‖. There is This Three main Auditing standard Followed By TATA steel Company.
  49. 49. STANDARD AUDITING Page 49 4.2.BIBLIOGRAPHY:  Internet  www.icai.org  www.investopedia.com  www.wikipedia.com  www.tatasteel.com  www.moneycontrol.com  www.iifl.com  Text Book  Auditing and Assurance Services Author by lain A. Arenas, Mark S Beasley, Randal J Elder, Hardcover Publisher Prentice Hall  Auditing Information Systems by Jack J. Champlain, Hardcover:, Publisher: Wiley  Advanced Auditing by Dr. Marsha Ainapure Publisher: Manan Prakashan

×