Caro 2016 and Internal Financial Controls

CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
LUNAWAT & CO.
Chartered Accountants
LUNAWAT & CO.
Chartered Accountants
7th August 2016, Mayur Vihar7th August 2016, Mayur Vihar
CARO & IFCCARO & IFCCARO & IFCCARO & IFC

AGENDAAGENDAAGENDAAGENDA
CARO 2016CARO 2016CARO 2016CARO 2016
Internal Financial ControlsInternal Financial ControlsInternal Financial ControlsInternal Financial Controls
Lunawat & Co.

Lunawat & Co.
Audit ReportsAudit ReportsAudit ReportsAudit Reports
CompaniesCompaniesCompaniesCompanies
ActActActAct
CAROCAROCAROCARO
NonNonNonNon----
CAROCAROCAROCARO
Other ActsOther ActsOther ActsOther Acts
TaxTaxTaxTax
AuditAuditAuditAudit
FormFormFormForm
3CA3CA3CA3CA
FormFormFormForm
3CB3CB3CB3CB
LLPLLPLLPLLP SocietySocietySocietySociety

REPORTREPORTREPORTREPORT ---- COMPANIESCOMPANIESCOMPANIESCOMPANIES
Inquiry u/s 143(1)Inquiry u/s 143(1)Inquiry u/s 143(1)Inquiry u/s 143(1) –––– 6 points6 points6 points6 points –––– onlyonlyonlyonly
to be reported when commentsto be reported when commentsto be reported when commentsto be reported when comments
requiredrequiredrequiredrequired
Report to include:Report to include:Report to include:Report to include:
Matters specified u/s 143(3)Matters specified u/s 143(3)Matters specified u/s 143(3)Matters specified u/s 143(3) ---- 9 points9 points9 points9 points
Matters specified in RulesMatters specified in RulesMatters specified in RulesMatters specified in Rules ---- 3 points3 points3 points3 points
AnyAnyAnyAny order madeorder madeorder madeorder made u/s 143(3) foru/s 143(3) foru/s 143(3) foru/s 143(3) for
specified Companies in consultationspecified Companies in consultationspecified Companies in consultationspecified Companies in consultation
with NFRAwith NFRAwith NFRAwith NFRA –––– CARO 2016CARO 2016CARO 2016CARO 2016 –––– 16 points16 points16 points16 points
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 –––– APPLICABILITYAPPLICABILITYAPPLICABILITYAPPLICABILITY
Applicable to all including Foreign Co.Applicable to all including Foreign Co.Applicable to all including Foreign Co.Applicable to all including Foreign Co.
for a/for a/for a/for a/cingcingcingcing period after 1.4.15 except:period after 1.4.15 except:period after 1.4.15 except:period after 1.4.15 except:
Banking Co. / Insurance Co.Banking Co. / Insurance Co.Banking Co. / Insurance Co.Banking Co. / Insurance Co.
Section 8 Co.Section 8 Co.Section 8 Co.Section 8 Co.
OPCOPCOPCOPC
Small Co.Small Co.Small Co.Small Co.
Not applicable on CFSNot applicable on CFSNot applicable on CFSNot applicable on CFS
Branch auditor also covered, if applicableBranch auditor also covered, if applicableBranch auditor also covered, if applicableBranch auditor also covered, if applicable
to co.to co.to co.to co.
Lunawat & Co.

P. CoP. CoP. CoP. Co not being sub. or holding ofnot being sub. or holding ofnot being sub. or holding ofnot being sub. or holding of
Pub. CoPub. CoPub. CoPub. Co. whose:. whose:. whose:. whose:
Paid up Capital & Reserves <Paid up Capital & Reserves <Paid up Capital & Reserves <Paid up Capital & Reserves < 1 Cr1 Cr1 Cr1 Cr asasasas
at B/s date; andat B/s date; andat B/s date; andat B/s date; and
Bonus, Pref. shares to be includedBonus, Pref. shares to be includedBonus, Pref. shares to be includedBonus, Pref. shares to be included
Share Application money !!Share Application money !!Share Application money !!Share Application money !!
All reserves to be included includingAll reserves to be included includingAll reserves to be included includingAll reserves to be included including
revaluation reserverevaluation reserverevaluation reserverevaluation reserve
Lunawat & Co.

P. CoP. CoP. CoP. Co not being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Co. whose:. whose:. whose:. whose:
Outstanding LoansOutstanding LoansOutstanding LoansOutstanding Loans ---- Bank or FIs <Bank or FIs <Bank or FIs <Bank or FIs < 1 Cr during1 Cr during1 Cr during1 Cr during
FYFYFYFY; and; and; and; and
All borrowings includedAll borrowings includedAll borrowings includedAll borrowings included –––– non fund basednon fund basednon fund basednon fund based –––– totototo
extent devolved, invoked guarantees & devolvedextent devolved, invoked guarantees & devolvedextent devolved, invoked guarantees & devolvedextent devolved, invoked guarantees & devolved
LCsLCsLCsLCs
TLTLTLTL –––– interest accrued & due only to be consideredinterest accrued & due only to be consideredinterest accrued & due only to be consideredinterest accrued & due only to be considered
CCCCCCCC –––– balance on any day as per booksbalance on any day as per booksbalance on any day as per booksbalance on any day as per books
OD against FD includedOD against FD includedOD against FD includedOD against FD included
Outstanding due of Credit card also includedOutstanding due of Credit card also includedOutstanding due of Credit card also includedOutstanding due of Credit card also included
Foreign banksForeign banksForeign banksForeign banks coveredcoveredcoveredcovered ---- FIs include NBFCFIs include NBFCFIs include NBFCFIs include NBFC
Lunawat & Co.

Pvt.Pvt.Pvt.Pvt. CoCoCoCo not being sub. or holding of Pub.not being sub. or holding of Pub.not being sub. or holding of Pub.not being sub. or holding of Pub.
CoCoCoCo. whose:. whose:. whose:. whose:
Total Revenue (including from discontinuingTotal Revenue (including from discontinuingTotal Revenue (including from discontinuingTotal Revenue (including from discontinuing
operations) < 10 crores as per Financialoperations) < 10 crores as per Financialoperations) < 10 crores as per Financialoperations) < 10 crores as per Financial
Statements as per Schedule IIIStatements as per Schedule IIIStatements as per Schedule IIIStatements as per Schedule III
Other income includedOther income includedOther income includedOther income included
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES
1(a)1(a)1(a)1(a) ---- PPPProperroperroperroper recordsrecordsrecordsrecords ---- full particulars,full particulars,full particulars,full particulars,
quantitative details and situation ofquantitative details and situation ofquantitative details and situation ofquantitative details and situation of FA.FA.FA.FA.
FAR in electronic form ifFAR in electronic form ifFAR in electronic form ifFAR in electronic form if 2222 conditionsconditionsconditionsconditions satisfiedsatisfiedsatisfiedsatisfied::::
CCCControlsontrolsontrolsontrols &&&& security measures insecurity measures insecurity measures insecurity measures in Co. areCo. areCo. areCo. are such that oncesuch that oncesuch that oncesuch that once
finalised,finalised,finalised,finalised, FARFARFARFAR cannot be altered without propercannot be altered without propercannot be altered without propercannot be altered without proper
authorizationauthorizationauthorizationauthorization &&&& audit trail.audit trail.audit trail.audit trail.
FAR canFAR canFAR canFAR can be retrieved in a legible formbe retrieved in a legible formbe retrieved in a legible formbe retrieved in a legible form....
In caseIn caseIn caseIn case above conditions not satisfiedabove conditions not satisfiedabove conditions not satisfiedabove conditions not satisfied,,,, to obtainto obtainto obtainto obtain aaaa
duly authenticated printduly authenticated printduly authenticated printduly authenticated print----out ofout ofout ofout of FAR.FAR.FAR.FAR. In caseIn caseIn caseIn case auditorauditorauditorauditor
decides to rely ondecides to rely ondecides to rely ondecides to rely on electronically FARelectronically FARelectronically FARelectronically FAR ---- to maintainto maintainto maintainto maintain
adequate documentationadequate documentationadequate documentationadequate documentation evidencing evaluationevidencing evaluationevidencing evaluationevidencing evaluation ofofofof
controls that seek to ensurecontrols that seek to ensurecontrols that seek to ensurecontrols that seek to ensure completenesscompletenesscompletenesscompleteness, accuracy, accuracy, accuracy, accuracy
& security& security& security& security ofofofof registerregisterregisterregister.
Lunawat & Co.

1(b)1(b)1(b)1(b) –––– Physical verificationPhysical verificationPhysical verificationPhysical verification –––– materialmaterialmaterialmaterial
discrepancydiscrepancydiscrepancydiscrepancy
1(c1(c1(c1(c)))) ---- WhetherWhetherWhetherWhether title deeds of immovabletitle deeds of immovabletitle deeds of immovabletitle deeds of immovable
propertiespropertiespropertiesproperties are held in the name of theare held in the name of theare held in the name of theare held in the name of the
company. If not, provide details thereofcompany. If not, provide details thereofcompany. If not, provide details thereofcompany. If not, provide details thereof
TDR /TDR /TDR /TDR / PltPltPltPlt & Mach imbedded in land not& Mach imbedded in land not& Mach imbedded in land not& Mach imbedded in land not immimmimmimm. Prop.. Prop.. Prop.. Prop.
In case of conversionIn case of conversionIn case of conversionIn case of conversion
In case of mortgageIn case of mortgageIn case of mortgageIn case of mortgage –––– banksbanksbanksbanks
Online if availableOnline if availableOnline if availableOnline if available
DetailsDetailsDetailsDetails –––– no. of cases, leasehold/freehold, gross/netno. of cases, leasehold/freehold, gross/netno. of cases, leasehold/freehold, gross/netno. of cases, leasehold/freehold, gross/net
block, remarksblock, remarksblock, remarksblock, remarks
Lunawat & Co.

2(a2(a2(a2(a)(b)(c) merged into 2)(b)(c) merged into 2)(b)(c) merged into 2)(b)(c) merged into 2 ---- Whether physicalWhether physicalWhether physicalWhether physical
verification of inventory has beenverification of inventory has beenverification of inventory has beenverification of inventory has been
conducted at reasonable intervals by theconducted at reasonable intervals by theconducted at reasonable intervals by theconducted at reasonable intervals by the
managementmanagementmanagementmanagement &&&& whether any materialwhether any materialwhether any materialwhether any material
discrepancies were noticed and if so, howdiscrepancies were noticed and if so, howdiscrepancies were noticed and if so, howdiscrepancies were noticed and if so, how
they have been dealt with inthey have been dealt with inthey have been dealt with inthey have been dealt with in booksbooksbooksbooks ofofofof a/ca/ca/ca/c
3333 ---- Whether company has granted anyWhether company has granted anyWhether company has granted anyWhether company has granted any
loans, secured or unsecured to cos, firms,loans, secured or unsecured to cos, firms,loans, secured or unsecured to cos, firms,loans, secured or unsecured to cos, firms,
LLPLLPLLPLLP or other parties covered is registeredor other parties covered is registeredor other parties covered is registeredor other parties covered is registered
maintained u/s 189maintained u/s 189maintained u/s 189maintained u/s 189....[MBP[MBP[MBP[MBP----4]4]4]4] –––– 184(2)/188184(2)/188184(2)/188184(2)/188
Lunawat & Co.

3333 –––– MBP 4MBP 4MBP 4MBP 4 ---- IfIfIfIf so,so,so,so,
(a)(a)(a)(a) WhetherWhetherWhetherWhether termstermstermsterms & conditions of grant of such& conditions of grant of such& conditions of grant of such& conditions of grant of such
loans are not prejudicial toloans are not prejudicial toloans are not prejudicial toloans are not prejudicial to company’s interestcompany’s interestcompany’s interestcompany’s interest;;;;
CY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standing
(b)(b)(b)(b) Whether the schedule of repayment of principal &Whether the schedule of repayment of principal &Whether the schedule of repayment of principal &Whether the schedule of repayment of principal &
interest is stipulatedinterest is stipulatedinterest is stipulatedinterest is stipulated & whether repayments && whether repayments && whether repayments && whether repayments &
interest are regular.interest are regular.interest are regular.interest are regular.
Opening + CY, squared up loans coveredOpening + CY, squared up loans coveredOpening + CY, squared up loans coveredOpening + CY, squared up loans covered –––– no. of casesno. of casesno. of casesno. of cases
(c) If overdue amount(c) If overdue amount(c) If overdue amount(c) If overdue amount for more than 90 daysfor more than 90 daysfor more than 90 daysfor more than 90 days, whether, whether, whether, whether
reasonable steps taken by Co. for recovery of thereasonable steps taken by Co. for recovery of thereasonable steps taken by Co. for recovery of thereasonable steps taken by Co. for recovery of the
principal & interestprincipal & interestprincipal & interestprincipal & interest
OpeningOpeningOpeningOpening ++++ CYCYCYCY –––– no. of cases, principalno. of cases, principalno. of cases, principalno. of cases, principal amtamtamtamt overdue,overdue,overdue,overdue, inttinttinttintt
overdue, steps takenoverdue, steps takenoverdue, steps takenoverdue, steps taken
Lunawat & Co.

4444 –––– Internal control on purchaseInternal control on purchaseInternal control on purchaseInternal control on purchase etcetcetcetc notnotnotnot
requiredrequiredrequiredrequired
4444 ---- In respect of loans, investments andIn respect of loans, investments andIn respect of loans, investments andIn respect of loans, investments and
guarantees, whether provisions of Sectionguarantees, whether provisions of Sectionguarantees, whether provisions of Sectionguarantees, whether provisions of Section
185 and 186185 and 186185 and 186185 and 186 havehavehavehave been complied with. Ifbeen complied with. Ifbeen complied with. Ifbeen complied with. If
not, provide details thereofnot, provide details thereofnot, provide details thereofnot, provide details thereof.
185 Details185 Details185 Details185 Details –––– maximum amount and closing Bal.maximum amount and closing Bal.maximum amount and closing Bal.maximum amount and closing Bal.
186186186186 –––– more than 2 layers, exceeding limits, rate ofmore than 2 layers, exceeding limits, rate ofmore than 2 layers, exceeding limits, rate ofmore than 2 layers, exceeding limits, rate of
interest, other defaultsinterest, other defaultsinterest, other defaultsinterest, other defaults
5555 –––– DepositsDepositsDepositsDeposits –––– nononono change 73change 73change 73change 73----76767676
Lunawat & Co.

6666 –––– Cost RecordsCost RecordsCost RecordsCost Records –––– nononono changechangechangechange
7777 –––– Statutory DuesStatutory DuesStatutory DuesStatutory Dues –––– Wealth taxWealth taxWealth taxWealth tax (c)(c)(c)(c) IEPFIEPFIEPFIEPF
StatutoryStatutoryStatutoryStatutory duedueduedue arisesarisesarisesarises out of a statuteout of a statuteout of a statuteout of a statute, rather, rather, rather, rather thanthanthanthan onononon
an independent contractual or legal relationshipan independent contractual or legal relationshipan independent contractual or legal relationshipan independent contractual or legal relationship
Advance tax, TDS, Custom duty… ifAdvance tax, TDS, Custom duty… ifAdvance tax, TDS, Custom duty… ifAdvance tax, TDS, Custom duty… if inttinttinttintt –––– irregular.irregular.irregular.irregular.
Instalments granted by authority, penalty/Instalments granted by authority, penalty/Instalments granted by authority, penalty/Instalments granted by authority, penalty/inttinttinttintt coveredcoveredcoveredcovered
Irregularity vs. due more than 6 monthsIrregularity vs. due more than 6 monthsIrregularity vs. due more than 6 monthsIrregularity vs. due more than 6 months
Mere show causeMere show causeMere show causeMere show cause –––– not disputed, S. 154not disputed, S. 154not disputed, S. 154not disputed, S. 154 –––– disputeddisputeddisputeddisputed
If no appeal filedIf no appeal filedIf no appeal filedIf no appeal filed –––– undisputed duesundisputed duesundisputed duesundisputed dues
Disclose disputed amounts even if provision made orDisclose disputed amounts even if provision made orDisclose disputed amounts even if provision made orDisclose disputed amounts even if provision made or
amount deposited under protestamount deposited under protestamount deposited under protestamount deposited under protest
Lunawat & Co.

8888 –––– AccumAccumAccumAccum. /cash losses. /cash losses. /cash losses. /cash losses–––– not requirednot requirednot requirednot required
8888 –––– Earlier 9Earlier 9Earlier 9Earlier 9 –––– Default to Bank, FIs,Default to Bank, FIs,Default to Bank, FIs,Default to Bank, FIs, Govt.Govt.Govt.Govt. &&&&
debenture holdersdebenture holdersdebenture holdersdebenture holders ---- (in case of(in case of(in case of(in case of banks,banks,banks,banks, Govt.Govt.Govt.Govt.
andandandand FIs,FIs,FIs,FIs, lender wise details to be provided).lender wise details to be provided).lender wise details to be provided).lender wise details to be provided).
DefaultDefaultDefaultDefault –––– non payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCs
Period of default and amount lender wisePeriod of default and amount lender wisePeriod of default and amount lender wisePeriod of default and amount lender wise
All defaults existing on B/S dateAll defaults existing on B/S dateAll defaults existing on B/S dateAll defaults existing on B/S date –––– even earlier yearseven earlier yearseven earlier yearseven earlier years
DebenturesDebenturesDebenturesDebentures –––– lenderlenderlenderlender----wise detail not requiredwise detail not requiredwise detail not requiredwise detail not required
Govt. does not includeGovt. does not includeGovt. does not includeGovt. does not include –––– Foreign govt., Govt. Co, PSU,Foreign govt., Govt. Co, PSU,Foreign govt., Govt. Co, PSU,Foreign govt., Govt. Co, PSU,
Boards,Boards,Boards,Boards, CCCCorporationsorporationsorporationsorporations
Lunawat & Co.

9999 –––– NewNewNewNew ---- Whether moneys raised by way ofWhether moneys raised by way ofWhether moneys raised by way ofWhether moneys raised by way of IPOIPOIPOIPO
/ FPO (including/ FPO (including/ FPO (including/ FPO (including debt instruments) &debt instruments) &debt instruments) &debt instruments) & term loansterm loansterm loansterm loans
were applied forwere applied forwere applied forwere applied for purposespurposespurposespurposes for which those arefor which those arefor which those arefor which those are
raised. If not,raised. If not,raised. If not,raised. If not, detailsdetailsdetailsdetails together with delays /together with delays /together with delays /together with delays /
defaultdefaultdefaultdefault &&&& subsequentsubsequentsubsequentsubsequent rectification.rectification.rectification.rectification.
DefaultDefaultDefaultDefault ---- amount involvedamount involvedamount involvedamount involved , nature, nature, nature, nature ofofofof default, delaydefault, delaydefault, delaydefault, delay inininin
utilizationutilizationutilizationutilization
Co. to disclose endCo. to disclose endCo. to disclose endCo. to disclose end use ofuse ofuse ofuse of IPO/FPO in notes & auditorIPO/FPO in notes & auditorIPO/FPO in notes & auditorIPO/FPO in notes & auditor
totototo verifyverifyverifyverify –––– seeseeseesee SEBI (ListingSEBI (ListingSEBI (ListingSEBI (Listing Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.
Temporary investment (FDR) to be reportedTemporary investment (FDR) to be reportedTemporary investment (FDR) to be reportedTemporary investment (FDR) to be reported
Term Loans from Private PartiesTerm Loans from Private PartiesTerm Loans from Private PartiesTerm Loans from Private Parties
If against property, FDR,If against property, FDR,If against property, FDR,If against property, FDR, etcetcetcetc –––– no specific purposeno specific purposeno specific purposeno specific purpose
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 –––– CHANGESCHANGESCHANGESCHANGES
10101010 ---- Whether any fraud by Co. or any fraudWhether any fraud by Co. or any fraudWhether any fraud by Co. or any fraudWhether any fraud by Co. or any fraud
on Co. by itson Co. by itson Co. by itson Co. by its officers/ employeesofficers/ employeesofficers/ employeesofficers/ employees has beenhas beenhas beenhas been
noticed or reported during the year; If yes,noticed or reported during the year; If yes,noticed or reported during the year; If yes,noticed or reported during the year; If yes,
nature and amount involved be indicatednature and amount involved be indicatednature and amount involved be indicatednature and amount involved be indicated
Only to report ‘noticed or reported’ frauds.Only to report ‘noticed or reported’ frauds.Only to report ‘noticed or reported’ frauds.Only to report ‘noticed or reported’ frauds. 143(12143(12143(12143(12))))
frauds tofrauds tofrauds tofrauds to CG/AC. Reported frauds u/s 143(12) to beCG/AC. Reported frauds u/s 143(12) to beCG/AC. Reported frauds u/s 143(12) to beCG/AC. Reported frauds u/s 143(12) to be
reported not suspected fraudsreported not suspected fraudsreported not suspected fraudsreported not suspected frauds
Management fraud vs. Employee fraudManagement fraud vs. Employee fraudManagement fraud vs. Employee fraudManagement fraud vs. Employee fraud
FraudulentFraudulentFraudulentFraudulent Financial ReportingFinancial ReportingFinancial ReportingFinancial Reporting vs. Misappropriationvs. Misappropriationvs. Misappropriationvs. Misappropriation
of assetsof assetsof assetsof assets
Lunawat & Co.

11111111 –––– NewNewNewNew ---- WhetherWhetherWhetherWhether managerial remunerationmanagerial remunerationmanagerial remunerationmanagerial remuneration
has been paid / provided in accordance with thehas been paid / provided in accordance with thehas been paid / provided in accordance with thehas been paid / provided in accordance with the
requisite approvals mandated by the provisionsrequisite approvals mandated by the provisionsrequisite approvals mandated by the provisionsrequisite approvals mandated by the provisions
ofofofof s.s.s.s. 197197197197 r.w.r.w.r.w.r.w. scheduleschedulescheduleschedule V?V?V?V? If not, state theIf not, state theIf not, state theIf not, state the
amount involvedamount involvedamount involvedamount involved &&&& steps takensteps takensteps takensteps taken forforforfor securingsecuringsecuringsecuring
refund of the same.refund of the same.refund of the same.refund of the same.
Only Public CosOnly Public CosOnly Public CosOnly Public Cos
ExclusionExclusionExclusionExclusion –––– sittingsittingsittingsitting fee,fee,fee,fee, for professional servicesfor professional servicesfor professional servicesfor professional services
Entitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approval
ReportingReportingReportingReporting –––– payment to MD, WTD, MD, Manager,payment to MD, WTD, MD, Manager,payment to MD, WTD, MD, Manager,payment to MD, WTD, MD, Manager,
Excess amountExcess amountExcess amountExcess amount paid/ provided, Due for recovery &paid/ provided, Due for recovery &paid/ provided, Due for recovery &paid/ provided, Due for recovery &
steps takensteps takensteps takensteps taken
Lunawat & Co.

12121212 –––– NidhiNidhiNidhiNidhi Co..Co..Co..Co..
13131313 –––– NewNewNewNew ---- WhetherWhetherWhetherWhether all transactions withall transactions withall transactions withall transactions with
related parties are in compliance with S.related parties are in compliance with S.related parties are in compliance with S.related parties are in compliance with S.
177177177177 andandandand 188 and188 and188 and188 and details have beendetails have beendetails have beendetails have been
disclosed in FSdisclosed in FSdisclosed in FSdisclosed in FS etcetcetcetc as required byas required byas required byas required by
applicable AS.applicable AS.applicable AS.applicable AS.
To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18
S. 188 applicable to all companies other than onS. 188 applicable to all companies other than onS. 188 applicable to all companies other than onS. 188 applicable to all companies other than on
arm’s length transactions entered into in ordinaryarm’s length transactions entered into in ordinaryarm’s length transactions entered into in ordinaryarm’s length transactions entered into in ordinary
course of businesscourse of businesscourse of businesscourse of business
May testMay testMay testMay test on TP mechanism peron TP mechanism peron TP mechanism peron TP mechanism per IT ActIT ActIT ActIT Act
Lunawat & Co.

13131313 –––– SA 550 Related PartiesSA 550 Related PartiesSA 550 Related PartiesSA 550 Related Parties ---- transactionstransactionstransactionstransactions
not in normal course ofnot in normal course ofnot in normal course ofnot in normal course of business (business (business (business (EgEgEgEg):):):):
Complex equity transactions, such as corporateComplex equity transactions, such as corporateComplex equity transactions, such as corporateComplex equity transactions, such as corporate
restructurings or acquisitionsrestructurings or acquisitionsrestructurings or acquisitionsrestructurings or acquisitions
Transactions with offshore entities in jurisdictions withTransactions with offshore entities in jurisdictions withTransactions with offshore entities in jurisdictions withTransactions with offshore entities in jurisdictions with
weak corporate lawsweak corporate lawsweak corporate lawsweak corporate laws
LLLLeasingeasingeasingeasing of premises orof premises orof premises orof premises or renderingrenderingrenderingrendering of management servicesof management servicesof management servicesof management services
bybybyby entityentityentityentity to another party if no consideration is exchangedto another party if no consideration is exchangedto another party if no consideration is exchangedto another party if no consideration is exchanged
Sales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returns
Transactions with circular arrangements, for example, salesTransactions with circular arrangements, for example, salesTransactions with circular arrangements, for example, salesTransactions with circular arrangements, for example, sales
with a commitment to repurchasewith a commitment to repurchasewith a commitment to repurchasewith a commitment to repurchase
Transactions under contracts whose terms are changedTransactions under contracts whose terms are changedTransactions under contracts whose terms are changedTransactions under contracts whose terms are changed
before expirybefore expirybefore expirybefore expiry.
Lunawat & Co.

14141414 ––––NewNewNewNew ---- Whether Co. has madeWhether Co. has madeWhether Co. has madeWhether Co. has made
preferential allotment / PP of shares orpreferential allotment / PP of shares orpreferential allotment / PP of shares orpreferential allotment / PP of shares or
fully or partlyfully or partlyfully or partlyfully or partly convertibleconvertibleconvertibleconvertible deb. duringdeb. duringdeb. duringdeb. during yryryryr....
WhetherWhetherWhetherWhether SSSS. 42 complied &. 42 complied &. 42 complied &. 42 complied & amountamountamountamount raisedraisedraisedraised
used for purposes for which funds wereused for purposes for which funds wereused for purposes for which funds wereused for purposes for which funds were
raised.raised.raised.raised.
If not, details of amount involved andIf not, details of amount involved andIf not, details of amount involved andIf not, details of amount involved and
nature of nonnature of nonnature of nonnature of non----compliance.compliance.compliance.compliance.
Lunawat & Co.

15151515 –––– NewNewNewNew ---- WhetherWhetherWhetherWhether the company hasthe company hasthe company hasthe company has
entered into any nonentered into any nonentered into any nonentered into any non----cash transactions withcash transactions withcash transactions withcash transactions with
directors or persons connected with himdirectors or persons connected with himdirectors or persons connected with himdirectors or persons connected with him
and if so, whether provisions ofand if so, whether provisions ofand if so, whether provisions ofand if so, whether provisions of S. 192S. 192S. 192S. 192
compliedcompliedcompliedcomplied withwithwithwith
Persons connectedPersons connectedPersons connectedPersons connected ---- 185(1)185(1)185(1)185(1) ExplExplExplExpl.... –––– check MBP 1check MBP 1check MBP 1check MBP 1
Loan, guarantee,Loan, guarantee,Loan, guarantee,Loan, guarantee, etcetcetcetc –––– MBP 2; ContractsMBP 2; ContractsMBP 2; ContractsMBP 2; Contracts –––– MBP 4MBP 4MBP 4MBP 4
FAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGM
Merger under court schemesMerger under court schemesMerger under court schemesMerger under court schemes –––– Not nonNot nonNot nonNot non----cashcashcashcash
Acquisition of asset in one year, settlement of liabilityAcquisition of asset in one year, settlement of liabilityAcquisition of asset in one year, settlement of liabilityAcquisition of asset in one year, settlement of liability
in another yearin another yearin another yearin another year –––– Not nonNot nonNot nonNot non----cashcashcashcash
Lunawat & Co.

16161616 –––– NewNewNewNew ---- Whether Co is required to beWhether Co is required to beWhether Co is required to beWhether Co is required to be
registered u/s 45registered u/s 45registered u/s 45registered u/s 45----IA of RBI and if soIA of RBI and if soIA of RBI and if soIA of RBI and if so
whether the registration has been obtainedwhether the registration has been obtainedwhether the registration has been obtainedwhether the registration has been obtained
Understanding business, if principal business isUnderstanding business, if principal business isUnderstanding business, if principal business isUnderstanding business, if principal business is
Financing activityFinancing activityFinancing activityFinancing activity
50505050----50 Test50 Test50 Test50 Test ---- Financial Assets > 50% of total assetsFinancial Assets > 50% of total assetsFinancial Assets > 50% of total assetsFinancial Assets > 50% of total assets
and income from Financial assets > 50% of Grossand income from Financial assets > 50% of Grossand income from Financial assets > 50% of Grossand income from Financial assets > 50% of Gross
IncomeIncomeIncomeIncome
If required and registration not obtained reasons toIf required and registration not obtained reasons toIf required and registration not obtained reasons toIf required and registration not obtained reasons to
be statedbe statedbe statedbe stated
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 –––– FINER POINTSFINER POINTSFINER POINTSFINER POINTS
Comply SAsComply SAsComply SAsComply SAs–––– DDDDocumentation, Materialityocumentation, Materialityocumentation, Materialityocumentation, Materiality
AssessAssessAssessAssess thethethethe effecteffecteffecteffect of failure to complyof failure to complyof failure to complyof failure to comply
It’s notIt’s notIt’s notIt’s not a separate audit engagementa separate audit engagementa separate audit engagementa separate audit engagement
Have CheckHave CheckHave CheckHave Check listslistslistslists
Need to document basis of reaching atNeed to document basis of reaching atNeed to document basis of reaching atNeed to document basis of reaching at
adverse opinionadverse opinionadverse opinionadverse opinion
Management RepresentationManagement RepresentationManagement RepresentationManagement Representation
Cross check with Board ReportCross check with Board ReportCross check with Board ReportCross check with Board Report
Lunawat & Co.

IFC /IFC /IFC /IFC / ICFRICFRICFRICFR
Lunawat & Co.
S.S.S.S. ResponsibleResponsibleResponsibleResponsible RemarksRemarksRemarksRemarks
134134134134 DirectorDirectorDirectorDirector
ResponsibilityResponsibilityResponsibilityResponsibility
StatementStatementStatementStatement
ListedListedListedListed CoCoCoCo –––– Directors haveDirectors haveDirectors haveDirectors have
laid down IFC to be followedlaid down IFC to be followedlaid down IFC to be followedlaid down IFC to be followed
by the Co. & that suchby the Co. & that suchby the Co. & that suchby the Co. & that such
controls are adequate &controls are adequate &controls are adequate &controls are adequate &
operating effectivelyoperating effectivelyoperating effectivelyoperating effectively
R.R.R.R.
8(5)(viii)8(5)(viii)8(5)(viii)8(5)(viii)
DirectorDirectorDirectorDirector
ReportReportReportReport
Details in respect ofDetails in respect ofDetails in respect ofDetails in respect of
adequacy of Internaladequacy of Internaladequacy of Internaladequacy of Internal
Financial controls withFinancial controls withFinancial controls withFinancial controls with
reference to the Financialreference to the Financialreference to the Financialreference to the Financial
StatementsStatementsStatementsStatements

Lunawat & Co.
177177177177
(4)(4)(4)(4)
(vii) &(vii) &(vii) &(vii) &
(5)(5)(5)(5)
AuditAuditAuditAudit
CommitteeCommitteeCommitteeCommittee
AC may call for comments ofAC may call for comments ofAC may call for comments ofAC may call for comments of
auditors about IFC before theirauditors about IFC before theirauditors about IFC before theirauditors about IFC before their
submission to Board & may alsosubmission to Board & may alsosubmission to Board & may alsosubmission to Board & may also
discuss related issues withdiscuss related issues withdiscuss related issues withdiscuss related issues with
internal & statutory auditors &internal & statutory auditors &internal & statutory auditors &internal & statutory auditors &
management of Co.management of Co.management of Co.management of Co.
Sch.Sch.Sch.Sch.
IVIVIVIV
IndependentIndependentIndependentIndependent
DirectorsDirectorsDirectorsDirectors
To satisfy themselves on integrityTo satisfy themselves on integrityTo satisfy themselves on integrityTo satisfy themselves on integrity
of financial information & ensureof financial information & ensureof financial information & ensureof financial information & ensure
that financial controls & systemsthat financial controls & systemsthat financial controls & systemsthat financial controls & systems
of risk management are robust &of risk management are robust &of risk management are robust &of risk management are robust &
defensibledefensibledefensibledefensible

Lunawat & Co.
143143143143
(3)((3)((3)((3)(iiii))))
AuditorAuditorAuditorAuditor
The Company has adequate IFCThe Company has adequate IFCThe Company has adequate IFCThe Company has adequate IFC
system and operatingsystem and operatingsystem and operatingsystem and operating
effectivenesseffectivenesseffectivenesseffectiveness of such controlsof such controlsof such controlsof such controls
ICAIICAIICAIICAI AuditorAuditorAuditorAuditor Guidance Note by ICAI inGuidance Note by ICAI inGuidance Note by ICAI inGuidance Note by ICAI in
September 2015September 2015September 2015September 2015
129(4)129(4)129(4)129(4) AuditorAuditorAuditorAuditor
CFSCFSCFSCFS
Provisions applicable toProvisions applicable toProvisions applicable toProvisions applicable to
preparation, adoption & auditpreparation, adoption & auditpreparation, adoption & auditpreparation, adoption & audit
of FS of a holding co. shall,of FS of a holding co. shall,of FS of a holding co. shall,of FS of a holding co. shall,
mutatis mutandis, apply tomutatis mutandis, apply tomutatis mutandis, apply tomutatis mutandis, apply to
CFS.CFS.CFS.CFS.

1956 ACT1956 ACT1956 ACT1956 ACT
CAROCAROCAROCARO –––– HHHHas adequate Internal Control procedureas adequate Internal Control procedureas adequate Internal Control procedureas adequate Internal Control procedure
commensurate with the size of Co. and nature ofcommensurate with the size of Co. and nature ofcommensurate with the size of Co. and nature ofcommensurate with the size of Co. and nature of
its business for Purchase of inventory and fixedits business for Purchase of inventory and fixedits business for Purchase of inventory and fixedits business for Purchase of inventory and fixed
assets and for sale of goods & servicesassets and for sale of goods & servicesassets and for sale of goods & servicesassets and for sale of goods & services
SSSS.... 217217217217((((2222AAAAAAAA)))) ---- DirectorsDirectorsDirectorsDirectors’’’’ ResponsibilityResponsibilityResponsibilityResponsibility StatementStatementStatementStatement
---- havehavehavehave takentakentakentaken properproperproperproper &&&& sufficientsufficientsufficientsufficient carecarecarecare forforforfor
maintenancemaintenancemaintenancemaintenance ofofofof adequateadequateadequateadequate accountingaccountingaccountingaccounting recordsrecordsrecordsrecords inininin
accordanceaccordanceaccordanceaccordance withwithwithwith provisionsprovisionsprovisionsprovisions ofofofof ActActActAct,,,,
forforforfor safeguardingsafeguardingsafeguardingsafeguarding assetsassetsassetsassets ofofofof CoCoCoCo....
forforforfor preventingpreventingpreventingpreventing &&&& detectingdetectingdetectingdetecting fraudfraudfraudfraud
otherotherotherother irregularitiesirregularitiesirregularitiesirregularities.
Lunawat & Co.

INTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROL
IFC meansIFC meansIFC meansIFC means policies &policies &policies &policies & procedures adoptedprocedures adoptedprocedures adoptedprocedures adopted
bybybyby Company for ensuring :Company for ensuring :Company for ensuring :Company for ensuring :
OrderlyOrderlyOrderlyOrderly & efficient conduct of its business,& efficient conduct of its business,& efficient conduct of its business,& efficient conduct of its business,
including adherence to company’s policiesincluding adherence to company’s policiesincluding adherence to company’s policiesincluding adherence to company’s policies,,,,
SafeguardingSafeguardingSafeguardingSafeguarding of its assets,of its assets,of its assets,of its assets,
PreventionPreventionPreventionPrevention and detection of fraudsand detection of fraudsand detection of fraudsand detection of frauds and errorsand errorsand errorsand errors,,,,
AccuracyAccuracyAccuracyAccuracy andandandand completenesscompletenesscompletenesscompleteness of the accountingof the accountingof the accountingof the accounting
records,records,records,records,
Timely preparationTimely preparationTimely preparationTimely preparation of reliable financialof reliable financialof reliable financialof reliable financial
informationinformationinformationinformation
Lunawat & Co.

ICFRICFRICFRICFR –––– ICAIICAIICAIICAI GUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTE –––– 9/20159/20159/20159/2015
TTTTermermermerm ‘IFC’‘IFC’‘IFC’‘IFC’ inininin S. 143(3)(S. 143(3)(S. 143(3)(S. 143(3)(iiii) would relate to) would relate to) would relate to) would relate to ‘IFC‘IFC‘IFC‘IFC
over Fover Fover Fover Financialinancialinancialinancial RRRReportingeportingeportingeporting’’’’ in accordance within accordance within accordance within accordance with
objectivesobjectivesobjectivesobjectives of an audit stated in SA 200 “Overallof an audit stated in SA 200 “Overallof an audit stated in SA 200 “Overallof an audit stated in SA 200 “Overall
Objectives of the Independent Auditor and theObjectives of the Independent Auditor and theObjectives of the Independent Auditor and theObjectives of the Independent Auditor and the
Conduct of an Audit in Accordance withConduct of an Audit in Accordance withConduct of an Audit in Accordance withConduct of an Audit in Accordance with
Standards onStandards onStandards onStandards on Auditing”Auditing”Auditing”Auditing”
Auditor needs to obtain reasonable assurance toAuditor needs to obtain reasonable assurance toAuditor needs to obtain reasonable assurance toAuditor needs to obtain reasonable assurance to
state:state:state:state:
WWWWhetherhetherhetherhether an adequate IFC system wasan adequate IFC system wasan adequate IFC system wasan adequate IFC system was maintainedmaintainedmaintainedmaintained &&&&
WWWWhetherhetherhetherhether such IFC systemsuch IFC systemsuch IFC systemsuch IFC system operated effectivelyoperated effectivelyoperated effectivelyoperated effectively inininin co.co.co.co.
in all material respects with respect to financialin all material respects with respect to financialin all material respects with respect to financialin all material respects with respect to financial
reporting only.reporting only.reporting only.reporting only.
Lunawat & Co.

“IFC over“IFC over“IFC over“IFC over FinancialFinancialFinancialFinancial RRRReportingeportingeportingeporting” shall mean” shall mean” shall mean” shall mean
““““A process designed to provide reasonableA process designed to provide reasonableA process designed to provide reasonableA process designed to provide reasonable
assurance regarding the reliability of financialassurance regarding the reliability of financialassurance regarding the reliability of financialassurance regarding the reliability of financial
reporting and the preparation of financialreporting and the preparation of financialreporting and the preparation of financialreporting and the preparation of financial
statements for external purposes in accordance withstatements for external purposes in accordance withstatements for external purposes in accordance withstatements for external purposes in accordance with
generally accepted accounting principles.generally accepted accounting principles.generally accepted accounting principles.generally accepted accounting principles.
AAAA company'scompany'scompany'scompany's IFCIFCIFCIFC over financial reporting includesover financial reporting includesover financial reporting includesover financial reporting includes
those policies and proceduresthose policies and proceduresthose policies and proceduresthose policies and procedures that:that:that:that:
1.1.1.1. PPPPertainertainertainertain to the maintenance of records that, into the maintenance of records that, into the maintenance of records that, into the maintenance of records that, in
reasonable detail, accurately and fairly reflectreasonable detail, accurately and fairly reflectreasonable detail, accurately and fairly reflectreasonable detail, accurately and fairly reflect
the transactions and dispositions of the assetsthe transactions and dispositions of the assetsthe transactions and dispositions of the assetsthe transactions and dispositions of the assets
of the companyof the companyof the companyof the company;;;;
Lunawat & Co.

2.2.2.2. Provide reasonable assurance that transactionsProvide reasonable assurance that transactionsProvide reasonable assurance that transactionsProvide reasonable assurance that transactions
are recorded as necessary to permit preparation ofare recorded as necessary to permit preparation ofare recorded as necessary to permit preparation ofare recorded as necessary to permit preparation of
financial statements in accordance with generallyfinancial statements in accordance with generallyfinancial statements in accordance with generallyfinancial statements in accordance with generally
accepted accounting principles, and that receiptsaccepted accounting principles, and that receiptsaccepted accounting principles, and that receiptsaccepted accounting principles, and that receipts
and expenditures of the company are being madeand expenditures of the company are being madeand expenditures of the company are being madeand expenditures of the company are being made
only in accordance with authorisations ofonly in accordance with authorisations ofonly in accordance with authorisations ofonly in accordance with authorisations of
management and directors of the company; andmanagement and directors of the company; andmanagement and directors of the company; andmanagement and directors of the company; and
3.3.3.3. ProvideProvideProvideProvide reasonable assurance regardingreasonable assurance regardingreasonable assurance regardingreasonable assurance regarding
prevention or timely detection of unauthorisedprevention or timely detection of unauthorisedprevention or timely detection of unauthorisedprevention or timely detection of unauthorised
acquisition, use, or disposition of the company'sacquisition, use, or disposition of the company'sacquisition, use, or disposition of the company'sacquisition, use, or disposition of the company's
assets that could have a material effect on theassets that could have a material effect on theassets that could have a material effect on theassets that could have a material effect on the
financial statementsfinancial statementsfinancial statementsfinancial statements.
Lunawat & Co.

Lunawat & Co.
ICFRICFRICFRICFR
MaintenanceMaintenanceMaintenanceMaintenance
of Financialof Financialof Financialof Financial
RecordsRecordsRecordsRecords
(Details /(Details /(Details /(Details /
Accuracy)Accuracy)Accuracy)Accuracy)
AuthorizationAuthorizationAuthorizationAuthorization
of Transactionsof Transactionsof Transactionsof Transactions
(As per GAAP)(As per GAAP)(As per GAAP)(As per GAAP)
SafeguardingSafeguardingSafeguardingSafeguarding
of assets ofof assets ofof assets ofof assets of
companycompanycompanycompany

ICFRICFRICFRICFR –––– AUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENT
Auditor should report if companyAuditor should report if companyAuditor should report if companyAuditor should report if company has:has:has:has:
adequateadequateadequateadequate internal control systems ininternal control systems ininternal control systems ininternal control systems in place; andplace; andplace; andplace; and
whetherwhetherwhetherwhether they were operating effectivelythey were operating effectivelythey were operating effectivelythey were operating effectively asasasas atatatat
balance sheet date.balance sheet date.balance sheet date.balance sheet date.
Not applicable on interim financial statements,Not applicable on interim financial statements,Not applicable on interim financial statements,Not applicable on interim financial statements,
such as quarterly or halfsuch as quarterly or halfsuch as quarterly or halfsuch as quarterly or half----yearly financialyearly financialyearly financialyearly financial
statements, unless such reporting is requiredstatements, unless such reporting is requiredstatements, unless such reporting is requiredstatements, unless such reporting is required
under any other law orunder any other law orunder any other law orunder any other law or regulationregulationregulationregulation
Should use a topShould use a topShould use a topShould use a top----down approach to select thedown approach to select thedown approach to select thedown approach to select the
controls tocontrols tocontrols tocontrols to test. It is nottest. It is nottest. It is nottest. It is not necessarilynecessarilynecessarilynecessarily the orderthe orderthe orderthe order inininin
whichwhichwhichwhich auditorauditorauditorauditor will performwill performwill performwill perform auditingauditingauditingauditing proceduresproceduresproceduresprocedures.
Lunawat & Co.

TOPTOPTOPTOP----DOWN APPROACHDOWN APPROACHDOWN APPROACHDOWN APPROACH
Lunawat & Co.
Internal Financial Control FrameworkInternal Financial Control FrameworkInternal Financial Control FrameworkInternal Financial Control Framework
Financial ReportingFinancial ReportingFinancial ReportingFinancial Reporting
FS ASSERTIONSFS ASSERTIONSFS ASSERTIONSFS ASSERTIONS (Completeness, Existence or(Completeness, Existence or(Completeness, Existence or(Completeness, Existence or
Occurrence, Rights & Obligations, ValuationsOccurrence, Rights & Obligations, ValuationsOccurrence, Rights & Obligations, ValuationsOccurrence, Rights & Obligations, Valuations
Presentation & Disclosure)Presentation & Disclosure)Presentation & Disclosure)Presentation & Disclosure) &&&& CONTROLSCONTROLSCONTROLSCONTROLS (Authorisation,(Authorisation,(Authorisation,(Authorisation,
Safeguarding of Assets & Maintenance of Records)Safeguarding of Assets & Maintenance of Records)Safeguarding of Assets & Maintenance of Records)Safeguarding of Assets & Maintenance of Records)
Business CyclesBusiness CyclesBusiness CyclesBusiness Cycles
SubSubSubSub---- processesprocessesprocessesprocesses
ObjectivesObjectivesObjectivesObjectives
ActivitiesActivitiesActivitiesActivities

ICFR AUDITICFR AUDITICFR AUDITICFR AUDIT –––– ICAIICAIICAIICAI GUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTE
Lunawat & Co.
PlanningPlanningPlanningPlanning 1.1.1.1. Identify significant account balances / disclosure itemsIdentify significant account balances / disclosure itemsIdentify significant account balances / disclosure itemsIdentify significant account balances / disclosure items
2.2.2.2. Identify & understand significant flows of transactionsIdentify & understand significant flows of transactionsIdentify & understand significant flows of transactionsIdentify & understand significant flows of transactions
3.3.3.3. Identify risk of material misstatementsIdentify risk of material misstatementsIdentify risk of material misstatementsIdentify risk of material misstatements
4.4.4.4. IdentifyIdentifyIdentifyIdentify controls which address risk of material misstatementscontrols which address risk of material misstatementscontrols which address risk of material misstatementscontrols which address risk of material misstatements
5.5.5.5. Identify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGC
Design &Design &Design &Design &
ImplementImplementImplementImplement
ationationationation
6.6.6.6. Assess the design of controlsAssess the design of controlsAssess the design of controlsAssess the design of controls
7.7.7.7. AssessAssessAssessAssess the implementation of controlsthe implementation of controlsthe implementation of controlsthe implementation of controls
Appropriate design & implementation controlsAppropriate design & implementation controlsAppropriate design & implementation controlsAppropriate design & implementation controls
8.8.8.8. Assess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable procedures
9.9.9.9. Plan operative effectiveness testingPlan operative effectiveness testingPlan operative effectiveness testingPlan operative effectiveness testing
OperatingOperatingOperatingOperating
EffectiveneEffectiveneEffectiveneEffectivene
ssssssss
10.10.10.10. Plan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectiveness
11.11.11.11. Perform operative effectiveness testingPerform operative effectiveness testingPerform operative effectiveness testingPerform operative effectiveness testing
12.12.12.12. Assess findings & conclude on effective effectivenessAssess findings & conclude on effective effectivenessAssess findings & conclude on effective effectivenessAssess findings & conclude on effective effectiveness
13.13.13.13. Form opinion on IFCForm opinion on IFCForm opinion on IFCForm opinion on IFC
ReportingReportingReportingReporting 14.14.14.14. Assess impact on Audit OpinionAssess impact on Audit OpinionAssess impact on Audit OpinionAssess impact on Audit Opinion
15.15.15.15. Form audit opinion on financial statementsForm audit opinion on financial statementsForm audit opinion on financial statementsForm audit opinion on financial statements
Prepare and control audit documentationPrepare and control audit documentationPrepare and control audit documentationPrepare and control audit documentation
ContinuousContinuousContinuousContinuous focus on audit qualityfocus on audit qualityfocus on audit qualityfocus on audit quality

COMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROL
Lunawat & Co.

COMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROL –––– SA 315SA 315SA 315SA 315
Lunawat & Co.
S. No.S. No.S. No.S. No. ComponentComponentComponentComponent ElementsElementsElementsElements
1111 ControlControlControlControl
EnvironmentEnvironmentEnvironmentEnvironment
1.1.1.1. Communication and enforcement of integrity andCommunication and enforcement of integrity andCommunication and enforcement of integrity andCommunication and enforcement of integrity and
ethical Valuesethical Valuesethical Valuesethical Values
2.2.2.2. Commitment to competenceCommitment to competenceCommitment to competenceCommitment to competence
3.3.3.3. Participation by those charged with governanceParticipation by those charged with governanceParticipation by those charged with governanceParticipation by those charged with governance
4.4.4.4. Management’s philosophy and operating styleManagement’s philosophy and operating styleManagement’s philosophy and operating styleManagement’s philosophy and operating style
5.5.5.5. Organisational structureOrganisational structureOrganisational structureOrganisational structure
6.6.6.6. Assignment of authority and responsibilityAssignment of authority and responsibilityAssignment of authority and responsibilityAssignment of authority and responsibility
7.7.7.7. Human resource policies and practicesHuman resource policies and practicesHuman resource policies and practicesHuman resource policies and practices
2222 Entity’s RiskEntity’s RiskEntity’s RiskEntity’s Risk
AssessmentAssessmentAssessmentAssessment
ProcessProcessProcessProcess
1.1.1.1. Management identification of business risksManagement identification of business risksManagement identification of business risksManagement identification of business risks
relevant to the preparation of financialrelevant to the preparation of financialrelevant to the preparation of financialrelevant to the preparation of financial
statementsstatementsstatementsstatements
2.2.2.2. External and internal events, transactions orExternal and internal events, transactions orExternal and internal events, transactions orExternal and internal events, transactions or
circumstances that may occur and adverselycircumstances that may occur and adverselycircumstances that may occur and adverselycircumstances that may occur and adversely
affect an entity’s ability to initiate, record,affect an entity’s ability to initiate, record,affect an entity’s ability to initiate, record,affect an entity’s ability to initiate, record,
process, and report financial data consistent withprocess, and report financial data consistent withprocess, and report financial data consistent withprocess, and report financial data consistent with
the assertions of management in the financialthe assertions of management in the financialthe assertions of management in the financialthe assertions of management in the financial

Lunawat & Co.
3333 ControlControlControlControl
ActivitiesActivitiesActivitiesActivities
1.1.1.1. Performance reviewsPerformance reviewsPerformance reviewsPerformance reviews
2.2.2.2. Information processingInformation processingInformation processingInformation processing
3.3.3.3. Physical controlsPhysical controlsPhysical controlsPhysical controls
4.4.4.4. Segregation of dutiesSegregation of dutiesSegregation of dutiesSegregation of duties
5.5.5.5. Authorisation controlsAuthorisation controlsAuthorisation controlsAuthorisation controls
4444 InformationInformationInformationInformation
System andSystem andSystem andSystem and
CommunicationCommunicationCommunicationCommunication
1.1.1.1. Information system that:Information system that:Information system that:Information system that:
1.1.1.1. Identify and record all valid transactionsIdentify and record all valid transactionsIdentify and record all valid transactionsIdentify and record all valid transactions
2.2.2.2. Describe on timely basis transactions in sufficientDescribe on timely basis transactions in sufficientDescribe on timely basis transactions in sufficientDescribe on timely basis transactions in sufficient
detail to permit proper classification of transactionsdetail to permit proper classification of transactionsdetail to permit proper classification of transactionsdetail to permit proper classification of transactions
for financial reportingfor financial reportingfor financial reportingfor financial reporting
3.3.3.3. Measure value of transactions in a manner thatMeasure value of transactions in a manner thatMeasure value of transactions in a manner thatMeasure value of transactions in a manner that
permits recording their proper monetary value inpermits recording their proper monetary value inpermits recording their proper monetary value inpermits recording their proper monetary value in
financial Statementsfinancial Statementsfinancial Statementsfinancial Statements
4.4.4.4. Determine time period in which transactionsDetermine time period in which transactionsDetermine time period in which transactionsDetermine time period in which transactions
occurred to permit recording of transactions inoccurred to permit recording of transactions inoccurred to permit recording of transactions inoccurred to permit recording of transactions in
proper accounting Periodproper accounting Periodproper accounting Periodproper accounting Period
5.5.5.5. Present properly transactions and related disclosuresPresent properly transactions and related disclosuresPresent properly transactions and related disclosuresPresent properly transactions and related disclosures
in financial statementsin financial statementsin financial statementsin financial statements

Lunawat & Co.
4444 InformationInformationInformationInformation
System andSystem andSystem andSystem and
CommunicationCommunicationCommunicationCommunication
2.2.2.2. Communicating individual roles andCommunicating individual roles andCommunicating individual roles andCommunicating individual roles and
responsibilitiesresponsibilitiesresponsibilitiesresponsibilities
5555 Monitoring ofMonitoring ofMonitoring ofMonitoring of
ControlsControlsControlsControls
1.1.1.1. Evaluating presence and functioning ofEvaluating presence and functioning ofEvaluating presence and functioning ofEvaluating presence and functioning of
components of internal control.components of internal control.components of internal control.components of internal control.
2.2.2.2. Evaluating and communicating internalEvaluating and communicating internalEvaluating and communicating internalEvaluating and communicating internal
control deficienciescontrol deficienciescontrol deficienciescontrol deficiencies.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING
Take Engagement LetterTake Engagement LetterTake Engagement LetterTake Engagement Letter
Perform proceduresPerform proceduresPerform proceduresPerform procedures
Take Representation LetterTake Representation LetterTake Representation LetterTake Representation Letter
Issue Separate ReportIssue Separate ReportIssue Separate ReportIssue Separate Report
UnmodifiedUnmodifiedUnmodifiedUnmodified
ModifiedModifiedModifiedModified
QualifiedQualifiedQualifiedQualified
AdverseAdverseAdverseAdverse
DisclaimerDisclaimerDisclaimerDisclaimer
Lunawat & Co.

QQQQualifiedualifiedualifiedualified or anor anor anor an adverse opinion ifadverse opinion ifadverse opinion ifadverse opinion if materialmaterialmaterialmaterial
weaknessesweaknessesweaknessesweaknesses identified asidentified asidentified asidentified as part of audit.part of audit.part of audit.part of audit.
MaterialMaterialMaterialMaterial weaknesses is a deficiency or aweaknesses is a deficiency or aweaknesses is a deficiency or aweaknesses is a deficiency or a
combination ofcombination ofcombination ofcombination of deficienciesdeficienciesdeficienciesdeficiencies inininin ICFR,ICFR,ICFR,ICFR, suchsuchsuchsuch
that material misstatement of co.’s annualthat material misstatement of co.’s annualthat material misstatement of co.’s annualthat material misstatement of co.’s annual
FSFSFSFS not prevented/detected on timelynot prevented/detected on timelynot prevented/detected on timelynot prevented/detected on timely basisbasisbasisbasis
AdverseAdverseAdverseAdverse opinionopinionopinionopinion ---- if matters are pervasiveif matters are pervasiveif matters are pervasiveif matters are pervasive
totototo FSFSFSFS i.e. they impact various elements,i.e. they impact various elements,i.e. they impact various elements,i.e. they impact various elements,
accounts or a substantial portion of FS.accounts or a substantial portion of FS.accounts or a substantial portion of FS.accounts or a substantial portion of FS.
Additionally, significant controlAdditionally, significant controlAdditionally, significant controlAdditionally, significant control
deficiencies reported to audit committeedeficiencies reported to audit committeedeficiencies reported to audit committeedeficiencies reported to audit committee
Lunawat & Co.

Auditor to disclaim opinionAuditor to disclaim opinionAuditor to disclaim opinionAuditor to disclaim opinion onononon co.’s ICFR:co.’s ICFR:co.’s ICFR:co.’s ICFR:
ifififif company has not established its system of IFC overcompany has not established its system of IFC overcompany has not established its system of IFC overcompany has not established its system of IFC over
financial reporting considering essentialfinancial reporting considering essentialfinancial reporting considering essentialfinancial reporting considering essential
components of internal control ;components of internal control ;components of internal control ;components of internal control ; orororor
auditor is unable to obtain sufficient appropriateauditor is unable to obtain sufficient appropriateauditor is unable to obtain sufficient appropriateauditor is unable to obtain sufficient appropriate
audit evidence to express an opinionaudit evidence to express an opinionaudit evidence to express an opinionaudit evidence to express an opinion on ICFR buton ICFR buton ICFR buton ICFR but isisisis
able to perform appropriate substantive proceduresable to perform appropriate substantive proceduresable to perform appropriate substantive proceduresable to perform appropriate substantive procedures
to express an opinion onto express an opinion onto express an opinion onto express an opinion on FS;FS;FS;FS; orororor
system ofsystem ofsystem ofsystem of ICFR wereICFR wereICFR wereICFR were not made available tonot made available tonot made available tonot made available to auditorauditorauditorauditor totototo
enableenableenableenable themthemthemthem to determine ifto determine ifto determine ifto determine if Co. hasCo. hasCo. hasCo. has establishedestablishedestablishedestablished
adequateadequateadequateadequate ICFRICFRICFRICFR and whether such internal financialand whether such internal financialand whether such internal financialand whether such internal financial
controls were operating effectivelycontrols were operating effectivelycontrols were operating effectivelycontrols were operating effectively
Lunawat & Co.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING ---- QUALIFIEDQUALIFIEDQUALIFIEDQUALIFIED
Lunawat & Co.
Due toDue toDue toDue to adequacyadequacyadequacyadequacy
(and therefore(and therefore(and therefore(and therefore
operatingoperatingoperatingoperating
effectiveness)effectiveness)effectiveness)effectiveness)
• The CompanyThe CompanyThe CompanyThe Company did not have an appropriatedid not have an appropriatedid not have an appropriatedid not have an appropriate
internal control systeminternal control systeminternal control systeminternal control system for customer acceptance,for customer acceptance,for customer acceptance,for customer acceptance,
credit evaluation and establishing customercredit evaluation and establishing customercredit evaluation and establishing customercredit evaluation and establishing customer
credit limits for sales, which could potentiallycredit limits for sales, which could potentiallycredit limits for sales, which could potentiallycredit limits for sales, which could potentially
result in the Company recognising revenueresult in the Company recognising revenueresult in the Company recognising revenueresult in the Company recognising revenue
without establishing reasonable certainty ofwithout establishing reasonable certainty ofwithout establishing reasonable certainty ofwithout establishing reasonable certainty of
ultimate collectionultimate collectionultimate collectionultimate collection
• ..except for the effects/possible effects of the..except for the effects/possible effects of the..except for the effects/possible effects of the..except for the effects/possible effects of the
material weakness/material weakness/material weakness/material weakness/eseseses described above on thedescribed above on thedescribed above on thedescribed above on the
achievement of the objectives of the controlachievement of the objectives of the controlachievement of the objectives of the controlachievement of the objectives of the control
criteria,criteria,criteria,criteria, the Company has maintained, in allthe Company has maintained, in allthe Company has maintained, in allthe Company has maintained, in all
material respects, adequate internal financialmaterial respects, adequate internal financialmaterial respects, adequate internal financialmaterial respects, adequate internal financial
controls over financial reporting as on..controls over financial reporting as on..controls over financial reporting as on..controls over financial reporting as on..
• …these material weakness/…these material weakness/…these material weakness/…these material weakness/eseseses do not affect ourdo not affect ourdo not affect ourdo not affect our
opinion on the standalone financial statementsopinion on the standalone financial statementsopinion on the standalone financial statementsopinion on the standalone financial statements
of the Companyof the Companyof the Companyof the Company

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING ---- ADVERSEADVERSEADVERSEADVERSE
Lunawat & Co.
Due toDue toDue toDue to adequacyadequacyadequacyadequacy
(and therefore(and therefore(and therefore(and therefore
effectiveness)effectiveness)effectiveness)effectiveness)
internal control systeminternal control systeminternal control systeminternal control system for customer acceptance,for customer acceptance,for customer acceptance,for customer acceptance,
credit evaluation and …...credit evaluation and …...credit evaluation and …...credit evaluation and …...
internal control system for inventoryinternal control system for inventoryinternal control system for inventoryinternal control system for inventory with regardwith regardwith regardwith regard
to receipts, issue for production and physicalto receipts, issue for production and physicalto receipts, issue for production and physicalto receipts, issue for production and physical
verification. Further, the internal control systemverification. Further, the internal control systemverification. Further, the internal control systemverification. Further, the internal control system
for identification and allocation of overheads tofor identification and allocation of overheads tofor identification and allocation of overheads tofor identification and allocation of overheads to
inventory was also not adequate. These couldinventory was also not adequate. These couldinventory was also not adequate. These couldinventory was also not adequate. These could
potentially result in material misstatements inpotentially result in material misstatements inpotentially result in material misstatements inpotentially result in material misstatements in
the Company’s trade payables, consumption,the Company’s trade payables, consumption,the Company’s trade payables, consumption,the Company’s trade payables, consumption,
inventory and expense account balances.inventory and expense account balances.inventory and expense account balances.inventory and expense account balances.
• …the Company…the Company…the Company…the Company has not maintained adequatehas not maintained adequatehas not maintained adequatehas not maintained adequate
internal financial controlsinternal financial controlsinternal financial controlsinternal financial controls over financial reportingover financial reportingover financial reportingover financial reporting
opinion on the financial statements of theopinion on the financial statements of theopinion on the financial statements of theopinion on the financial statements of the
CompanyCompanyCompanyCompany

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING ---- QUALIFIEDQUALIFIEDQUALIFIEDQUALIFIED
Lunawat & Co.
QualifiedQualifiedQualifiedQualified ---- Due toDue toDue toDue to
effectivenesseffectivenesseffectivenesseffectiveness
UnmodifiedUnmodifiedUnmodifiedUnmodified –––– OnOnOnOn
AdequacyAdequacyAdequacyAdequacy
• The Company’sThe Company’sThe Company’sThe Company’s internal financial controls overinternal financial controls overinternal financial controls overinternal financial controls over
customer acceptancecustomer acceptancecustomer acceptancecustomer acceptance, credit evaluation and, credit evaluation and, credit evaluation and, credit evaluation and
establishing customer credit limits for sales,establishing customer credit limits for sales,establishing customer credit limits for sales,establishing customer credit limits for sales,
were not operating effectivelywere not operating effectivelywere not operating effectivelywere not operating effectively which couldwhich couldwhich couldwhich could
potentially result in the Company recognisingpotentially result in the Company recognisingpotentially result in the Company recognisingpotentially result in the Company recognising
revenue without establishing reasonablerevenue without establishing reasonablerevenue without establishing reasonablerevenue without establishing reasonable
certainty of ultimate collectioncertainty of ultimate collectioncertainty of ultimate collectioncertainty of ultimate collection
• ..except for the effects/possible effects of the..except for the effects/possible effects of the..except for the effects/possible effects of the..except for the effects/possible effects of the
material weakness/material weakness/material weakness/material weakness/eseseses described above on thedescribed above on thedescribed above on thedescribed above on the
criteria,criteria,criteria,criteria, the Company’s internal financial controlsthe Company’s internal financial controlsthe Company’s internal financial controlsthe Company’s internal financial controls
over financial reporting were operatingover financial reporting were operatingover financial reporting were operatingover financial reporting were operating
effectively as on..effectively as on..effectively as on..effectively as on..
of the Companyof the Companyof the Companyof the Company

Lunawat & Co.
Due toDue toDue toDue to operatingoperatingoperatingoperating
effectivenesseffectivenesseffectivenesseffectiveness
UnmodifiedUnmodifiedUnmodifiedUnmodified –––– OnOnOnOn
AdequacyAdequacyAdequacyAdequacy
• The Company’sThe Company’sThe Company’sThe Company’s internal financial controls overinternal financial controls overinternal financial controls overinternal financial controls over
customer acceptancecustomer acceptancecustomer acceptancecustomer acceptance, credit evaluation and, credit evaluation and, credit evaluation and, credit evaluation and
establishing customer credit limits for sales,establishing customer credit limits for sales,establishing customer credit limits for sales,establishing customer credit limits for sales,
were not operating effectivelywere not operating effectivelywere not operating effectivelywere not operating effectively which couldwhich couldwhich couldwhich could
potentially result in the Company ….potentially result in the Company ….potentially result in the Company ….potentially result in the Company ….
• The Company’sThe Company’sThe Company’sThe Company’s internal control systeminternal control systeminternal control systeminternal control system forforforfor
inventory with regard to receipts, issue forinventory with regard to receipts, issue forinventory with regard to receipts, issue forinventory with regard to receipts, issue for
production and physical verificationproduction and physical verificationproduction and physical verificationproduction and physical verification were notwere notwere notwere not
operating effectivelyoperating effectivelyoperating effectivelyoperating effectively. Further, the internal control. Further, the internal control. Further, the internal control. Further, the internal control
system for identification and allocation ofsystem for identification and allocation ofsystem for identification and allocation ofsystem for identification and allocation of
overheads to inventoryoverheads to inventoryoverheads to inventoryoverheads to inventory was also not operatingwas also not operatingwas also not operatingwas also not operating
effectively.effectively.effectively.effectively. These could potentially result ….These could potentially result ….These could potentially result ….These could potentially result ….
• …Company’s internal financial controls over…Company’s internal financial controls over…Company’s internal financial controls over…Company’s internal financial controls over
financial reportingfinancial reportingfinancial reportingfinancial reporting were not operating effectivelywere not operating effectivelywere not operating effectivelywere not operating effectively
opinion on the financial statements of Companyopinion on the financial statements of Companyopinion on the financial statements of Companyopinion on the financial statements of Company

Lunawat & Co.
Due toDue toDue toDue to ---- EssentialEssentialEssentialEssential
components ofcomponents ofcomponents ofcomponents of
internal controlsinternal controlsinternal controlsinternal controls
not adequatelynot adequatelynot adequatelynot adequately
consideredconsideredconsideredconsidered
in the internalin the internalin the internalin the internal
financial controlsfinancial controlsfinancial controlsfinancial controls
established by theestablished by theestablished by theestablished by the
companycompanycompanycompany
internal financial control system over financialinternal financial control system over financialinternal financial control system over financialinternal financial control system over financial
reportingreportingreportingreporting since the internal controls adopted bysince the internal controls adopted bysince the internal controls adopted bysince the internal controls adopted by
the Company didthe Company didthe Company didthe Company did not adequately consider risknot adequately consider risknot adequately consider risknot adequately consider risk
assessment,assessment,assessment,assessment, which is one of the essentialwhich is one of the essentialwhich is one of the essentialwhich is one of the essential
components of internal control, with regard tocomponents of internal control, with regard tocomponents of internal control, with regard tocomponents of internal control, with regard to
the potential for fraud when performing riskthe potential for fraud when performing riskthe potential for fraud when performing riskthe potential for fraud when performing risk
assessmentassessmentassessmentassessment
• …the Company…the Company…the Company…the Company has not maintained adequatehas not maintained adequatehas not maintained adequatehas not maintained adequate
and effective internal financial controls overand effective internal financial controls overand effective internal financial controls overand effective internal financial controls over
financial reportingfinancial reportingfinancial reportingfinancial reporting as on..as on..as on..as on..
• …these material weaknesses…these material weaknesses…these material weaknesses…these material weaknesses do not affect ourdo not affect ourdo not affect ourdo not affect our
opinion on the financial statements of theopinion on the financial statements of theopinion on the financial statements of theopinion on the financial statements of the
CompanyCompanyCompanyCompany

Lunawat & Co.
Resulting inResulting inResulting inResulting in
modified opinionmodified opinionmodified opinionmodified opinion
of standaloneof standaloneof standaloneof standalone
financialfinancialfinancialfinancial
• The CompanyThe CompanyThe CompanyThe Company did not have appropriate internaldid not have appropriate internaldid not have appropriate internaldid not have appropriate internal
controls for reconciliation of physically inventorycontrols for reconciliation of physically inventorycontrols for reconciliation of physically inventorycontrols for reconciliation of physically inventory
with the inventory records, which has resulted inwith the inventory records, which has resulted inwith the inventory records, which has resulted inwith the inventory records, which has resulted in
misstatement of inventory values in the books ofmisstatement of inventory values in the books ofmisstatement of inventory values in the books ofmisstatement of inventory values in the books of
account.…account.…account.…account.…
• because of the effect of the materialbecause of the effect of the materialbecause of the effect of the materialbecause of the effect of the material
weaknesses described above on theweaknesses described above on theweaknesses described above on theweaknesses described above on the
criteria, the Companycriteria, the Companycriteria, the Companycriteria, the Company has not maintainedhas not maintainedhas not maintainedhas not maintained
adequate and effective internal financial controlsadequate and effective internal financial controlsadequate and effective internal financial controlsadequate and effective internal financial controls
over financial reporting as of..over financial reporting as of..over financial reporting as of..over financial reporting as of..
• …these material weakness/…these material weakness/…these material weakness/…these material weakness/eseseses has affected ourhas affected ourhas affected ourhas affected our
of the Company and we have issued a qualifiedof the Company and we have issued a qualifiedof the Company and we have issued a qualifiedof the Company and we have issued a qualified
(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion on theon theon theon the
standalone financial statements.standalone financial statements.standalone financial statements.standalone financial statements.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING ---- DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMER
Lunawat & Co.
Due toDue toDue toDue to ----
Framework forFramework forFramework forFramework for
internal financialinternal financialinternal financialinternal financial
control overcontrol overcontrol overcontrol over
financial reportingfinancial reportingfinancial reportingfinancial reporting
notnotnotnot
established butestablished butestablished butestablished but
does not impactdoes not impactdoes not impactdoes not impact
the audit opinionthe audit opinionthe audit opinionthe audit opinion
on financialon financialon financialon financial
• the Companythe Companythe Companythe Company has not established its internalhas not established its internalhas not established its internalhas not established its internal
financial control over financial reporting onfinancial control over financial reporting onfinancial control over financial reporting onfinancial control over financial reporting on
criteria based on or considering the essentialcriteria based on or considering the essentialcriteria based on or considering the essentialcriteria based on or considering the essential
componentscomponentscomponentscomponents of internal control stated in theof internal control stated in theof internal control stated in theof internal control stated in the
Guidance Note on Audit ofGuidance Note on Audit ofGuidance Note on Audit ofGuidance Note on Audit of IFCoFRIFCoFRIFCoFRIFCoFR issued by theissued by theissued by theissued by the
ICAI. Because of this reason,ICAI. Because of this reason,ICAI. Because of this reason,ICAI. Because of this reason, we are unable towe are unable towe are unable towe are unable to
obtain sufficient appropriate audit evidence toobtain sufficient appropriate audit evidence toobtain sufficient appropriate audit evidence toobtain sufficient appropriate audit evidence to
provide a basis for our opinionprovide a basis for our opinionprovide a basis for our opinionprovide a basis for our opinion whether thewhether thewhether thewhether the
Company had adequate internal financialCompany had adequate internal financialCompany had adequate internal financialCompany had adequate internal financial
controls over financial reporting and whethercontrols over financial reporting and whethercontrols over financial reporting and whethercontrols over financial reporting and whether
such internal financial controls were operatingsuch internal financial controls were operatingsuch internal financial controls were operatingsuch internal financial controls were operating
effectively as at…effectively as at…effectively as at…effectively as at…
• …the…the…the…the disclaimer does notdisclaimer does notdisclaimer does notdisclaimer does not affectaffectaffectaffect our opinion onour opinion onour opinion onour opinion on
the financial statements of the Companythe financial statements of the Companythe financial statements of the Companythe financial statements of the Company

Lunawat & Co.
Due toDue toDue toDue to ----AuditorAuditorAuditorAuditor
unable to obtainunable to obtainunable to obtainunable to obtain
sufficientsufficientsufficientsufficient
appropriate auditappropriate auditappropriate auditappropriate audit
evidence onevidence onevidence onevidence on
controls overcontrols overcontrols overcontrols over
but does notbut does notbut does notbut does not
impact auditimpact auditimpact auditimpact audit
opinion on theopinion on theopinion on theopinion on the
• The system of internal financial controls overThe system of internal financial controls overThe system of internal financial controls overThe system of internal financial controls over
financial reporting with regard tofinancial reporting with regard tofinancial reporting with regard tofinancial reporting with regard to one of theone of theone of theone of the
significant branches of the Company at _____significant branches of the Company at _____significant branches of the Company at _____significant branches of the Company at _____
were not made available to uswere not made available to uswere not made available to uswere not made available to us to enable us toto enable us toto enable us toto enable us to
determine if the Company has establisheddetermine if the Company has establisheddetermine if the Company has establisheddetermine if the Company has established
adequate internal financial control over financialadequate internal financial control over financialadequate internal financial control over financialadequate internal financial control over financial
reporting at the aforesaid branch and whetherreporting at the aforesaid branch and whetherreporting at the aforesaid branch and whetherreporting at the aforesaid branch and whether
such internal financial controls were operatingsuch internal financial controls were operatingsuch internal financial controls were operatingsuch internal financial controls were operating
effectively as at…effectively as at…effectively as at…effectively as at…
• …the…the…the…the disclaimer does notdisclaimer does notdisclaimer does notdisclaimer does not affectaffectaffectaffect our opinion onour opinion onour opinion onour opinion on
the financial statements of the Companythe financial statements of the Companythe financial statements of the Companythe financial statements of the Company

Lunawat & Co.
Due toDue toDue toDue to ----AuditorAuditorAuditorAuditor
unable to obtainunable to obtainunable to obtainunable to obtain
sufficientsufficientsufficientsufficient
appropriate auditappropriate auditappropriate auditappropriate audit
evidence onevidence onevidence onevidence on
controls overcontrols overcontrols overcontrols over
and impactingand impactingand impactingand impacting
auditauditauditaudit
opinion on theopinion on theopinion on theopinion on the
• The system of internal financial controls overThe system of internal financial controls overThe system of internal financial controls overThe system of internal financial controls over
financial reporting with regard tofinancial reporting with regard tofinancial reporting with regard tofinancial reporting with regard to the Companythe Companythe Companythe Company
were not made available to uswere not made available to uswere not made available to uswere not made available to us to enable us toto enable us toto enable us toto enable us to
determine if the Company has establisheddetermine if the Company has establisheddetermine if the Company has establisheddetermine if the Company has established
adequate internal financial control over financialadequate internal financial control over financialadequate internal financial control over financialadequate internal financial control over financial
reporting and whether such internal financialreporting and whether such internal financialreporting and whether such internal financialreporting and whether such internal financial
controls were operating effectively as at…controls were operating effectively as at…controls were operating effectively as at…controls were operating effectively as at…
• … the disclaimer has affected our opinion on the… the disclaimer has affected our opinion on the… the disclaimer has affected our opinion on the… the disclaimer has affected our opinion on the
financial statements of the standalone Companyfinancial statements of the standalone Companyfinancial statements of the standalone Companyfinancial statements of the standalone Company
andandandand we have issued a qualified (/ adverse /we have issued a qualified (/ adverse /we have issued a qualified (/ adverse /we have issued a qualified (/ adverse /
disclaimer of) opinion ondisclaimer of) opinion ondisclaimer of) opinion ondisclaimer of) opinion on the financialthe financialthe financialthe financial
statements.statements.statements.statements.

CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod Jain
pramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.com
+91 9811073867+91 9811073867+91 9811073867+91 9811073867
© 2016 CA. Pramod Jain, Lunawat & Co© 2016 CA. Pramod Jain, Lunawat & Co© 2016 CA. Pramod Jain, Lunawat & Co© 2016 CA. Pramod Jain, Lunawat & Co

Caro 2016 and Internal Financial Controls

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