CA Pramod Jain's Guide to Financial Statements and Internal Controls

CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
LUNAWAT & CO.
Chartered AccountantsChartered AccountantsChartered AccountantsChartered Accountants
LUNAWAT & CO.
Chartered AccountantsChartered AccountantsChartered AccountantsChartered Accountants
24242424thththth July 2016, FaridabadJuly 2016, FaridabadJuly 2016, FaridabadJuly 2016, Faridabad24242424thththth July 2016, FaridabadJuly 2016, FaridabadJuly 2016, FaridabadJuly 2016, Faridabad
CRITICAL ISSUES
IN PREPARATION OF
FINANCIAL STATEMENTS
and
INTERNAL FINANCIAL
CONTROLS
CRITICAL ISSUES
IN PREPARATION OF
FINANCIAL STATEMENTS
and
INTERNAL FINANCIAL
CONTROLS

Lunawat & Co.
AnnualAnnualAnnualAnnual
ReportReportReportReport
Director’sDirector’sDirector’sDirector’s
Auditor’sAuditor’sAuditor’sAuditor’s
FinancialFinancialFinancialFinancial
statementstatementstatementstatement
ssss
BalanceBalanceBalanceBalance
SheetSheetSheetSheet
Profit /Profit /Profit /Profit /
LossLossLossLoss
Cash FlowCash FlowCash FlowCash Flow NotesNotesNotesNotes

FINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTSFINANCIAL STATEMENTS
Financial YearFinancial YearFinancial YearFinancial Year –––– 31313131stststst MarchMarchMarchMarch
Cash Flow for all except OPC, SC, DC.Cash Flow for all except OPC, SC, DC.Cash Flow for all except OPC, SC, DC.Cash Flow for all except OPC, SC, DC.
ShallShallShallShall be in Schedule IIIbe in Schedule IIIbe in Schedule IIIbe in Schedule III
AmendedAmendedAmendedAmended w.e.fw.e.fw.e.fw.e.f. 4.9.15 to include. 4.9.15 to include. 4.9.15 to include. 4.9.15 to include
MSMED details under TradeMSMED details under TradeMSMED details under TradeMSMED details under Trade PayablePayablePayablePayable
Lunawat & Co.

BASICSBASICSBASICSBASICS –––– CURRENT VS. NONCURRENT VS. NONCURRENT VS. NONCURRENT VS. NON----CURRENTCURRENTCURRENTCURRENT
Current AssetCurrent AssetCurrent AssetCurrent Asset ---- satisfies any of following criteria;satisfies any of following criteria;satisfies any of following criteria;satisfies any of following criteria;
In the company’s normal operating cycle it is;In the company’s normal operating cycle it is;In the company’s normal operating cycle it is;In the company’s normal operating cycle it is;
Intended for sale; orIntended for sale; orIntended for sale; orIntended for sale; or
Intended to be consumed; orIntended to be consumed; orIntended to be consumed; orIntended to be consumed; or
Expected to be realized.Expected to be realized.Expected to be realized.Expected to be realized.
Held primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; or
Expected to be realized within 12 months afterExpected to be realized within 12 months afterExpected to be realized within 12 months afterExpected to be realized within 12 months after
reporting date; orreporting date; orreporting date; orreporting date; or
Cash or cash equivalent unless it is restricted fromCash or cash equivalent unless it is restricted fromCash or cash equivalent unless it is restricted fromCash or cash equivalent unless it is restricted from
being exchanged or used to settle a liability for atbeing exchanged or used to settle a liability for atbeing exchanged or used to settle a liability for atbeing exchanged or used to settle a liability for at
least 12 months after reporting date.least 12 months after reporting date.least 12 months after reporting date.least 12 months after reporting date.
Lunawat & Co.

BASICSBASICSBASICSBASICS ---- CURRENT LIABILITYCURRENT LIABILITYCURRENT LIABILITYCURRENT LIABILITY
Current liability if it satisfies any of the followingCurrent liability if it satisfies any of the followingCurrent liability if it satisfies any of the followingCurrent liability if it satisfies any of the following
criteria; if it is :criteria; if it is :criteria; if it is :criteria; if it is :
Expected to be settled in the company’s normalExpected to be settled in the company’s normalExpected to be settled in the company’s normalExpected to be settled in the company’s normal
operating cycle; oroperating cycle; oroperating cycle; oroperating cycle; or
Held primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; orHeld primarily for the purpose of being traded; or
Due to be settled within 12 months after reportingDue to be settled within 12 months after reportingDue to be settled within 12 months after reportingDue to be settled within 12 months after reporting
date; ordate; ordate; ordate; or
The company does not have an unconditional rightThe company does not have an unconditional rightThe company does not have an unconditional rightThe company does not have an unconditional right
to defer settlement of liability for at least 12to defer settlement of liability for at least 12to defer settlement of liability for at least 12to defer settlement of liability for at least 12
months after reporting date. Terms of a liabilitymonths after reporting date. Terms of a liabilitymonths after reporting date. Terms of a liabilitymonths after reporting date. Terms of a liability
that could, at option of counterparty, result in itsthat could, at option of counterparty, result in itsthat could, at option of counterparty, result in itsthat could, at option of counterparty, result in its
settlement by issue of equity do not affect itssettlement by issue of equity do not affect itssettlement by issue of equity do not affect itssettlement by issue of equity do not affect its
classification.classification.classification.classification.
Lunawat & Co.

GENERALGENERALGENERALGENERAL
Balance Sheet TitleBalance Sheet TitleBalance Sheet TitleBalance Sheet Title –––– ‘as at’ or ‘as on’ 31st‘as at’ or ‘as on’ 31st‘as at’ or ‘as on’ 31st‘as at’ or ‘as on’ 31st
MarchMarchMarchMarch
Rounding off based on turnover.Rounding off based on turnover.Rounding off based on turnover.Rounding off based on turnover.
<<<< RsRsRsRs. 100 Crores. 100 Crores. 100 Crores. 100 Crores ---- To the nearest hundreds,To the nearest hundreds,To the nearest hundreds,To the nearest hundreds,
thousands, lakhs or millions or decimalthousands, lakhs or millions or decimalthousands, lakhs or millions or decimalthousands, lakhs or millions or decimal
thereofthereofthereofthereof
RsRsRsRs. 100 Crores or more. 100 Crores or more. 100 Crores or more. 100 Crores or more ---- To the nearestTo the nearestTo the nearestTo the nearest
lakhs or millions or crores or decimal thereoflakhs or millions or crores or decimal thereoflakhs or millions or crores or decimal thereoflakhs or millions or crores or decimal thereof
ComparativeComparativeComparativeComparative figuresfiguresfiguresfigures requiredrequiredrequiredrequired to be disclosedto be disclosedto be disclosedto be disclosed
for the last reportingfor the last reportingfor the last reportingfor the last reporting periodperiodperiodperiod
Lunawat & Co.

GENERALGENERALGENERALGENERAL
Linking of notes with B/S & PLLinking of notes with B/S & PLLinking of notes with B/S & PLLinking of notes with B/S & PL
Name , DIN, designation & address ofName , DIN, designation & address ofName , DIN, designation & address ofName , DIN, designation & address of
signatories to any documentsignatories to any documentsignatories to any documentsignatories to any document
uploaded / filed with ROCuploaded / filed with ROCuploaded / filed with ROCuploaded / filed with ROC
B/s & PL on letterhead of Auditors!!B/s & PL on letterhead of Auditors!!B/s & PL on letterhead of Auditors!!B/s & PL on letterhead of Auditors!!
Date of signingDate of signingDate of signingDate of signing
Payment to shareholders for 2(22)(e)Payment to shareholders for 2(22)(e)Payment to shareholders for 2(22)(e)Payment to shareholders for 2(22)(e)
Lunawat & Co.

FORM OF BALANCE SHEET (PART 1)FORM OF BALANCE SHEET (PART 1)FORM OF BALANCE SHEET (PART 1)FORM OF BALANCE SHEET (PART 1)
Particulars Note
No.
Figures as at the
end of the CRP
Figures as at the
end of the PRP
I. EQUITY AND LIABILITIES
(1) Shareholders’ Funds
(a) Share capital
(b) Reserve and Surplus
(c) Money received against share
warrants
1
2
(2) Share application money pending
allotment
3
(3) Non-current Liabilities
(a) Long term borrowings
(b) Deferred tax liabilities (net)
(c) Other long term liabilities
(d) Long term provisions
4
5
6
7
(4) Current Liabilities
(a) Short term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short term provisions
8
9
10
TOTAL

SHARE CAPITAL & RESERVESSHARE CAPITAL & RESERVESSHARE CAPITAL & RESERVESSHARE CAPITAL & RESERVES
AuthorizedAuthorizedAuthorizedAuthorized / Paid up Capital/ Paid up Capital/ Paid up Capital/ Paid up Capital –––– Check withCheck withCheck withCheck with
Master DataMaster DataMaster DataMaster Data
Reconciliation of no of shares outstanding atReconciliation of no of shares outstanding atReconciliation of no of shares outstanding atReconciliation of no of shares outstanding at
beginning and at end of reporting period.beginning and at end of reporting period.beginning and at end of reporting period.beginning and at end of reporting period.
RRRRightsightsightsights, preference & restrictions attaching to, preference & restrictions attaching to, preference & restrictions attaching to, preference & restrictions attaching to
each class of shareseach class of shareseach class of shareseach class of shares etc.etc.etc.etc.
IsIsIsIs conversion of loans into shares in event ofconversion of loans into shares in event ofconversion of loans into shares in event ofconversion of loans into shares in event of
default in repaymentdefault in repaymentdefault in repaymentdefault in repayment –––– NonNonNonNon----cash?cash?cash?cash?
Share Premium A/c??Share Premium A/c??Share Premium A/c??Share Premium A/c??
Lunawat & Co.

SHARE APPLICATION MONEYSHARE APPLICATION MONEYSHARE APPLICATION MONEYSHARE APPLICATION MONEY ---- DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE
Terms & conditions & No. of shares proposed toTerms & conditions & No. of shares proposed toTerms & conditions & No. of shares proposed toTerms & conditions & No. of shares proposed to
be issued.be issued.be issued.be issued.
Amount of premium, if any.Amount of premium, if any.Amount of premium, if any.Amount of premium, if any.
Period before which the allotment shall be made.Period before which the allotment shall be made.Period before which the allotment shall be made.Period before which the allotment shall be made.
Whether company has sufficient authorizedWhether company has sufficient authorizedWhether company has sufficient authorizedWhether company has sufficient authorized
share capital to allot shares.share capital to allot shares.share capital to allot shares.share capital to allot shares.
Period for which the share application money hasPeriod for which the share application money hasPeriod for which the share application money hasPeriod for which the share application money has
been pending beyond the period for allotment asbeen pending beyond the period for allotment asbeen pending beyond the period for allotment asbeen pending beyond the period for allotment as
mentioned in the share application document.mentioned in the share application document.mentioned in the share application document.mentioned in the share application document.
Reason for which such share application moneyReason for which such share application moneyReason for which such share application moneyReason for which such share application money
is pending for allotment, if so pending.is pending for allotment, if so pending.is pending for allotment, if so pending.is pending for allotment, if so pending.
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES
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.

BORROWINGSBORROWINGSBORROWINGSBORROWINGS
Long Term vs. ShortLong Term vs. ShortLong Term vs. ShortLong Term vs. Short TermTermTermTerm
Directors??Directors??Directors??Directors??
CC Limits?? Demand Loans??CC Limits?? Demand Loans??CC Limits?? Demand Loans??CC Limits?? Demand Loans??
Secured /unsecuredSecured /unsecuredSecured /unsecuredSecured /unsecured –––– nature of security to benature of security to benature of security to benature of security to be
statedstatedstatedstated &&&& guaranteed by directors to be shownguaranteed by directors to be shownguaranteed by directors to be shownguaranteed by directors to be shown
separately.separately.separately.separately.
Term of repayment of term loans to be givenTerm of repayment of term loans to be givenTerm of repayment of term loans to be givenTerm of repayment of term loans to be given
Period of maturity with respect to B/S datePeriod of maturity with respect to B/S datePeriod of maturity with respect to B/S datePeriod of maturity with respect to B/S date
Number of installmentsNumber of installmentsNumber of installmentsNumber of installments due;due;due;due; AmtAmtAmtAmt of installments dueof installments dueof installments dueof installments due
Applicable rate of interestApplicable rate of interestApplicable rate of interestApplicable rate of interest
PeriodPeriodPeriodPeriod & amount of default in payment of& amount of default in payment of& amount of default in payment of& amount of default in payment of
principalprincipalprincipalprincipal &&&& interest as oninterest as oninterest as oninterest as on B/SB/SB/SB/S datedatedatedate
Lunawat & Co.

OTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIES
The amount shall be classified as:The amount shall be classified as:The amount shall be classified as:The amount shall be classified as:
Current maturities of long term debtsCurrent maturities of long term debtsCurrent maturities of long term debtsCurrent maturities of long term debts
Current maturities of finance lease obligationsCurrent maturities of finance lease obligationsCurrent maturities of finance lease obligationsCurrent maturities of finance lease obligations
Interest accrued but not due on borrowingsInterest accrued but not due on borrowingsInterest accrued but not due on borrowingsInterest accrued but not due on borrowings
Interest accrued and due on borrowingsInterest accrued and due on borrowingsInterest accrued and due on borrowingsInterest accrued and due on borrowings
Income received in advanceIncome received in advanceIncome received in advanceIncome received in advance
Unpaid dividendsUnpaid dividendsUnpaid dividendsUnpaid dividends
Share Application money due for refund and interestShare Application money due for refund and interestShare Application money due for refund and interestShare Application money due for refund and interest
accrued thereon (including advances for allotment ofaccrued thereon (including advances for allotment ofaccrued thereon (including advances for allotment ofaccrued thereon (including advances for allotment of
share Capital)share Capital)share Capital)share Capital)
Unpaid matured deposit and interest thereonUnpaid matured deposit and interest thereonUnpaid matured deposit and interest thereonUnpaid matured deposit and interest thereon
Unpaid matured debentures and interest thereonUnpaid matured debentures and interest thereonUnpaid matured debentures and interest thereonUnpaid matured debentures and interest thereon
Other payablesOther payablesOther payablesOther payables
Lunawat & Co.

OTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIESOTHER CURRENT LIABILITIES
Others payable may include:Others payable may include:Others payable may include:Others payable may include:
Statutory obligations like, ESI, PF, VAT, CST, etc.Statutory obligations like, ESI, PF, VAT, CST, etc.Statutory obligations like, ESI, PF, VAT, CST, etc.Statutory obligations like, ESI, PF, VAT, CST, etc.
Liability for purchase of fixed assetsLiability for purchase of fixed assetsLiability for purchase of fixed assetsLiability for purchase of fixed assets
Contractually reimbursable expensesContractually reimbursable expensesContractually reimbursable expensesContractually reimbursable expenses
Interest accrued on trade payablesInterest accrued on trade payablesInterest accrued on trade payablesInterest accrued on trade payables
Expenses Payable.Expenses Payable.Expenses Payable.Expenses Payable.
TDS PayableTDS PayableTDS PayableTDS Payable
Trade / Security DepositTrade / Security DepositTrade / Security DepositTrade / Security Deposit
MarkMarkMarkMark----totototo----market loss on forward and optionmarket loss on forward and optionmarket loss on forward and optionmarket loss on forward and option
contractscontractscontractscontracts
Retention MoniesRetention MoniesRetention MoniesRetention Monies
Accrued salaries and benefitsAccrued salaries and benefitsAccrued salaries and benefitsAccrued salaries and benefits
Lunawat & Co.

FORM OF BALANCE SHEET (PART 2)FORM OF BALANCE SHEET (PART 2)FORM OF BALANCE SHEET (PART 2)FORM OF BALANCE SHEET (PART 2)
Particulars Note
No.
Figures as at the
end of the CRP
Figures as at the
end of the PRP
II. ASSETS
(1)Non-current assets
(a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non- current investments
(c) Deferred tax assets (Net)
(d) Long term loans and advances
(e) Other non-current assets
11
12
13
14
15
(2) Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short term loans and advances
(f) Other current assets
16
17
18
19
20
TOTAL

FIXED ASSETSFIXED ASSETSFIXED ASSETSFIXED ASSETS
Fixed Asset on the face of the BalanceFixed Asset on the face of the BalanceFixed Asset on the face of the BalanceFixed Asset on the face of the Balance
Sheet has to be classified as follows:Sheet has to be classified as follows:Sheet has to be classified as follows:Sheet has to be classified as follows:
Tangible AssetsTangible AssetsTangible AssetsTangible Assets
Intangible AssetsIntangible AssetsIntangible AssetsIntangible Assets
SoftwareSoftwareSoftwareSoftware
Capital workCapital workCapital workCapital work----inininin----progressprogressprogressprogress
Intangible assets under developmentIntangible assets under developmentIntangible assets under developmentIntangible assets under development
Capital advances not to be grouped asCapital advances not to be grouped asCapital advances not to be grouped asCapital advances not to be grouped as
Capital WorkCapital WorkCapital WorkCapital Work----inininin----Progress but long termProgress but long termProgress but long termProgress but long term
loans and advancesloans and advancesloans and advancesloans and advances????
Lunawat & Co.

INVENTORIESINVENTORIESINVENTORIESINVENTORIES
Classification into:Classification into:Classification into:Classification into:
Raw MaterialsRaw MaterialsRaw MaterialsRaw Materials
WorkWorkWorkWork----inininin----progressprogressprogressprogress
Finished goodsFinished goodsFinished goodsFinished goods
StockStockStockStock----inininin----trade (trading goods)trade (trading goods)trade (trading goods)trade (trading goods)
Stores and sparesStores and sparesStores and sparesStores and spares
Loose toolsLoose toolsLoose toolsLoose tools
Others (specifying nature)Others (specifying nature)Others (specifying nature)Others (specifying nature)
Finished goods should include all goods exceptFinished goods should include all goods exceptFinished goods should include all goods exceptFinished goods should include all goods except
acquired for trading purposesacquired for trading purposesacquired for trading purposesacquired for trading purposes
GoodsGoodsGoodsGoods----inininin----transittransittransittransit ----disclose under relevant subdisclose under relevant subdisclose under relevant subdisclose under relevant sub----headheadheadhead
Mode of valuation to be statedMode of valuation to be statedMode of valuation to be statedMode of valuation to be stated
Lunawat & Co.

FORM OF STATEMENT OF PROFIT AND LOSSFORM OF STATEMENT OF PROFIT AND LOSSFORM OF STATEMENT OF PROFIT AND LOSSFORM OF STATEMENT OF PROFIT AND LOSS
Particulars Note
No.
Figures for
the CRP
Figure for
the PRP
I. Revenue from operations 21
II. Other income 22
III Total Revenue (I + II)
Iv. Expenses 23
V. Profit before exceptional and extraordinary items and tax (III - IV)
VI. Exceptional items 24
VII. Profit before extraordinary items and tax (V-VI)
VIII. Extraordinary items 25
IX. Profit before tax (VII-VIII)
X. Tax Expenses 26
XI. Profit (loss) for the period from continuing operations (IX-X)
XII Profit (Loss) from the discontinuing business 27
XIII Tax expenses of discontinuing operations 28
XIV. Profit (Loss) from discontinuing operations (after tax) (XII-XIV)
XV. Profit (Loss) for the period (XI+XIV) 29
XVI. Earnings per equity share
Lunawat & Co.

REVENUE FROM OPERATIONSREVENUE FROM OPERATIONSREVENUE FROM OPERATIONSREVENUE FROM OPERATIONS
For companies other than finance company:For companies other than finance company:For companies other than finance company:For companies other than finance company:
Sale of ProductsSale of ProductsSale of ProductsSale of Products
Sale of ServicesSale of ServicesSale of ServicesSale of Services
Other Operating RevenuesOther Operating RevenuesOther Operating RevenuesOther Operating Revenues
Less: Excise DutyLess: Excise DutyLess: Excise DutyLess: Excise Duty
For Finance company:For Finance company:For Finance company:For Finance company:
InterestInterestInterestInterest
Other Financial servicesOther Financial servicesOther Financial servicesOther Financial services
As per AS 9 presentation for excise dutyAs per AS 9 presentation for excise dutyAs per AS 9 presentation for excise dutyAs per AS 9 presentation for excise duty ---- onononon
face of PLface of PLface of PLface of PL
Lunawat & Co.

OTHER INCOMEOTHER INCOMEOTHER INCOMEOTHER INCOME
To be classified as:To be classified as:To be classified as:To be classified as:
Interest income (other than for finance company)Interest income (other than for finance company)Interest income (other than for finance company)Interest income (other than for finance company)
DividendDividendDividendDividend
Dividend from subsidiary companyDividend from subsidiary companyDividend from subsidiary companyDividend from subsidiary company
Net gain / loss on sale of investmentsNet gain / loss on sale of investmentsNet gain / loss on sale of investmentsNet gain / loss on sale of investments
Other nonOther nonOther nonOther non----operating incomeoperating incomeoperating incomeoperating income
Interest, dividend, etc. to be disclosed separatelyInterest, dividend, etc. to be disclosed separatelyInterest, dividend, etc. to be disclosed separatelyInterest, dividend, etc. to be disclosed separately
for Current as well as Non Current Investmentsfor Current as well as Non Current Investmentsfor Current as well as Non Current Investmentsfor Current as well as Non Current Investments
Lunawat & Co.

EXPENSESEXPENSESEXPENSESEXPENSES
Disclosure on face of the PL:Disclosure on face of the PL:Disclosure on face of the PL:Disclosure on face of the PL:
Cost of material consumedCost of material consumedCost of material consumedCost of material consumed
Purchase of stockPurchase of stockPurchase of stockPurchase of stock----inininin----tradetradetradetrade
Changes in inventories of finished goodsChanges in inventories of finished goodsChanges in inventories of finished goodsChanges in inventories of finished goods
WorkWorkWorkWork----inininin----progress and stock in tradeprogress and stock in tradeprogress and stock in tradeprogress and stock in trade
Employee benefit expensesEmployee benefit expensesEmployee benefit expensesEmployee benefit expenses
Finance costFinance costFinance costFinance cost
Depreciation and amortization expensesDepreciation and amortization expensesDepreciation and amortization expensesDepreciation and amortization expenses
Other expenses.Other expenses.Other expenses.Other expenses.
Lunawat & Co.

FINANCE COSTFINANCE COSTFINANCE COSTFINANCE COST
Interest expenseInterest expenseInterest expenseInterest expense
Interest on borrowings, debentures, bonds, etc.Interest on borrowings, debentures, bonds, etc.Interest on borrowings, debentures, bonds, etc.Interest on borrowings, debentures, bonds, etc.
Finance charges on finance lease are in nature of interestFinance charges on finance lease are in nature of interestFinance charges on finance lease are in nature of interestFinance charges on finance lease are in nature of interest
Other borrowing costsOther borrowing costsOther borrowing costsOther borrowing costs
Commitment chargesCommitment chargesCommitment chargesCommitment charges
Loan processing chargesLoan processing chargesLoan processing chargesLoan processing charges
Guarantee chargesGuarantee chargesGuarantee chargesGuarantee charges
Loan facilitation chargesLoan facilitation chargesLoan facilitation chargesLoan facilitation charges
Discounts/ premium on borrowingsDiscounts/ premium on borrowingsDiscounts/ premium on borrowingsDiscounts/ premium on borrowings
Other ancillaryOther ancillaryOther ancillaryOther ancillary costscostscostscosts
Applicable net loss on foreign currency transactions toApplicable net loss on foreign currency transactions toApplicable net loss on foreign currency transactions toApplicable net loss on foreign currency transactions to
the extent they are regarded as adjust to interest costthe extent they are regarded as adjust to interest costthe extent they are regarded as adjust to interest costthe extent they are regarded as adjust to interest cost
Interest on Tax???Interest on Tax???Interest on Tax???Interest on Tax???
Lunawat & Co.

OTHER EXPENSESOTHER EXPENSESOTHER EXPENSESOTHER EXPENSES
All other expenses will be grouped here. Following to beAll other expenses will be grouped here. Following to beAll other expenses will be grouped here. Following to beAll other expenses will be grouped here. Following to be
disclosed separately:disclosed separately:disclosed separately:disclosed separately:
Consumption of stores and sparesConsumption of stores and sparesConsumption of stores and sparesConsumption of stores and spares
Power and fuelPower and fuelPower and fuelPower and fuel
RentRentRentRent
Repairs to buildingsRepairs to buildingsRepairs to buildingsRepairs to buildings
Repairs to machineryRepairs to machineryRepairs to machineryRepairs to machinery
InsuranceInsuranceInsuranceInsurance
Rates and taxes, excluding taxes on incomeRates and taxes, excluding taxes on incomeRates and taxes, excluding taxes on incomeRates and taxes, excluding taxes on income
Miscellaneous expensesMiscellaneous expensesMiscellaneous expensesMiscellaneous expenses
Any expenditure which exceeds 1% of revenue fromAny expenditure which exceeds 1% of revenue fromAny expenditure which exceeds 1% of revenue fromAny expenditure which exceeds 1% of revenue from
operations or Rs.1 L whichever is higheroperations or Rs.1 L whichever is higheroperations or Rs.1 L whichever is higheroperations or Rs.1 L whichever is higher ---- separateseparateseparateseparate
Lunawat & Co.

NOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTSNOTES TO ACCOUNTS
Contingent LiabilitiesContingent LiabilitiesContingent LiabilitiesContingent Liabilities / Commitments/ Commitments/ Commitments/ Commitments (to the(to the(to the(to the
extent not provided for)extent not provided for)extent not provided for)extent not provided for)
BroadBroadBroadBroad HeadsHeadsHeadsHeads –––– RM , Income, PurchasesRM , Income, PurchasesRM , Income, PurchasesRM , Income, Purchases
Value of imports made during the year on CIFValue of imports made during the year on CIFValue of imports made during the year on CIFValue of imports made during the year on CIF
basisbasisbasisbasis::::----
Raw MaterialsRaw MaterialsRaw MaterialsRaw Materials
Components (intermediaries & components) &Components (intermediaries & components) &Components (intermediaries & components) &Components (intermediaries & components) &
Spare Parts (for capital equipment)Spare Parts (for capital equipment)Spare Parts (for capital equipment)Spare Parts (for capital equipment)
Capital GoodsCapital GoodsCapital GoodsCapital Goods
Lunawat & Co.

Exp. in foreign currency (accrual basis) on:Exp. in foreign currency (accrual basis) on:Exp. in foreign currency (accrual basis) on:Exp. in foreign currency (accrual basis) on:
RoyaltyRoyaltyRoyaltyRoyalty
KnowKnowKnowKnow----howhowhowhow
Professional & consultation feeProfessional & consultation feeProfessional & consultation feeProfessional & consultation fee
InterestInterestInterestInterest
OthersOthersOthersOthers
Dividend ifDividend ifDividend ifDividend if paid inpaid inpaid inpaid in FC (cash Basis):FC (cash Basis):FC (cash Basis):FC (cash Basis):
Total amount remitted during the year inTotal amount remitted during the year inTotal amount remitted during the year inTotal amount remitted during the year in FCFCFCFC
TotalTotalTotalTotal no.no.no.no. of nonof nonof nonof non----resident shareholdersresident shareholdersresident shareholdersresident shareholders
NNNNo.o.o.o. of shares held by them on which dividendof shares held by them on which dividendof shares held by them on which dividendof shares held by them on which dividend duedueduedue
Year to which dividend relatesYear to which dividend relatesYear to which dividend relatesYear to which dividend relates
Lunawat & Co.

Foreign Exchange Earnings (AccrualForeign Exchange Earnings (AccrualForeign Exchange Earnings (AccrualForeign Exchange Earnings (Accrual
basis):basis):basis):basis):
Export of goods (calculated on F.O.B. basis)Export of goods (calculated on F.O.B. basis)Export of goods (calculated on F.O.B. basis)Export of goods (calculated on F.O.B. basis)
Royalty, know how, professional andRoyalty, know how, professional andRoyalty, know how, professional andRoyalty, know how, professional and
consultation feesconsultation feesconsultation feesconsultation fees
Interest and dividendsInterest and dividendsInterest and dividendsInterest and dividends
Other income (indicating the nature thereof)Other income (indicating the nature thereof)Other income (indicating the nature thereof)Other income (indicating the nature thereof)
Lunawat & Co.

OTHER DISCLOSURESOTHER DISCLOSURESOTHER DISCLOSURESOTHER DISCLOSURES IN NOTESIN NOTESIN NOTESIN NOTES
To disclose in FS full particulars of:To disclose in FS full particulars of:To disclose in FS full particulars of:To disclose in FS full particulars of:
Loan given;Loan given;Loan given;Loan given;
Investment made;Investment made;Investment made;Investment made;
Guarantee given; orGuarantee given; orGuarantee given; orGuarantee given; or
Security Provided.Security Provided.Security Provided.Security Provided.
Purpose for which loan or guarantee or security isPurpose for which loan or guarantee or security isPurpose for which loan or guarantee or security isPurpose for which loan or guarantee or security is
proposed to beproposed to beproposed to beproposed to be utilisedutilisedutilisedutilised by recipient of loan orby recipient of loan orby recipient of loan orby recipient of loan or
guarantee or security [186(4)]guarantee or security [186(4)]guarantee or security [186(4)]guarantee or security [186(4)]
Contribution duringContribution duringContribution duringContribution during yryryryr to Nationalto Nationalto Nationalto National DefenceDefenceDefenceDefence FundFundFundFund
AAAAmount contributed to Political Party and namemount contributed to Political Party and namemount contributed to Political Party and namemount contributed to Political Party and name
of partyof partyof partyof party [182(3)][182(3)][182(3)][182(3)]
Lunawat & Co.

OTHER DISCLOSURESOTHER DISCLOSURESOTHER DISCLOSURESOTHER DISCLOSURES IN NOTESIN NOTESIN NOTESIN NOTES
Public Companies:Public Companies:Public Companies:Public Companies:
Money received from directorMoney received from directorMoney received from directorMoney received from director
Private companiesPrivate companiesPrivate companiesPrivate companies
Money received from directorMoney received from directorMoney received from directorMoney received from director
Money received fromMoney received fromMoney received fromMoney received from relative of directorrelative of directorrelative of directorrelative of director
Lunawat & Co.

RELATED PARTYRELATED PARTYRELATED PARTYRELATED PARTY
AccountingAccountingAccountingAccounting
StandardsStandardsStandardsStandards
AS 18AS 18AS 18AS 18
CompaniesCompaniesCompaniesCompanies
ActActActAct
S. 2(76)S. 2(76)S. 2(76)S. 2(76)
S. 184S. 184S. 184S. 184 S. 188S. 188S. 188S. 188
Income TaxIncome TaxIncome TaxIncome Tax
40A(2)(b)40A(2)(b)40A(2)(b)40A(2)(b)
Lunawat & Co.

Entities that are toEntities that are toEntities that are toEntities that are to
follow ASfollow ASfollow ASfollow AS
CorporateCorporateCorporateCorporate
CompaniesCompaniesCompaniesCompanies
(Accounting(Accounting(Accounting(Accounting
Standards)Standards)Standards)Standards)
Rules, 2006Rules, 2006Rules, 2006Rules, 2006
IndIndIndInd ASASASAS ICDSICDSICDSICDS
NonNonNonNon----
CorporateCorporateCorporateCorporate
AS issuedAS issuedAS issuedAS issued
by ICAIby ICAIby ICAIby ICAI
ICDSICDSICDSICDS
Lunawat & Co.Lunawat & Co.Lunawat & Co.Lunawat & Co.
ACCOUNTING STANDARDSACCOUNTING STANDARDSACCOUNTING STANDARDSACCOUNTING STANDARDS

AS DISCLOSURES IN NOTESAS DISCLOSURES IN NOTESAS DISCLOSURES IN NOTESAS DISCLOSURES IN NOTES
SMC / NonSMC / NonSMC / NonSMC / Non---- SMCSMCSMCSMC
AS 1AS 1AS 1AS 1
FS to be preparedFS to be preparedFS to be preparedFS to be prepared in compliance ofin compliance ofin compliance ofin compliance of
ASASASAS
FS has to be AS compliant:FS has to be AS compliant:FS has to be AS compliant:FS has to be AS compliant:
FS to disclose deviation from ASFS to disclose deviation from ASFS to disclose deviation from ASFS to disclose deviation from AS
Reason for deviationReason for deviationReason for deviationReason for deviation
Financial effect arising of deviationFinancial effect arising of deviationFinancial effect arising of deviationFinancial effect arising of deviation
Lunawat & Co.

AS APPLICABILITYAS APPLICABILITYAS APPLICABILITYAS APPLICABILITY
AS
No.
Short Title Corporate Non- Corporate Entities
Non-SMC SMC Level I Level II Level III
1 Accounting Policies Y Y Y Y Y
2 Inventories Y Y Y Y Y
3 Cash Flow Y N (C) Y N N
4 Events after Balance Sheet date Y Y Y Y Y
5 Prior Period Items & Policies Y Y Y Y Y
6 Depreciation Y Y Y Y Y
7 Construction Y Y Y Y Y
9 Revenue Y Y Y Y Y
10 Fixed Assets Y Y Y Y Y
11 Foreign Exchange Y Y Y Y Y
12 Government Grants Y Y Y Y Y
13 Investments Y Y Y Y Y
14 Amalgamations Y Y Y Y Y
15 Employee Benefits Y Partly Y Partly Partly

AS APPLICABILITYAS APPLICABILITYAS APPLICABILITYAS APPLICABILITY
16 Borrowing Cost Y Y Y Y Y
17 Segment Y N Y N N
18 Related Party Y Y Y Y N
19 Leases Y Partly Y Partly Partly
20 Earning Per Share Y Partly Y Partly Partly
21 Consolidation Y (listed) N (C) Y (listed) N N
22 Deferred Taxes Y Y Y Y Y
23 Consolidated Statements Y (listed) N (C) Y (listed) N N
24 Discontinuing Operation Y Y Y Y N
25 Interim Reporting Y (listed) N** Y (listed) N** N**
26 Intangible Assets Y Y Y Y Y
27 Interest in Joint Ventures Y (listed) N (C) Y (listed) N N
28 Impairment Y Partly Y Partly Partly
29 Contingency Y Partly Y Partly Partly
30- 32 Financial Instruments N*** N*** **** **** ****

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
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.

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.

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.

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.

DOCUMENTATIONDOCUMENTATIONDOCUMENTATIONDOCUMENTATION
Have checklists, tell articles to cross verifyHave checklists, tell articles to cross verifyHave checklists, tell articles to cross verifyHave checklists, tell articles to cross verify
Seniors to cross verifySeniors to cross verifySeniors to cross verifySeniors to cross verify
Take necessary certificates / representationTake necessary certificates / representationTake necessary certificates / representationTake necessary certificates / representation
from managementfrom managementfrom managementfrom management
External ConfirmationsExternal ConfirmationsExternal ConfirmationsExternal Confirmations
Ensure Compliance of ASsEnsure Compliance of ASsEnsure Compliance of ASsEnsure Compliance of ASs
Ensure all applicable regulatoryEnsure all applicable regulatoryEnsure all applicable regulatoryEnsure all applicable regulatory
compliances including Companies Act,compliances including Companies Act,compliances including Companies Act,compliances including Companies Act,
2013201320132013
Comply with SAsComply with SAsComply with SAsComply with SAs
Work not documented is work not done.Work not documented is work not done.Work not documented is work not done.Work not documented is work not done.
Lunawat & Co.

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

CA Pramod Jain's Guide to Financial Statements and Internal Controls

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