Draft Specimen of Independent Auditors Report Qualified and Unqualified options
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ____________ LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of _______ LIMITED (“the company”),which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and operating effectiveness of such controls . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company’s Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
*******Opinion (For Qualified Opinion/Emphasis of the matter Refer Note)
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31stMarch2015, its profit/loss and its cash flows for the year ended on that date.
Report on other Legal and Regulatory Requirements
- As required by the Companies (Auditor’s Report) Order, 2015(“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order, to the extent applicable.
Requirements of the Companies (Auditor’s Report) Order, 2015(“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, are not applicable.
- As required by section 143(3) of the Act, we report that:
- a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
- b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books (and proper returns adequate for the purposes of our audit have been received from the branches not visited by us)*
- c) [The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt by us in preparing this report]* (This para to be included in the report only when there is a branch.)
- d) the Balance Sheet, the Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.[and the returns received from the branches not visited by us]*
- e) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
- f) (This para to be included in the Audit Report when there is qualification or adverse remark) (OR The going concern matter described in sub-paragraph (b) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company). ( OR In our opinion and to the best of our information and according to the explanations given to us, we have no observations or comments on financial transactions or matters which have any adverse effect on the functioning of the company);
- g) On the basis of written representations received from the directors as on 31 March, _______, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 20______, from being appointed as a director in terms of Section 164(2) of the Act.
- h) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:
- The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note ______ to the financial statements ;
[or the Company does not have any pending litigations which would impact its financial position]
- The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts – Refer Note _______ to the financial statements;
[or The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses]
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
[or, following are the instances of delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
or there were no amounts which required to be transferred by the Company to the Investor Education and Protection Fund]
For ________ ASSOCIATES
(Firm Registration No. : ________)
(Membership No.: ___________ )
Date: __/ ___/2015
( To be substituted for Qualified Opinion …………….)
***Basis for Qualified Opinion
The Company’s inventories are carried in the Balance Sheet at Rs. ‘n’ (As at 31st March 20YY: Rs. ‘m’). The Management has not stated the inventories at the lower of cost and net realisable value but has stated them solely at cost, which constitutes a departure from the Accounting Standard – 2 “Valuation of Inventories”. The Company’s records indicate that had the Management stated the inventories at the lower of cost and net realisable value, an amount of Rs. ‘p’ (As at 31st March 20YY: Rs. ‘o’) would have been required to write the inventories down to their net realisable value. Accordingly, cost of sales would have been increased by Rs. ‘p’ (Previous year ended 31st March, 20YY: Rs. ‘o’), and income tax, profit for the year and shareholders’ funds would have been reduced by Rs. ____, Rs. ______ and Rs. ________, respectively (Previous year ended 31st March, 20YY: Rs.____, Rs.____ and Rs.______, respectively). This matter was also qualified in our report/ the report of the predecessor auditors on the financial statements for the year ended 31st March 20YY.
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 20____, and its profit/loss and its cash flows for the year ended on that date.
***Emphasis of Matters
We draw attention to the following matters in the Notes to the financial statements:
- a) Note @@ ...…. to the financial statements which, describes the uncertainty related to the outcome of the lawsuit filed against the Company by XY Company.
- b) Note @@@…….. in the financial statement which indicates that the Company has accumulated losses and its Net worth has been fully/substantially eroded, the Company has incurred a net loss/net cash loss during the current year and previous year(s) and, the Company current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters set forth in Note xxx……, indicate the existence of a material uncertainty that cast significant doubt about the Company’s ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.
Our opinion is not modified in respect of these matters.