Audit report

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jabir

jabir (Querist)
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07 January 2014 I am doing Articleship now, want to know about format of audit report of small firms

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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07 January 2014 The format of the Statutory Audit Report is as under :
.

Auditor's Report (Amarjothi Spinning Mills)
.
Year End : Mar '13

I have audited the accompanying financial statements of Amarjothi Spinning Mills Limited, which comprise the Balance Sheet as at 31st March 2013 and the Statement of Profit and Loss and Cash Flow Statement
for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation 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 Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956. This responsibility includes the design,
implementation and maintenance of internal control 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.

My responsibility is to express an opinion on these financial
statements based on my audit. I conducted my audit in accordance with
the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that I 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 control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.

I believe that the audit evidence I have obtained is sufficient and
appropriate to provide a basis for my audit opinion.

In my opinion and to the best of my information and according to the
explanations given to me, the 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:

(i) in the case of the Balance Sheet, of the STATE OF AFFAIRS of the
Company as at 31 March 2013;

(ii) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.

1. As required by the Companies (Auditor''s Report) Order, 2003, issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Act, I give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, I report that:

a. I have obtained all the information and explanations which to the
best of my knowledge and belief were necessary for the purpose of my
audit;

b. In my opinion proper books of account as required by law have been
kept by the Company so far as appears from my examination of those
books;

c. The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;

d. In my opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors
as on 31 March 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31 March 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.

The Annexure referred to in paragraph 1 of my report of even date to
the members of Amarjothi Spinning Mills Limited on the accounts of the
company for the year ended 31 March 2013.

On the basis of such checks as I considered appropriate and according
to the information and explanation given to me during the course of my
audit, I report that;

1. a. The Company has maintained proper records showing full
particulars including

quantitative details and situation of fixed assets.

b. As explained to me, fixed assets have been physically verified by
the management at reasonable intervals. No material discrepancies were
noticed on such verification.

c. In my opinion and according to the information and explanations
give to me, no fixed asset has been disposed off during the year that
affect the going concern assumption.

2. a. As explained to me, inventories have been physically verified
during the year by the management at reasonable intervals.

b. In my opinion and according to the information and explanations
given to me, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.

c. In my opinion and on the basis of my examination of the records,
the Company is generally maintaining proper records of its inventories.
No material discrepancy was noticed on physical verification of stocks
by the management as compared to book records.

3. a. The company has taken unsecured loan from parties covered in
the register maintained under section 301 of the Companies Act, 1956.
The maximum amount involved during the year was Rs.48.24 Crores and the
year-end balance of loans taken from such parties was Rs.48.24 crores.
These amounts have been brought in pursuant to the terms of sanction
given by the bankers.

b. In my opinion the rate of interest and other terms and conditions
on which loans have been taken from parties listed in the registers
maintained under section 301 are not, prima facie, prejudicial to the
interest of the company.

c. The company is regular in repaying the principal amounts as
stipulated and has been regular in the payment of interest.

d. There is no overdue amount of loans taken from parties listed in
the registers maintained under section 301 of the Companies Act, 1956.

e. According to the information and explanations given to me and on
the basis of my examination of the books of account, the Company has
taken unsecured loans from 4 parties listed in the register maintained
under Section 301 of the Companies'' Act 1956.

f. The Company has not granted any loan, secured or unsecured to
companies, firms and other parties listed in the register maintained
under Section 301 of the Companies Act, 1956 and hence the other
subsections are not applicable.

4. In my opinion and according to the information and explanations
given to me, there is generally an adequate internal control procedure
commensurate with the size of the company and the nature of its
business, for the purchase of inventories & fixed assets and payment
for expenses & for sale of goods. During the course of my audit, no
major instance of continuing failure to correct any weaknesses in the
internal controls has been noticed.

5. a. Based on the audit procedures applied by me and according to
the information and explanations provided by the management, the
particulars of contracts or arrangements referred to in section 301 of
the Act have been entered in the register required to be maintained
under that section.

b. As per information & explanations given to me and in my opinion, the
transaction entered into by the company with parties covered u/s.301 of
the Act does not exceeds five lakhs rupees in a financial year other
than unsecured loans mentioned in item no.3 of this report and a sum of
Rs.58.40 lakhs paid towards purchase of lands. Such transactions are
made at prevailing market prices and are comparable.

6. The Company has not accepted any deposits from the public covered
under section 58A and 58AA of the Companies Act 1956.

7. As per information & explanations given by management, the company
has an internal audit system commensurate with the size and nature of
its business.

8. As per information & explanation given by the management,
maintenance of cost records has been prescribed by the Central
Government under clause (d) of sub-section(1) of section 209 of the Act
and I am of the opinion that prima facie the prescribed accounts and
records have been made and maintained.

9. a. According to the records of the company, undisputed statutory
dues including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service
Tax, Custom Duty, Excise duty, Cess to the extent applicable and any
other statutory dues have generally been regularly deposited with the
appropriate authorities. According to the information and explanations
given to me there were no outstanding statutory dues as on 31st of
March, 2013 for a period of more than six months from the date they
became payable.

b. According to the information and explanations given to me, there is
no amounts payable in respect of Income-tax, wealth-tax, service tax,
sales-tax, customs duty and excise duty which have not been deposited
on account of any disputes.

V. NARAYANASWAMI, M.A., F.C.A.

Chartered Accountant

Place : Tirupur Proprietor

Date : 24.05.2013 Membership No.023661