CHAPTER 1 INTRODUCTION

COMPANY ACCOUNTS
For showing the revenue and financial performance of company, Accountant maintains company accounts .All company accounts are made in corporate accounting. We can define it as recording of issue of equity and pref. shares, debentures, bonus and right shares. It is also duty to maintain all routine accounts like sole trade and partnership firm In normal transactions, we can include purchase, sale, receipt and payment transactions and it is recorded in journal first and after posted it to ledger of ompany accounts.

ompany accounts are also helpful for making company!s final account.

COMPANY AUDIT
"he general definition of an audit is a planned and documented activity performed by qualified personnel to determine by investigation, e#amination, or evaluation of objective evidence, the adequacy and compliance with established procedures, or applicable documents, and the effectiveness of implementation. "he term may refer to audits in accounting, internal controls, quality management, project management, water management, and energy conservation. Auditing is defined as a systematic and independent e#amination of data, statements, records, operations and performances $financial or otherwise% of an enterprise for a stated

purpose. In any auditing the auditor perceives and recogni&es the propositions before him for e#amination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. "he purpose is then to give an opinion on the adequacy of controls $financial and otherwise% within an environment they audit, to evaluate and improve the effectiveness of risk management, control, and governance processes.

"ata 'otors (imited $formerly ")( *, short for "ata )ngineering and (ocomotive ompany% is an Indian multinational automotive manufacturing company headquartered in 'umbai, 'aharashtra, India and a subsidiary of the "ata +roup. Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. It is the world!s si#teenth,largest motor vehicle manufacturing company, fourth,largest truck manufacturer and second,largest bus manufacturer by volume. "ata 'otors has auto manufacturing and assembly plants in -amshedpur, .antnagar, (ucknow, /anand, 0harwad and .une in India, as well as in Argentina, /outh Africa, "hailand and the 1nited 2ingdom. It has research and development centres in .une, -amshedpur, (ucknow and 0harwad, India, and in /outh 2orea, /pain, and the 1nited 2ingdom. "ata 'otors! principal subsidiaries include the 3ritish premium car maker -aguar (and 4over $the maker of -aguar, (and 4over and 4ange 4over cars% and the /outh 2orean commercial vehicle manufactuer "ata 0aewoo. "ata 'otors has a bus manufacturing joint venture with 'arcopolo /.A.

$"ata 'arcopolo%, a construction equipment manufacturing joint venture with 5itachi $"ata 5itachi onstruction 'achinery% and a joint venture with Fiat which manufactures automotive components and Fiat and "ata branded vehicles. Founded in 6789 as a manufacturer of locomotives, the company manufactured its first commercial vehicle in 6798 in a collaboration with 0aimler,3en& A+, which ended in 67:7. "ata 'otors entered the passenger vehicle market in 6776 with the launch of the "ata /ierra, becoming the first Indian manufacturer to achieve the capability of developing a competitive indigenous automobile.;:< In 677= "ata launched the first fully indigenous Indian passenger car, the Indica, and in >??= launched the "ata @ano, the world!s cheapest car. "ata 'otors acquired the /outh 2orean truck manufacturer 0aewoo ommercial Aehicles ompany in >??8 and

purchased -aguar (and 4over from Ford in >??=. "ata 'otors is listed on the 3ombay /tock )#change, where it is a constituent of the 3/) /)@/)B inde#, the @ational /tock )#change of India and the @ew Cork /tock )#change. "ata 'otors is ranked D68th in the >?6> Fortune +lobal 9?? ranking of the world!s biggest corporations. 5istory "ata entered the commercial vehicle sector in 6798 after forming a joint venture with 0aimler,3en& of +ermany. After years of dominating the commercial vehicle market in India, "ata 'otors entered the passenger vehicle market in 6776 by launching the "ata /ierra, a multi utility vehicle. "ata subsequently launched the "ata )state $677>E a station wagon design

based on the earlier !"ata'obile! $67=7%, a light commercial vehicle%, the "ata /umo $6778E ( A% and the "ata /afari $677=E India!s first sports utility vehicle%.

"ata launched the Indica in 677=, the first fully indigenous Indian passenger car. Although initially criticised by auto,analysts, its e#cellent fuel economy, powerful engine and an aggressive marketing strategy made it one of the best selling cars in the history of the Indian automobile industry. A newer version of the car, named Indica A>, was a major improvement over the previous version and quickly became a mass, favourite. "ata 'otors also successfully e#ported large quantities of the car to /outh Africa. "he success of Indica played a key role in the growth of "ata 'otors.

CHAPTER 2 Company Profile

"ata 'otors (imited is India!s largest automobile company, with consolidated revenues of I@4 6,==,=6= crores $1/0 D8.F billion% in >?6>, 6D. It is the leader in commercial vehicles in each segment, and among the top in passenger vehicles with winning products in the compact, midsi&e car and utility vehicle segments. It is also the world!s fifth largest truck manufacturer and fourth largest bus manufacturer. "he "ata 'otors +roup!s over :?,??? employees are guided by the mission Gto be passionate in anticipating and providing the best vehicles and e#periences that e#cite our customers globally.G )stablished in 6789, "ata 'otors! presence cuts across the length and breadth of India. *ver = million "ata vehicles ply on Indian roads, since the first rolled out in 6798. "he company!s manufacturing base in India is spread across -amshedpur $-harkhand%, .une $'aharashtra%, (ucknow $1ttar .radesh%, .antnagar $1ttarakhand%, /anand $+ujarat% and 0harwad $2arnataka%. Following a strategic alliance with Fiat in >??9, it has set up an industrial joint venture with Fiat +roup Automobiles at 4anjangaon

$'aharashtra% to produce both Fiat and "ata cars and Fiat powertrains. "he company!s dealership, sales, services and spare parts network comprises over :,:?? touch points. "ata 'otors, also listed in the @ew Cork /tock )#change $/eptember >??8%, has emerged as an international automobile company. "hrough subsidiaries and associate companies, "ata 'otors has operations in the 12, /outh 2orea, "hailand, /outh Africa and Indonesia. Among them is -aguar (and 4over, acquired in >??=. In >??8, it acquired the 0aewoo ommercial Aehicles ompany, /outh 2orea!s second largest truck maker. "he rechristened "ata 0aewoo ommercial Aehicles ompany has

launched several new products in the 2orean market, while also e#porting these products to several international markets. "oday two,thirds of heavy commercial vehicle e#ports out of /outh 2orea are from "ata 0aewoo. In >??:, "ata 'otors formed a 96H87 joint venture with the 3ra&il,based, 'arcopolo, a global leader in body,building for buses and coaches to manufacture fully,built buses and coaches for India , the plant is located in 0harwad. In >??:, "ata 'otors entered into joint venture with "honburi Automotive Assembly .lant ompany of "hailand to manufacture and

market the company!s pickup vehicles in "hailand, and entered the market in >??=. "ata 'otors $/A% $.roprietary% (td., "ata 'otors! joint venture with "ata Africa 5olding $.ty% (td. set up in >?66, has an assembly plant in 4osslyn, north of .retoria. "he plant can assemble, semi knocked down $/20% kits, light, medium and heavy commercial vehicles ranging from 8

tonnes to 9? tonnes. "ata 'otors is also e#panding its international footprint, established through e#ports since 67:6. "he company!s commercial and passenger vehicles are already being marketed in several countries in )urope, Africa, the 'iddle )ast, /outh )ast Asia, /outh Asia, /outh America, I/ and

4ussia. It has franchiseeIjoint venture assembly operations in 3angladesh, 1kraine, and /enegal. "he foundation of the company!s growth over the last := years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer,desired offerings through leading edge 4J0. With over 8,9?? engineers, scientists and technicians the company!s )ngineering 4esearch entre, established in 67::, has enabled pioneering technologies and products. "he company today has 4J0 centres in .une, -amshedpur, (ucknow, 0harwad in India, and in /outh 2orea, Italy, /pain, and the 12. It was "ata 'otors, which launched the first indigenously developed (ight ommercial Aehicle in 67=:. In >??9, "ata 'otors created a new segment by launching the "ata Ace, India!s first indigenously developed mini,truck. In >??7, the company launched its globally benchmarked .rima range of trucks and in >?6> the 1ltra range of international standard light commercial vehicles. In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and

match the best in the world in performance at a lower life,cycle cost. "ata 'otors also introduced India!s first /ports 1tility Aehicle in 6776 and, in 677=, the "ata Indica, India!s first fully indigenous passenger car. In -anuary >??=, "ata 'otors unveiled its .eople!s ar, the "ata @ano. "he "ata @ano has been subsequently launched, as planned, in India in 'arch >??7, and subsequently in >?66 in @epal and /ri (anka. A development, which signifies a first for the global automobile industry, the @ano brings the joy of a car within the reach of thousands of families. "ata 'otors is equally focussed on environment,friendly technologies in emissions and alternative fuels. It has developed electric and hybrid vehicles both for personal and public transportation. It has also been implementing several environment,friendly technologies in manufacturing processes, significantly enhancing resource conservation. "hrough its subsidiaries, the company is engaged in engineering and automotive solutions, automotive vehicle components manufacturing and supply chain activities, vehicle financing, and machine tools and factory automation solutions. "ata 'otors is committed to improving the quality of life of communities by working on four thrust areas , employability, education, health and environment. "he activities touch the lives of more than a million citi&ens. "he company!s support on education and employability is focused on youth and women. "hey range from schools to technical education

institutes to actual facilitation of income generation. In health, the company!s intervention is in both preventive and curative health care. "he goal of environment protection is achieved through tree plantation, conserving water and creating new water bodies and, last but not the least, by introducing appropriate technologies in vehicles and operations for constantly enhancing environment care. With the foundation of its rich heritage, "ata 'otors today is etching a refulgent future.

*3-) "IA)/ *F A10I"I@+H,

Auditing main purpose or object is to find the opinion of an auditor about correctness and reliability of accounts and the financial position of the business concern. For this purpose,auditor has to check the arithmetically accuracy of the books of account and find out that whether the transactions entered in the book of account are correct or incorrect. "his is done by various methods like inspecting, comparing and checking. /o all that work which is done by the auditor ensures him that Gfigures are factsG.

3A/I .4I@ I.()/ *F A10I"I@+H

6% Integrity, objectivity and independenceH "he auditor should be honest and sincere in his audit work. 5e must be fair and objective. 5e should also be independent. >% onfidentialityH

"he auditor should keep the information obtained during audit, confidential. 5e should not disclose such information to any third party. 5e should, keep his eyes and ears open but his mouth shut.

D% /kill and competenceH "he auditor should have adequate training, e#perience and competence in Auditing. 5e should have a professional qualification $i.e. be a hartered Accountant% and practical e#perience. 5e should be aware of recent developments in the field of auditing such as statement of I AI, changes in company law, decisions of courts etc. 8% Working papersH "he auditor should maintain working papers of important matters to prove that audit was conducted with due care according to the basic principles. 9% .lanningH "he auditor should plan his audit work. 5e should prepare an audit programmed to complete the audit efficiently and in time. :% Audit evidenceH "he report of the auditor should be base on evidence obtained in the course of audit. "he evidence may be obtained through vouching of transactions, verification of assets and liabilities, ratio analysis etc. F% )valuation of accounting system and internal controlH

"he auditor should ensure that the accounting system is adequate. 5e should see that all the transaction have been properly recorded. 5e should study and evaluate the internal controls.

K =% *pinion and reportH "he auditor should arrive at his opinion on the account based on the audit evidence and submit his report. "he opinion may be unqualified, qualified or adverse. "he audit reportshould clearly e#press his opinion. (aw should require the content and form of audit report

CHAPTER 3 AUDIT REPORT

A10I"*4/! 4).*4" 4eport on the Financial /tatements

We have audited the accompanying financial statements of "A"A '*"*4/ (I'I")0 $Gthe ompanyG%, which comprise the 3alance /heet as at 'arch D6, >?6D, the .rofit and (oss /tatement and the ash Flow

/tatement for the year then ended, and a summary of the significant accounting policies and other e#planatory information. 'anagement!s 4esponsibility for the Financial /tatements "he ompany!s 'anagement 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 ompany in accordance with the Accounting /tandards referred to in /ection >66$D % of the ompanies Act, 679: $Gthe ActG% and in accordance with the accounting principles generally accepted in India. "his 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.

Auditors! 4esponsibility
*ur responsibility is to e#press an opinion on these financial statements based on our audit. We conducted our audit in accordance with the /tandards on Auditing issued by the Institute of hartered Accountants of India. "hose /tandards 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 the disclosures in the financial statements. "he 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 ompany!s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of e#pressing an opinion on the effectiveness of the ompany!s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 'anagement, 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.

A0AA@"A+)/ *F A10I"I@+
6% Assurance of true and fair accountsH Audit provides an assurance to the various users of final accounts such as owners, management, creditors, lenders, investors, governmentLs etc. that the accounts are true and fair.

>% "rue and Fair balance sheetH

"he user accounts can be sure that the assets and liabilities shown in the audited balance sheet show the concern, as it is i.e. neither more nor less.

D% "rue and fair profit and loss accountH

"he user can be confident that the audited profit and loss account shows the true amount of profit or loss as it is i.e. neither more nor less.

8% "ally with booksH

"he audited final account can be taken to tally with the books of accounts. "hus, the income,ta# officer can start with the figure of audited books profit, make adjustments and compute the ta#able income. An outside user need not go through the entire books.

9% As per standard accounting and auditing practicesH

"he audited final accounts follow the standard accounting and auditing

principles laid down by professional bodies. "hus, audited accounts are based on objectives standard and not on personal whims and fancies of a particular accountant or auditor.

:% 0etection and prevention of errors and fraudsH

Audited accounts can be assumed reasonably free from errors and frauds. "he auditor with his e#pert knowledge would take due care to see that )rrors and frauds are detected so that the accounts shoe a true and fair view.

F% Advice on system, ta#ation, financeH

"he auditor can also advise the client about the accounting system, internal control, internal check, internal audit, ta#ation, finances etc.

(I'I"A"I*@/ *F A10I"I@+
6. An auditor cannot check each and every transaction he has to check only the selected areas and transaction on a sample basis. >. Audit evidence is not conclusive in nature thus confirmation by a debtor is not conclusive evidence that the amount will be collected. It is said evidence is rather than conclusive in nature. D.An auditor cannot be e#pected to discover deeply laid frauds usually involves acts designed to conceal them such as forgery , celibate failure to record transactions, false e#planation and hence are difficult to detect. 8. Audit cannot assure the users of account about the future profitability,

prospects or the efficiency of the management. 9.An auditor has to rely upon e#pert auditor may have to rely on e#pert in related field such as lawyers, engineers, valueLs etc. for estimating contingent liabilities, valuation of fi#ed assets etc.

Audit objectives
6. ompletenessH to ensure that there is no unrecorded cash. "his means

reconciling cash balances to records, ensuring that proper sales cut off has been performed. >. Accuracy of measurementH to ensure that amounts are correctly recorded in the proper accounting period. "his means that cut off is correct.

D. )#istenceH to ensure that the cash e#ist at a given date. "he related evidence includes cash count. 8. 4ights and obligationsH to ensure that the company has a right to the cash. 9. *ccurrenceH to ensure that the cash belongs to the company at the year end date. "his means checking to ensure no cash receipts are post dated. :. .resentation and disclosuresH to ensure that the cash balance and related income statement entries are correctly disclosed in the F/ in accordance with legislation and accounting standards.

*pinion
In our opinion and to the best of our information and according to the e#planations 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 in the case of the 3alance /heet, of the state of affairs of the ompany as at 'arch D6, >?6DEin the case of the .rofit and (oss ompany for the year ended on that dateE

/tatement, of the profit of the and in the case of the

ash Flow /tatement, of the cash flows of the

ompany for the year ended on that date. 4eport on *ther (egal and 4egulatory 4equirements As required by the ompanies $Auditor!s 4eport% *rder, >??D $Gthe

*rderG% issued by the entral +overnment in terms of /ection >>F$8A% of the Act, we give in the Anne#ure a statement on the matters specified in paragraphs 8 and 9 of the *rder. As required by /ection >>F$D% of the Act, we report thatH We have obtained all the information and e#planations which to the best of our knowledge and belief were necessary for the purposes of our audit. In our opinion, proper books of account as required by law have been kept by the ompany so far as it appears from our e#amination of those books. "he 3alance /heet, the .rofit and (oss /tatement, and the ash Flow

/tatement dealt with by this report are in agreement with the books of account. In our opinion, the 3alance /heet, the .rofit and (oss /tatement, and the ash Flow /tatement comply with the Accounting /tandards referred to in /ection >66$D % of the Act. *n the basis of the written representations received from the directors as on 'arch D6, >?6D taken on record by the 3oard of 0irectors, none of the directors is disqualified as on 'arch D6, >?6D from being appointed as a director in terms of /ection >F8$6%$g% of the Act.

A10I" *F .AC')@"
Audit procedures for obtaining audit evidence Auditors design detailed audit procedures to obtain sufficient appropriate audit evidence. .rocedures can include inspection, observation, confirmation, recalculation,

reperformance, and analytical procedures, often in some combination. "his section further e#plainsaudit procedures for obtaining audit evidence, andspecific types of audit procedures.Audit procedures for obtaining audit evidence "he evidence,gathering process involves the following stepsH designing the audit procedures or testsEcarrying out the audit procedures or tests andIor gathering evidenceE analy&ing evidence and drawing conclusions, which may also involve evaluating

performance against the audit criteriaE and making decisions about whether additional information is required and can be obtained $go back to step 6% or whether sufficient appropriate evidence e#ists. Audit procedures typically focus on the key risk areas identified through a risk analysis. It is not unusual for audits to be redesigned during the e#amination stage as teams encounter unforeseen difficulties in gathering sufficient evidence of appropriate quality. Auditors have to be alert to any signs that the evidence,gathering process may not be achieving the level of assurance required for the audit assignment and take appropriate corrective action. If there are any potential amendments to the audit program, communicate these changes and raise any other issues, on a timely basis, with the senior members of the audit team. In instances where modifications did not take place before the start of field work, modify the audit steps as the work progresses, obtain approval for changes to audit programs, and include appropriate information on the nature, timing, and e#tent of steps to be performed. .

Inspection. Inspection of documents and records provides varying degrees of reliability, depending on the nature and source of the documents. Inspection of physical assets provides highly reliable evidence of e#istence and some indication of value $if it does not appear damaged or obsolete% but not necessarily of ownership or value. *bservation. *bservation of the application of a client!s or entity!s policy or procedure

provides assurance of that procedure at a given point in time, but not necessarily of its performance at other times during the year. Analytical procedures Analytical procedures are used throughout the audit process and are conducted for the following primary and secondary purposesH .rimary 4isk assessmentMto direct attention to higher risk areas in determining the nature, timing, and e#tent of audit procedures /ubstantive testingMto obtain audit evidence of accuracy or to identify potential misstatementsIerrors as a substitute for tests of details *verall conclusionMto assist in assessing the propriety of audit conclusions reached and in evaluating the overall opinionIreport /econdary 1nderstanding the businessMto deepen our understanding of the entity )ntity communicationsMto develop more meaningful entity communications through a deeper understanding of the relevant business and audit issues. Auditors use analysis at various stages of the audit for different purposes. "hey use preliminary analytical procedures when planning the audit to confirm the planned audit approach or to identify new risk areas that need to be addressed during the audit. At the reporting phase of the audit, auditors use analytical procedures to assess whether the

opinionIreport taken as a whole is reasonable and consistent with their knowledge of the subject matter and the e#pected results where applicable. Inquiry Inquiry is used throughout the engagement to obtain knowledge of the entity develop the preliminary audit approach collect specific evidenceE and corroborate evidence collected by other means. A solid understanding of the control environment is important in order to assess the e#tent to which inquiry will be effective in obtaining reliable evidence. For e#ample, in an environment in which management!s integrity and trustworthiness are high, the auditor may be able to place relatively more reliance on inquiry. A decision regarding the e#tent to which inquiry will provide sufficient, appropriate evidence is required. Inquiry involves considering the knowledge, objectivity, e#perience, responsibility, and qualifications of the individual to be interviewed asking clear and concise questions using open or closed questions appropriately listening actively and effectivelyE and considering the interviewee!s responses and asking follow,up questions. Inquiries can often be efficiently combined with other testing procedures such as observation and will frequently be followed up by further audit procedures to obtain sufficient appropriate evidence.

Inquiry is sometimes referred to as in,depth inquiry to emphasi&e that the technique is e#pected to be performed with rigour. 0o not infer from seeing the word inquiry on its

own that it means rigour is unnecessary.

4elated guidanceH /ee *A+ Annual Audit 7?9> for guidance on written representations. Although inquiry has always been an integral part of audit, it is becoming an increasingly important method of collecting audit evidence due to the increasing use of Nsoft informationO in financial statements. /pecifically, soft information is based on estimates, e#pectations, and assumptions. In addition, more reliance is placed on management controls where little documentation may e#ist to support the e#istence of the review being performed and follow,up action taken when results are out of line with management e#pectations. In such cases, inquiry may be the primary $or only% source of evidence that the controls are in place and working effectively.

DISCLAIMER O OPINION REPORT

or not, which hinder the auditor!s work in obtaining evidence and performing procedures $/A/ @o. 9=%E A 0isclaimer of *pinion is issued in either of the following casesH When the auditor is not independent or when there is conflict of interest. When the limitation on scope is imposed by client, as a result the auditor is unable

to obtain sufficient appropriate audit evidence. When the circumstances indicate substantial problem of going concern in client. When there are significant uncertainties in the business of client.

"he audit report changes significantly when there is 0isclaimer of opinion. An additional paragraph G3asis for 0isclaimerG is added in audit report which is placed after /cope paragraph and before *pinion paragraph. In /cope paragraph the wording changes to GWe were engaged to audit the financial statements of BCP o. (td.G from GWe have

audited the financial statements of BCP o. (td.G In *pinion paragraph wording changes to GWe do not e#press an opinion on the financial statements of BCP situations e#plained in 3asis for 0isclaimer paragraphG o. (td. due to

A 0isclaimer of *pinion, commonly referred to simply as a 0isclaimer, is issued when the auditor could not form and consequently refuses to present an opinion on the financial statements. "his type of report is issued when the auditor tried to audit an entity but could not complete the work due to various reasons and does not issue an opinion. "he disclaimer of opinion report can be traced back to 6787, when the /tatement on Auditing .rocedure @o. >DH 4ecommendation 'ade "o larify Accountant!s 4epresentations

When *pinion Is @ot )#pressed was published in order to provide guidance to auditors in presenting a disclaimer. /tatements on Auditing /tandards $/A/% provide certain situations where a disclaimer of opinion may be appropriateH

A lack of independence, or material conflict$s% of interest, e#ist between the auditor and the auditee $/A/ @o. >:% "here are significant scope limitations, whether intentional "here is a substantial doubt about the auditee!s ability to continue as a going concern or, in other words, continue operating $/A/ @o. 97% "here are significant uncertainties within the auditee $/A/ @o. F7%. Although this type of opinion is rarely used,;:< the most common e#amples where disclaimers are issued include audits where the auditee willfully hides or refuses to provide evidence and information to the auditor in significant areas of the financial statements, where the auditee is facing significant legal and litigation issues in which the outcome is uncertain $usually government investigations%, and where the auditee has going concern issues $the auditee may not continue operating in the near future%.;:< Investors, lending institutions, and governments typically reject an auditee!s financial statements if the auditor disclaimed an opinion, and will request the auditee to correct the situations the auditor mentioned and obtain another audit report. A disclaimer of opinion differs substantially from the rest of the auditor!s reports because it provides very little information regarding the audit itself, and includes an e#planatory paragraph stating the reasons for the disclaimer. Although the report still contains the letterhead, the auditee!s name and address, the auditor!s signature and address, and the report!s issuance date, every other paragraph is modified e#tensively, and the scope paragraph is entirely omitted since the auditor is basically stating that an audit could not be reali&ed.

In the introductory paragraph, the first phrase changes from GWe have auditedG to GWe were engaged to auditG in order to let the user know that the auditee commissioned an audit, but does not mention that the auditor necessarily completed the audit. Additionally, since the audit was not completely andIor adequately performed, the auditor refuses to accept any responsibility by omitting the last sentence of the paragraph. "he scope paragraph is omitted in its entirety since, effectively, no audit was performed. /imilar to the qualified and the adverse opinions, the auditor must briefly discuss the situations for the disclaimer in an e#planatory paragraph. Finally, the opinion paragraph changes completely, stating that an opinion could not be formed and is not e#pressed because of the situations mentioned in the previous paragraphs. "he following is a draft of the three main paragraphs of a disclaimer of opinion because of inadequate accounting records of an auditee, which is considered a significant scope of limitationH We were engaged to audit the accompanying balance sheet of A3 ompany, Inc. $the

G ompanyG% as of 0ecember D6, >?BB and the related statements of income and cash flows for the year then ended. "hese financial statements are the responsibility of the ompany!s management. "he ompany does not maintain adequate accounting records to provide sufficient ompany!s

information for the preparation of the basic financial statements. "he

accounting records do not constitute a double,entry system which can produce financial statements. 3ecause of the significance of the matters discussed in the preceding paragraphs, the

scope of our work was not sufficient to enable us to e#press, and we do not e#press, an opinion of the financial statements referred to in the first paragraph.

AUDITOR!S REPORT ON INTERNAL CONTROLS O COMPANIES

Following the enactment of the /arbanes,*#ley Act of >??>, the .ublic

PU"LIC

ompany

Accounting *versight 3oard $. A*3% was established in order to monitor, regulate, inspect, and discipline audit and public accounting firms of public companies. "he . A*3 Auditing /tandards @o. > now requires auditors of public companies to include an additional disclosure in the opinion report regarding the auditee!s internal controls, and to opine about the company!s and auditor!s assessment on the company!s internal controls over financial reporting. "hese new requirements are commonly referred to as the */* *pinion. "he auditor!s report is modified to include all necessary disclosures by either presenting the report subsequent to the report on the financial statements, or combining both reports into one auditor!s report. "he following is an e#ample of the former version of adding a separate report immediately after the auditor!s report on financial statements.

INTERNAL CONTROL O#ER INANCIAL REPORTIN$

We have also audited management!s assessment, included in the accompanying 'anagement!s Annual 4eport on Internal ontrol *ver Financial 4eporting, that the

ompany maintained effective internal control over financial reporting as of 0ecember D6, >?BB, based on criteria established in Internal issued by the $G */*G%."he ontrolMIntegrated Framework ommission

ommittee of /ponsoring *rgani&ations of the "readway

ompany!s management is responsible for maintaining effective internal

control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. *ur responsibility is to e#press an opinion on management!s assessment and on the effectiveness of the ompany!s internal control over financial reporting based on our audit. We conducted our audits in accordance with the standards of the .ublic ompany Accounting *versight 3oard $1nited /tates%. "hose

standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. *ur audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management!s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company!s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for e#ternal purposes in accordance with generally accepted accounting principles. A company!s internal control over financial reporting includes those policies and procedures that $6% .ertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the companyE $>% provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and e#penditures of the company are being made only in accordance with authori&ations of management and directors of the companyE and $D% .rovide reasonable assurance regarding prevention or timely detection of unauthori&ed acquisition, use, or disposition of the company!s assets that could have a material effect on the financial statements. 3ecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, management!s assessment that A3 ompany maintained effective

internal control over financial reporting as of 0ecember D6, >?BB, is fairly stated, in all material respects, based on criteria established in Internal Framework issued by */*. Furthermore, in our opinion, A3 ontrolMIntegrated

ompany maintained, in

all material respects, effective internal control over financial reporting as of 0ecember D6, >?BB, based on criteria established in Internal issued by */*. ontrolMIntegrated Framework

$OIN$ CONCERN
+oing concern is a term which means that an entity will continue to operate in the near future which is generally more than ne#t 6> months, so long as it generates or obtains enough resources to operate. If the auditee is not a going concern, it means that the entity might not be able to sustain itself within the ne#t twelve months. Auditors are required to

consider the going concern of an auditee before issuing a report. If the auditee is a going concern, the auditor does not modify hisIher report in any way. 5owever, if the auditor considers that the auditee is not a going concern, or will not be a going concern in the near future, then the auditor is required to include an e#planatory paragraph before the opinion paragraph or following the opinion paragraph, in the audit report e#plaining the situation, which is commonly referred to as the going concern disclosure. /uch an opinion is called an Gunqualified modified opinionG. 1nfortunately, many auditors are increasingly reluctant to include this disclosure in their opinions, since it is considered a Gself,fulfilling prophesyG by some. "his is because a disclosure for a lack of going concern is viewed negatively by investors, lending institutions, and credit agencies, and therefore reduces the chance that the auditee may obtain the capital or borrowing it needs to survive once the disclosure is made. If this situation occurs, the auditee is more likely to stop being a going concern while the auditor loses potential future audit engagements, and so the auditor may be pressured to avoid including a going concern disclosure. In a study performed on >??6 bankruptcies, nearly half $8=Q% of selected public companies who faced bankruptcy in >??6 did not have a Ggoing concern disclosureG in the previous auditor!s reports. Additionally, 6> of the >? largest bankruptcies in 1./. history occurred between >??6 and >??> and none of them had a Ggoing concern disclosureG in their previous auditor!s report. As for the actual wording of the auditor!s report, when a lack of going concern is determined by the auditor, the disclosure paragraph should state the situation, state the auditor!s determination, and state the auditee!s plan to correct the situation. "he disclosure paragraph should immediately follow the opinion paragraph.

Auditor responsibilities for front section of annual reports one of the reasons given by investors for wanting more commentary from auditors is a feeling that the information provided by directors in the front section of annual reports is presented in a favourable light or tends to be standardised boilerplate.

"he responsibilities of auditors for reporting on the front section of the financial statements are currently limited. Auditors read this information and must report if the information provided is inconsistent with the financial statements or contains material the auditors know to be untrue. Annual reports have e#panded over the years and banks and other reporting entities provide significantly more information in the front section of annual reports. "he scope of the audit report, by contrast, has remained relatively staticbeing largely focused on the financial statements. it may be time to reassess this. "here was no particular demand from the stakeholders we interviewed for auditors to provide a true and fair opinion over the front section of annual reports. 5owever, there was some surprise from investors that auditorsL responsibilities were so limited, and particularly that audit reports do not provide comfort on the completeness of information presented in the front section of annual reports in our view, auditors should report not only on whether there are any inconsistencies between the information in the front ection of annual reports and the financial statements, but also whether there are anymaterial omissions in the information provided in the front section of annual reports, based upon the auditorsL knowledge of the bank they are reporting on. Alternatively, the auditor could

report on whether the balance of the information is appropriate. "his would require the development of a new auditing or assurance standard to define the terms to be used so that users are clear about the level of assurance they receive. Without this there is a danger of a widened e#pectation gap over the role of the auditor but we see no reason why an appropriate standard could not be developed. A1 /ection D6: onsideration of Fraud in a Financial /tatement Audit $/upersedes /A/ @o. =>.% /ourceH /A/ @o. 77E /A/ @o. 66D. )ffective for audits of Rnancial statements for periods beginning on or after 0ecember 69, >??>, unless otherwise indicated. Introduction and *verview $i% /ection 66?, 4esponsibilities and Functions of the Independent Auditor, states, G"he auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the Rnancial statements are free of material misstatement, whether caused by error or fraud."his section establishes standards and provides guidance to auditors n fulRlling that responsibility, as it relates to fraud, in an audit of Rnancial statements conducted in accordance with generally accepted auditing standards $+AA/%. $ii% "he following is an overview of the organi&ation and content of this sectionH

6% 0escription and characteristics of fraud. "his section describes fraudand its characteristics. "he importance of e#ercising professional skepticism. "his section discusses the need for auditors to e#ercise professional skepticism when considering the possibility that a material misstatement due to fraud could be present. >% 0iscussion among engagement personnel regarding the risks of materialmisstatement due to fraud. "his section requires, as part of planning the audit, that there be a discussion among the audit team members to consider how and where the entity!s inimical statements might be susceptible to material misstatement due to fraud and to reinforce the importance of adopting an appropriate mindset of professionalLs skepticism. D% *btaining the information needed to identify risks of material misstatement due to fraud. "his section requires the auditor to gather information necessary to identify risks of material misstatement due to fraud, by a. Inquiring of management and others within the entity about the risks of fraud. b. onsidering the results of the analytical procedures performed in planning the audit. c. onsidering fraud risk factors. and the Appendi#, G)#amples of Fraud 4isk FactorsG d. onsidering certain other information

A10I"*4/! 4)/.*@/I3I(I"C
6. *ur responsibility is to e#press an opinion on these financial statements based on our audit. We conducted our audit in accordance with the /tandards on Auditing issued by the Institute of hartered Accountants of India. "hose /tandards 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. "he procedures selected depend on the auditors! 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 auditors consider internal control relevant to the ompany!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 'anagement, as well as evaluating the overall presentation of the financial statements. D. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION
In our opinion, and to the best of our information and according to the e#planations given to us, the accompanying 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 IndiaH $a% in the case of the 3alance /heet, of the state of affairs of the 'arch, >?6DE ompany as at D6st

$b% in the case of the /tatement of .rofit and (oss, of the profit for the year ended on that dateE and $c% In the case of the ash Flow /tatement, of the cash flows for the year ended on that date.

4).*4" *@ *"5)4 ()+A( A@0 4)+1(A"*4C 4)S1I4)')@"/

As required by !the ompanies $Auditor!s 4eport% *rder, >??D!, as amended by !the entral

ompanies $Auditor!s 4eport% $Amendment% *rder, >??8!, issued by the

+overnment of India in terms of sub,section $8A% of section >>F of the Act $hereinafter referred to as the *rder%, and on the basis of such checks of the books and records of the ompany as we considered appropriate and according to the information and e#planations given to us, we give in the Anne#ure a statement on the matters specified in paragraphs 8 and 9 of the *rder.

As required by section >>F$D% of the Act, we report thatH $a% We have obtained all the information and e#planations which, to the best of our knowledge and belief, were necessary for the purpose of our auditE $b% In our opinion, proper books of account as required by law have been kept by the ompany so far as appears from our e#amination of those booksE $c% "he 3alance /heet, /tatement of .rofit and (oss, and ash Flow /tatement dealt with

by this 4eport are in agreement with the books of accountE $d% In our opinion, the 3alance /heet, /tatement of .rofit and (oss, and ash Flow

/tatement dealt with by this report comply with the Accounting /tandards referred to in sub,section $D % of section >66 of the ActE $e% *n the basis of written representations received from the directors as on D6st 'arch, >?6D, and taken on record by the 3oard of 0irectors, none of the directors is disqualified as on D6st 'arch, >?6D, from being appointed as a director in terms of clause $g% of sub, section $6% of section >F8 of the Act. 6. $a% "he ompany is maintaining proper records showing full particulars, including

quantitative details and situation, of fi#ed assets. $b% "he fi#ed assets are physically verified by the 'anagement according to a phased programme designed to cover all the items over a period of two years which, in our opinion, is reasonable having regard to the si&e of the ompany and the nature of its

assets. .ursuant to the programme, a portion of the fi#ed assets has been physically verified by the 'anagement during the year and no material discrepancies have been noticed on such verification. $c% I n our opinion, and according to the information and e#planations given to us, a substantial part of fi#ed assets has not been disposed off by the ompany during the year.

>. $a% "he inventory $e#cluding stocks with third parties% has been physically verified by the 'anagement during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable. $b% In our opinion, the procedures of physical verification of inventory followed by the 'anagement are reasonable and adequate in relation to the si&e of the ompany and the nature of its business. $c% *n the basis of our e#amination of the inventory records, in our opinion, the ompany is maintaining proper records of inventory. "he discrepancies noticed on physical verification of inventory as compared to book records were not material. D. "he ompany has neither granted nor taken any loans, secured or unsecured, toI from companies, firms or other parties covered in the register maintained under /ection D?6 of the Act. "herefore, the provisions of lause 8$iii%;$b%, $c%, $d%, $f% and $g%< of the said

*rder are not applicable to the ompany. 8. In our opinion, and according to the information and e#planations given to us, there is an adequate internal control system commensurate with the si&e of the ompany and the nature of its business for the purchase of inventory and fi#ed assets and for the sale of goods and services. Further, on the basis of our e#amination of the books and records of the ompany, and according to the information and e#planations given to us, we have

neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

9. $a% According to the information and e#planations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section D?6 of the ompanies Act, 679: have been so entered. $b% In our opinion, and according to the information and e#planations given to us, the transactions made in pursuance of such contracts or arrangements and e#ceeding the value of 4upees Five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. :. "he ompany has not accepted any deposits from the public within the meaning of /ections 9=A and 9=AA of the Act and the rules framed there under. F. I n our opinion, the ompany has an internal audit system commensurate with its si&e and the nature of its business. =. We have broadly reviewed the books of account maintained by the respect of products where, pursuant to the rules made by the ompany in

entral +overnment of

India, the maintenance of cost records has been prescribed under clause $d% of sub,section $6% of /ection >?7 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed e#amination of the records with a view to determine whether they are accurate or complete. 7. $a% According to the information and e#planations given to us and the records of the ompany e#amined by us, in our opinion, the ompany is generally regular in depositing

undisputed statutory dues in respect of provident fund, employees! state insurance, service ta#, e#cise duty and ta# deducted at source, and is regular in depositing undisputed statutory dues, including investor education and protection fund, income ta#, sales ta#, wealth ta#, customs duty and other material statutory dues, as applicable, with the appropriate authorities. $b% According to the information and e#planations given to us and the records of the ompany e#amined by us, there are no dues of wealth ta# which have not been deposited on account of any dispute. "he particulars of dues of income ta#, sales ta#, service ta#, customs duty and e#cise duty as at D6st 'arch, >?6D which have not been deposited on account of a dispute, are as followsH 6. "he ompany has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

>. As the

ompany does not have any borrowings from any financial

institution or bank nor has it issued any debentures as at the balance sheet date, the provisions of
ompany. D. "he ompany has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. "herefore, the provisions of lause 8$#ii% of the *rder are not applicable to the ompany. 8. As the provisions of any special statute applicable to chit fundI nidhiI mutual benefit

lause 8$#i% of the *rder are not applicable to the

fundI societies are not applicable to the ompany, the provisions of lause 8$#iii% of the *rder are not applicable to the ompany. 9. I n our opinion, the ompany is not dealing in or trading in shares, securities, lause 8$#iv% of the

debentures and other investments. Accordingly, the provisions of *rder are not applicable to the ompany.

:. In our opinion, and according to the information and e#planations given to us, the ompany has not given any guarantee for loans taken by others from banks or financial institutions during the year. Accordingly, the provisions of lause 8$#v% of the *rder are not applicable to the ompany. F. "he ompany has not raised any term loans. Accordingly, the provisions of lause

8$#vi% of the *rder are not applicable to the ompany. =. "he ompany has not raised any loans on short term basis. Accordingly, the

provisions of lause 8$#vii% of the *rder are not applicable to the ompany. 7. "he ompany has not made any preferential allotment of shares to parties and

companies covered in the register maintained under /ection D?6 of the Act during the year. Accordingly, the provisions of lause 8$#viii% of the *rder are not applicable to the ompany. 6?. "he ompany has not issued any debentures during the year and does not have any debentures outstanding as at the beginning of the year and at the year end. Accordingly, the provisions of lause 8$#i#% of the *rder are not applicable to the ompany. 66. "he ompany has not raised any money by public issues during the year.

Accordingly, the provisions of ompany.

lause 8$##% of the *rder are not applicable to the

6>. 0uring the course of our e#amination of the books and records of the

ompany,

carried out in accordance with the generally accepted auditing practices in India, and according to the information and e#planations given to us, we have neither come across any instance of material fraud on or by the ompany, noticed or reported during the year, nor have we been informed of any such case by the 'anagement

Analysis of Financial /tatement "ALANCE SHEET O TATA MOTORS

%%%%%%%%%%%%%%%%%%% IN RS& CR& %%%%%%%% 'ar !6D 'ar !6> ' 6> mths 6> mths 6> mths 69 mths >6F.77 >6F.77 ?.?? ?.?? 6,=8>.=

6> mths /ources *f Funds "otal /hare apital )quity /hare apital /hare Application 'oney .reference /hare apital 4eserves

>6:.>9 >6:.>9 ?.?? ?.?? >,89F.FF

>6:.69 >6:.69 ?.?? ?.?? D,>7:.F

>69.79 >69.79 ?.?? ?.?? >,88D.9

>6=.6F >6=.6F ?.?? ?.?? >,D:8.:

4evaluation 4eserves @etworth /ecured (oans 1nsecured (oans "otal 0ebt "otal (iabilities

?.?? >,:F8.?> ?.?? ?.?? ?.?? >,:F8.?> 'ar !6D 6> mths

= ?.?? D,96>.7 D ?.?? ?.?? ?.?? D,96>.7 D 'ar !6> 6> mths

F ?.?? >,:97.9 > ?.?? ?.?? ?.?? >,:97.9 > 'ar !66 6> mths

= ?.:F >,9=D.9 > ?.?? ?.?? ?.?? >,9=D.9 > 'ar !6? 6> mths

9 ?.:F >,?:6.9 6 688.:9 >FF.D? 8>6.79 >,8=D.8 : 'ar !?7 69 mths >,==6.F D 6,>F8.7 9 6,:?:.F = 8F>.?F DD>.:> >,9>=.= : 9D:.=7 67?.97 D,>9:.D 8 6,67:.7 9 6,9=:.F

Application *f Funds +ross 3lock (essH Accum. 0epreciation @et 3lock apital Work in .rogress Investments Inventories /undry 0ebtors ash and 3ank 3alance "otal urrent Assets (oans and Advances Fi#ed 0eposits D,=:=.79 6,9F:.?9 >,>7>.7? >69.:8 >,DD?.:: >,9>:.77 =DD.8= 6,F?F.=7 9,?:=.D: 6,:?8.76 ?.?? D,9:8.D 9 6,86:.= = >,68F.8 F >69.89 >,8D=.> 6 >,96:.: 9 :F=.77 6,=D?.? 8 9,?>9.: = 6,6D6.8 : ?.?? D,9D6.9 ? 6,D:>.8 ? >,6:7.6 ? >==.F: 6,>:?.: F >,=6?.F F 78D.>6 6,:>=.8 F 9,D=>.8 9 6,?:6.: = ?.?? D,9=6.7 : 6,867.= 9 >,6:>.6 6 >FD.7: 6,>:8.? = >,6F7.7 D :F=.88 >D6.DF D,?=7.F 8 6,?:=.D 6 6,::?.=

"otal

A,

(oans

Advances 0effered redit urrent (iabilities .rovisions "otal ( J .rovisions

:,:FD.>F ?.?? :,>:?.?7 >,9F=.D: =,=D=.89

:,69F.6 8 ?.?? 9,877.8 > 6,789.7 > F,889.D 8 , 6,>==.> ? ?.?? D,96>.7 D 6,??7.> D 6:.>9

:,888.6 D ?.?? 9,F=>.= 8 6,F>?.D ? F,9?D.6 8 , 6,?97.? 6 ?.?? >,:97.9 > 7>>.7> 6>.D>

8 9,=6=.= 7 ?.?? 9,87D.7 F 6,886.9 9 :,7D9.9 > , 6,66:.: D ?.?? >,9=D.9 > 8:=.87 66.=8

: :,?8?.? 9 ?.?? 8,88?.? = 6,9>F.7 = 9,7:=.? : F6.77 ?.?? >,8=D.8 : 86F.>: 7.89

@et urrent Assets 'iscellaneous )#penses "otal Assets ontingent (iabilities 3ook Aalue $4s%

,>,6:9.6= ?.?? >,:F8.?> =78.>6 6>.DF

.4*FI" A@0 (*//AI

Mar !13 6> mths *perating .rofit .30I" 2)&*3 D9.7F Mar !12 6> mths 3+&(2 D=.=6 Mar !11 6> mths 23&,, >F.>= Mar !1' 6> mths 1*&1( >>.8D Mar !'( 6> mths 12&(2 68.77

Interest .30" 0epreciation *ther Written *ff .rofit 3efore "a# )#tra,ordinary items .3" $.ost )#tra,ord Items% "a# Repor-e. @et .rofit "otal Aalue Addition .reference 0ividend )quity 0ividend orporate 0ividend "a# Per share data /ann0ali1e.2 /hares in issue $lakhs% )arning .er /hare /R12 )quity 0ividend $Q% 3ook Aalue $4s%

>8.=> 66.69 6?.77 ?.?? ?.6: ,?.D= ,?.>> >.F8 +&() 77.FF ?.?? 6.?= ?.6= F6.== *&31 69.?? 6:?.68

67.=7 6=.7> 7.D> ?.?? 7.:? ,?.6? 7.9? D.>: ,&2+ =D.7= ?.?? 6.?= ?.6F F6.== *&)' 69.?? 698.:8

66.=9 69.8D =.6F ?.?? F.>: ?.D6 F.9F >.8F +&'* :F.F= ?.?? 6.?= ?.6F F6.== )&') 69.?? 9=.7F

=.68 68.>7 9.:9 ?.?? =.:8 ?.?= =.F> >.77 +&)+ 9:.9? ?.?? 6.?= ?.6= F6.== *&'' 69.?? 9D.:8

=.D8 :.:9 8.=D ?.?? 6.=> ?.>: >.?= 6.?6 1&'( 8F.:D ?.?? ?.=: ?.69 F6.== 1&+1 6>.?? 8F.==

C3ap-er 4 ANALYSIS O ACCOUNTS AND AUDIT O Ta-a Mo-or1

"he financial information discussed in this section is derived from the Audited onsolidated Financial /tatements. "ata 'otors +roup primarily operates in the automotive segment. "he acquisition of -(4 enabled the ompany to enter the premium car market. "he ompany continues to focus on profitable growth opportunities in global automotive business, through new products and market e#pansion. "he ompany and -(4, continue to focus on integration, and ompany!s

synergy through sharing of resources, platforms, facilities for product development and

manufacturing, sourcing strategy, mutual sharing of best practices. 6. $Tthe We have e#amined the attached financial information of "ata 'otors (imited ompanyL%, as approved by the 3oard of 0irectors of the ompany, prepared in

terms of the requirements of .aragraph 3 of .art II of /chedule II of the ompanies Act, 679: $Tthe ActL% and the /ecurities and )#change 3oard of India $T/)3IL% , $0isclosure and Investor .rotection% +uidelines, >??? as amended till August >=, >??= $the T/)3I +uidelinesL% issued by /)3I under /ection 66 of the /ecurities and )#change 3oard of India Act, 677> and related clarifications thereto and in terms of our engagement agreed upon with the ompany in accordance with our engagement letter dated -uly D, >??= in connection with the proposed simultaneous but unlinked issue of *rdinary /hares and TAL *rdinary /hares on a 4ights basis $N4ights IssueO%.

>.

Financial Information as per Audited Financial /tatements

We have e#amined the attached T/ummary /tatement of Assets and (iabilities, as restated of "ata 'otors (imitedL as at 'arch D6, >??=, >??F, >??:, >??9 and >??8 $Anne#ure I% and the attached T/ummary /tatement of .rofit and (osses, as restated of "ata 'otors (imitedL $Anne#ure II% for each of the years ended 'arch D6, >??=, >??F, >??:, >??9 and >??8 together referred to herein as T@on,consolidated 4estated /ummary /tatementsL. "hese @on,consolidated 4estated /ummary /tatements have been e#tracted from the financial statements of "ata 'otors (imited as at and for the years ended 'arch D6, >??=, >??F, >??:, >??9 and >??8 and have been approvedI adopted by the 3oard of 0irectorsI 'embers for those respective years. Audit for the financial years ended 'arch

D6, >??9 and >??8 was conducted by 'essrs A. F. Ferguson J o. $NAFFO% and 'essrs /. 3. 3illimoria J o., $N/33O% $AFF together with /33, the N)rstwhile AuditorsO% and our opinion in so far as they relate to the amounts included in respect of these years are based solely on the reports submitted by them. "he financial statements of the ompany as at and for the year ended 'arch D6, >??=, >??F and >??: have been audited by us. 3ased on our e#amination of these @on,consolidated 4estated /ummary /tatements, we state thatH

i.

"he T@on,consolidated 4estated /ummary /tatementsL have to be read in

conjunction with the T/ignificant Accounting .olicies and @otes to the /ummary /tatements of Assets and (iabilities, /ummary /tatement of .rofit and (oss and ash

Flow /tatement, as restated of "ata 'otors (imited given in Anne#ure IA to this report.

ii.

"he restated profits have been arrived after adjusting for the changes in

accounting policies retrospectively in respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods.

iii.

"he restated profits have been arrived at after making such adjustments

and regroupings as in our opinion are appropriate in the year to which they relate and are described under note ;3< appearing in Anne#ure IA to this reportE

iv.

"here are no e#tra ordinary items that need to be disclosed separately in

the @on,consolidated 4estated /ummary /tatements.

v.

"here are no qualifications in the auditorsL report on the financial

statements that require adjustments to the @on,consolidated 4estated /ummary /tatements.

D.

*ther Financial Information

We have also e#amined the following financial information relating to the ompany as at and for the financial years ended 'arch D6, >??=, >??F, >??:, >??9 and >??8 approved by the 3oard of 0irectors and anne#ed to this reportH

a.

/tatement of ash Flows, as restated for the years ended 'arch D6, >??=,

>??F, >??:, >??9 and >??8 $Anne#ure III%E

b.

/ignificant Accounting .olicies adopted by the ompany and notes to the

4estated /ummary /tatements and ash Flow /tatement $Anne#ure IA%E

c.

0etails of /ecured and 1nsecured (oans as at 'arch D6, >??=, >??F,

>??:, >??9 and >??8 $Anne#ure A%

d.

0etails of /undry 0ebtors as at 'arch D6, >??=, >??F, >??:, >??9 and

>??8 $Anne#ure AI%

e.

0etails of (oans and Advances as at 'arch D6, >??=, >??F, >??:, >??9

and >??8, $Anne#ure AII%

f.

0etails of Investments as at 'arch D6, >??=, >??F, >??:, >??9 and >??8

$Anne#ure AIII%

g. $Anne#ure IB%

0etails of 0eferred "a# as at 'arch D6, >??=, >??F, >??:, >??9 and >??8

h.

0etails of 0ividend and *ther Income for the years ended 'arch D6,

>??=, >??F, >??:, >??9 and >??8 $Anne#ure B%

i.

0etails of 0ividends .aid for the years ended 'arch D6, >??=, >??F,

>??:, >??9 and >??8 $Anne#ure BI%

j.

/tatement of "a# /helter for the years ended 'arch D6, >??=, >??F, >??:,

>??9 and >??8 $Anne#ure BII%

k.

Accounting 4atios relating to earnings per share, net asset value and return

on net worth $Anne#ure BIII%

l.

apitalisation /tatement as at 'arch D6, >??= $Anne#ure BIA%

CHAPTER + CONCLUSION
"he goal of an audit is to form and e#press an opinion on financial statements. "he audit is performed to get reasonable assurance on whether the financial statements are free of material misstatement. An audit also includes assessing the accounting principles used and the significant estimates made by the management. Audit conclusions and reporting are one of the principles governing an audit. 4eporting is the last procedure of the process of an audit.

/")./ I@A*(A)0
An audit involves the following stepsH +athering of audit evidence, evaluation of the evidence, deciding on their reliability and acceptability, drawing a conclusion based on such evaluations, forming an opinion based on a set of conclusions and e#pressing an opinion. "he auditor should get sufficient and appropriate audit evidence both at the transaction level, as well as the account level. 5e should evaluate the adequacy of the evidence in his possession, both in terms of quality and quantity. "he auditor should draw a conclusion on each of the line items of the financial statements, based on the transactions e#amined by him. A set of conclusions, on such line items, leads to forming an opinion on the financial statements as a whole, both at the transaction level as well as at the account level, which, he should e#press in his report without any fear or favour. +athering of audit evidenceH An auditor should be thorough in his efforts to gather the audit evidence, and be impartial in its evaluation. /ubstantive procedures such as enquiry, information, confirmation, observation, compilation, verification and valuation, etc. are used to substantiate the transactions. arrying out such procedures on a reasonable

number of transactions provides a basis for drawing a conclusion on a particular head of account $line item%. 5aving gathered the audit evidence by substantive procedures, the auditor should ensure that the entity has complied with the necessary requirements such as requirements of law, applicable Accounting /tandards issued by the I AII @A A/ , accounting policies adapted by the entity from time to time, and internal control systems. )valuation of audit evidenceH 5aving gathered the audit evidence, the auditor goes through the evidence with a fine,toothed comb to properly evaluate it, judge their reliability and draw logical conclusions. 5e has to document the reasons for accepting or

rejecting certain replies and reports. Analysis of evidenceH "he auditor uses analytical procedures such as accounting ratios, analysesE intercompany comparisons, comparing the industry norm with the data of the unit, etc. to analyse the data. Audit conclusionsH /uch analyses help the auditor to draw conclusions regarding various aspects of the line items of the financial statements. "hese conclusions should be independent and factual, and not based on assumptions. A set of such conclusions leads to forming an opinion. ompliance with code of conductH .rofessional ethics of the I AI hold an auditor guilty of professional misconduct for negligence if he doesn!t gather enough evidence to justify his opinion. 5e would be liable if the evidence in his possession is contradictory to the opinion e#pressed by him. "his makes drawing a conclusion a critical aspect of an audit.

)B.4)//I*@ *F *.I@I*@
"he auditor discusses his observations with those charged with governance, such as the audit committee of the company, before finalising the report. "he auditor should be firm in his opinion, and e#ercise his independence at this level. "his part of the audit is critical, and calls for resilience on the part of the auditor. An audit report, being a public document, should be drafted skilfully. "he code of conduct prohibits an auditor from divulging any information received by him in the course of his professional assignment, unless legally required so to do. "herefore, the auditor shouldn!t hesitate to take the help of a legal e#pert on whether to include certain comments in his report.

"I"ILO$RAPHY 6. *riol Amat >. Anne a&avan,-eny D.3eatri& +arcia *sma 8. (awrence Allan +ordon Ma56ine1 78o0rnal1 6.Accounting,Auditing and Accountability -ournal >.Audit and 3eyond D.Audit J4isk 8.Auditors 4eport

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