STANDARDS AUDITING FOLLOWED BY TATA

STEEL COMPANY

SUBMITTED BY

NAME: Ms. JEENAL N. RATHOD

CLASS: M.COM PART II ACCOUNTS (SEM IV)

SUBMITTED TO

UNIVERSITY OF MUMBAI

PROJECTED GUIDE: Mrs. Dr. NATIK PODDAR

RAJATHANI SAMMELANS

GHANSHYAMDAS SARAF GIRLS COLLEGE,

AFFILLIATED TO UNIVERSITY OF MUMBAI

REACCREDITED BY NAAC WITH A GRADE

&

DURGADEVI SARAF JUNIOR COLLEGE

( ARTS & COMMERCE)

S.V.ROAD MALAD (W)

MUMBAI 400064

YEAR: 2013-14
STANDARD AUDITING
Page 1
 RAJASTHANI SAMMELANS

Ghanshyamdas Saraf College

Affiliated to University of Mumbai

REACCREDITED BY NAAC WITH A GRADE

R. S. Campus, S. V. Road,

Malad (W), Mumbai: 400 064

Year: 2013-2014

CERTIFICATE

I Prof. Dr. Natika Poddar here by certify that Ms. Jeenal Navratana
Rathod a student of Ghanshyamdas Saraf College of M.COM PART II
ACCOUNT (Semester IV) has completed Project on
STANDARDS AUDITING FOLLOWED BY TATA
STEEL COMPANY in the Academic year 2013-2014.

Thus information submitted is true and Original to the best of my

Knowledge.

External Examiner: Principal:

Date:

Project Co-ordinator: College Seal:

Date:
STANDARD AUDITING
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 ACKNOWLEDGEMENT

I take this opportunity to thank the UNIVERSITY OF MUMBAI for

giving me a chance to do this Project.

I express my sincere gratitude to the Principal Mrs. Sujata

Karmarkar, course co-ordinator and Guide Prof. Mrs. Dr. Natika
Poddar, our librarian and other teachers for their constant support and
helping me for completing the project.

I am also grateful to my friends for giving support in my project.

Lastly, I would like to thank each and every person who helped me in
completing the project especially MY PARENTS.

Date: Signature of the Student :

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 DECLARATION

I Miss JEENAL NAVARATNA RATHOD a student of Ghanshyamdas

Saraf College of Arts and Commerce, Malad (W) M.COM PART II
ACCOUNT (Semester IV) hereby declare that I have completed
project on STANDARDS AUDITING FOLLOWED BY
TATA STEEL COMPANY in the academic Year 2013-2014.
This information submitted is true and original to best of my
Knowledge.

Date : Signature of the Student:

STANDARD AUDITING
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 INDEX

Sr. No TITLE Page.

No.

CHAPTER 1

1.1 Executive Summary (Preface) 6

Objectives of the Study
1.2 7

CHAPTER 2

2.1 Standard Auditing (SA) 8-12

2.2 Generally Accepted Auditing Standard (GAAS) 13-15

CHAPTER 3

3.1 TATA STEEL Company profile 16-19

Auditors Reports of TATA STEEL Company
3.2 20-27
Standard Auditing Followed by TATA STEEL Company
3.3 28-46

3.4 Comments on Standard Auditing Followed by TATA 47

STEEL Company

CHAPTER 4

4.3 Conclusion 48

4.6 Bibliography 49

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CHAPTER 1

1.1Executive Summary:

Tata Steel, established in 1907 is the flagship company of the $ 17.8

billion Tata Group, one of Indias largest and most respected business
houses. It is currently the worlds sixth largest steel producer. Tata Steel is the
world 6th largest steel company with an existing annual crude steel
production capacity of 30 Million Tones Per Annum (MTPA). Tata Steel
has a balanced global presence in over 50 developed European and fast
growing Asian markets, with manufacturing units in 26 countries.

This report, deals with the analysis of Auditors report on basis of financial
statement of TATA steel which is followed Auditing standards for Tata Steel,
The report integrates the Auditing standards which is generally followed in
India. This report has contained various types of Auditing Standard followed by
company. i.e. TATA Steel has followed SA 220- Quality Control for an Audit
of Financial Statements, 501 Audit EvidenceSpecific Considerations for
Selected Items, SA 610- Using The Work of Internal Auditors. There are
This Three main Auditing standard Followed By TATA steel Company.

Hence, In this report we have show various Auditing standard followed by

auditor in India and making audit report of company on basis of follow
Accounting and Auditing standard of India and also show Generally
Accepted Auditing Standards (GAAS) of India.

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1.2OBJECTIVES OF THE STUDY:

Since Auditing Standard is one of the most important aspects of

Auditors report, it enables to study in-depth the Various Auditing
Standard Followed in Audit report of Company; so that as a student
of Finance Advanced Auditing it gives me a chance to study the
Auditing standard followed of the industry. It offers scope to
understand various aspects of Auditing standard and all these aspects
are reflected in this report. The estimation of required Auditing
Standard is differs from organization to organization. So doing this
project in an industry will help in knowing more about the
Auditing Standard, its preparation and execution.

The study has the following

objectives :-

1. To see whether the Auditing Standard in TATA STEEL

is an effective one.
2. To find out the extent of the need and adequacy of the Auditing
Standard of the firm.
3. To evaluate or analyze the organizational financial discipline
and fiscal soundness.
4. To find out the variance attained in related to projected and actual
figure.
5. To see the Auditing Standard of the company.
6. To see the Various Auditing Standard followed in India.
7. To see the Auditing Standard is properly maintained.
8. To see the Generally Accepted Auditing Standards (GAAS) of India.

STANDARD AUDITING
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CHAPTER 2
2.1. STANDARD AUDITING
Standards on Quality Control (SQCs)

SQC 1, Quality Control for Firms that Perform Audit and Reviews of
Historical Financial Information, and other Assurance and Related Services
Engagements

Announcement on Amendment to SQC 1 - Retention Period for Engagement

Documentation (Working Papers)

Audits and Reviews of Historical Financial Information

New/Revised Standards (Auditing, Review and Others) issued
under the Clarity Project:

100-199 Introductory Matters

200-299 General Principles and Responsibilities

SA 200 (Revised) issued under the Clarity Project, Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with
Standards on Auditing

SA 210 (Revised) under the Clarity Project, Agreeing the Terms of Audit
Engagements

SA 220 (Revised)issued under the Clarity Project , Quality Control for an

Audit of Financial Statements

SA 230 (Revised) under the Clarity Project, Audit Documentation

SA 240 (Revised) under the Clarity Project, The Auditors Responsibilities

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Relating to Fraud in an Audit of Financial Statements

SA 250 (Revised) under the Clarity Project, Consideration of Laws and

Regulations in an Audit of Financial Statements

SA 260 (Revised) under the Clarity Project, Communication with Those

Charged with Governance

SA 265 issued under the Clarity Project, Communicating Deficiencies in

Internal Control to Those Charged With Governance and Management

SA 299 (AAS 12), Responsibility of Joint Auditors

300-499 Risk Assessment and Response to Assessed Risks

SA 300 (Revised) under the Clarity Project, Planning an Audit of Financial

Statements

SA 315 under the Clarity Project, Identifying and Assessing the Risks of
Material Misstatement through Understanding the Entity and Its Environment

SA 320 (Revised) issued under the Clarity Project, Materiality in Planning

and Performing an Audit

SA 330 under the Clarity Project, The Auditors Responses to Assessed

Risks

SA 402 (Revised) issued under the Clarity Project, Audit Considerations

Relating to an Entity Using a Service Organization

SA 450 issued under the Clarity Project, Evaluation of Misstatements

Identified During the Audit

500-599 Audit Evidence

SA 500 (Revised) under the Clarity Project, Audit Evidence

SA 501 (Revised)issued under the Clarity Project, Audit EvidenceSpecific

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Considerations for Selected Items

SA 505 (Revised) issued under the Clarity Project, External Confirmations

SA 510 (Revised) under the Clarity Project, Initial Audit Engagements

Opening Balances

SA 520 (Revised) issued under the Clarity Project, Analytical Procedures

SA 530 (Revised) under the Clarity Project, Audit Sampling

SA 540 (Revised) under the Clarity Project, Auditing Accounting Estimates,

Including Fair Value Accounting Estimates, and Related Disclosures

SA 550 (Revised) under the Clarity Project, Related Parties

SA 560 (Revised) under the Clarity Project, Subsequent Events

SA 570 (Revised) under the Clarity Project, Going Concern

SA 580 (Revised) under the Clarity Project, Written Representations

600-699 Using Work of Others

SA 600 (AAS 10), Using the Work of Another Auditor

SA 610 (Revised) issued under the Clarity Project, Using The Work of
Internal Auditors

SA 620 (Revised) issued under the Clarity Project, Using the Work of an
Auditors Expert

700-799 Audit Conclusions and Reporting

SA 700 (Revised) issued under the Clarity Project, Forming an Opinion and
Reporting on Financial Statements

SA 705 issued under the Clarity Project, Modifications to the Opinion in the

STANDARD AUDITING
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Independent Auditors Report"

SA 706 issued under the Clarity Project, Emphasis of Matter Paragraphs and
Other Matter Paragraphs in the Independent Auditors Report"

SA 710 (Revised) issued under the Clarity Project, Comparative Information

Corresponding Figures and Comparative Financial Statements

SA 720 under the Clarity Project, The Auditors Responsibility in Relation

to Other Information in Documents Containing Audited Financial Statements

800-899 Specialized Areas

SA 800 issued under the Clarity Project, Audits of Financial Statements

Prepared in Accordance with Special Purpose Frameworks

SA 805 issued under the Clarity Project, Special ConsiderationsAudits of

Single Financial Statements and Specific Elements, Accounts or Items of a
Financial Statement

SA 810 issued under the Clarity Project, Engagements to Report on

Summary Financial Statements

2000-2699 Standards on Review Engagements (SREs)

SRE 2400 (Revised), Engagements to Review Financial Statements

SRE 2410 Review of Interim Financial Information Performed by the

Independent Auditor of the Entity

General Clarifications issued

General Clarification (GC)-AASB/2/2004 on SA 210

General Clarification (GC)-AASB/1/2002 on SA 620

Assurance Engagements Other Than Audits or Reviews of

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Historical Financial Information

3000-3699 Standards on Assurance Engagements (SAEs)

3000-3399 Applicable to All Assurance Engagements

3400-3699 Subject Specific Standards

SAE 3400 (AAS 35), The Examination of Prospective Financial Information

SAE 3402, Assurance Reports on Controls At a Service Organization

Related Services

4000-4699 Standards on Related Services (SRSs)

SRS 4400 (AAS 32), Engagements to Perform Agreed-upon Procedures

Regarding Financial Information

SRS 4410 (AAS 31), Engagements to Compile Financial Information

STANDARD AUDITING
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2.2. Generally Accepted Auditing Standards:

Generally Accepted Auditing Standards, or GAAS are sets of standards

against which the quality of audits are performed and may be judged.
Several organizations have developed such sets of principles, which vary by
territory. In the United States, the standards are promulgated by the
Auditing Standards Board, a division of the American Institute of Certified
Public Accountants (AICPA). Section 150 states that there are 10 standards:
3 general standards, 3 fieldwork standards, and 4 reporting standards. These
standards are issued and clarified Statement of Accounting Standards, with
the first issued in 1972 to replace previous guidance. Typically, the first
number of the AU section refers to which standard applies. However, in
2012 the Clarity Project significantly revised the standards and replaced AU
Section 150 with AU Section 200, which does not explicitly discuss the 10
standards. In the United States, the Public Company Accounting Oversight
Board develops standards (Auditing Standards or AS) for publicly traded
companies since the 2002 passage of the Sarbanes-Oxley Act; however, it
adopted many of the GAAS initially. The GAAS continues to apply to non-
public companies.

General:

1. The auditor must maintain independence in mental attitude in all

matters related to the audit.

2. The auditor must have adequate technical training & proficiency to

perform the audit.

3. The auditor must exercise due professional care during the

performance of the audit and the preparation of the report.

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Standards of Field Work:

1. The auditor must adequately plan the work and must properly
supervise any assistants.

2. The auditor must obtain a sufficient understanding of the entity and

its environment, including its internal control, to assess the risk of
material misstatement of the financial statements whether due to
error or fraud, and to design the nature, timing, and extent of
further audit procedures.

3. The auditor must obtain sufficient appropriate audit evidence by

performing audit procedures to afford a reasonable basis for an
opinion regarding the financial statements under audit.
Standards of Reporting:

1. The auditor must state in the auditor's report whether the financial
statements are presented in accordance with generally accepted
accounting principles.

2. The auditor must identify in the auditor's report those circumstances

in which such principles have not been consistently observed in the
current period in relation to the preceding period.

3. When the auditor determines that informative disclosures are not

reasonably adequate, the auditor must so state in the auditor's
report.

4. The auditor must either express an opinion regarding the financial

statements, taken as a whole, or state that an opinion cannot be
expressed, in the auditor's report. When the auditor cannot express
an overall opinion, the auditor should state the reasons therefore in
the auditor's report. In all cases where an auditor's name is
STANDARD AUDITING
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 associated with financial statements, the auditor should clearly
indicate the character of the auditor's work, if any, and the degree
of responsibility the auditor is taking, in the auditor's report.

Clarity Project:

In 2004, a project was begun to clarify and converge the standards with
the International Standards in Auditing (ISAs). Many of the AU sections
are being remapped as part of the Clarity Project. In October 2011, SAS
122 was issued which superseded all previous SAS as except 51, 59, 65,
87, and 117-20. In the interim period, these new AU sections are referred
to as AU-C until 2014.[6] The AICPA provides a list of the AU-C standards.

ISAs:

International Standards on Auditing are developed by the International

Auditing and Assurance Standards Board of the International Federation of
Accountants. Derivatives of ISAs are used in the audit of several other
jurisdictions, including the United Kingdom.

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CHAPTER 3

3.1. COMPANY PROFILE

TATA STEEL:
Tata Steel, formerly known as TISCO and Tata Iron and Steel Company
Limited, Established in 1907, Tata Steel, the flagship company of the Tata
group is the first integrated steel plant in Asia and is now the world`s
second most geographically diversified steel producer and a Fortune 500
Company. Backed by 100 glorious years of experience in steel making,
Tata Steel is the world 6th largest steel company with an existing annual
crude steel production capacity of 30 Million Tones Per Annum (MTPA).
Tata Steel has a balanced global presence in over 50 developed European
and fast growing Asian markets, with manufacturing units in 26 countries.
STANDARD AUDITING
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It was the vision of the founder; Jaksetic Nusserwanji Tata, that on
February 27, 1908, the first stake was driven into the soil of Sakchi. His
vision helped Tata Steel overcome several periods of adversity and strive to
improve against all odds.
Tata Steel`s Jamshedpur (India) Works has a crude steel production capacity
of 6.8 MTPA which is slated to increase to 10 MTPA by 2010. The
Company also has proposed three Greenfield steel projects in the states of
Jharkhand, Orissa and Chhattisgarh in India with additional capacity of 23
MTPA and a Greenfield project in Vietnam.
Through investments in Corus, Millennium Steel (renamed Tata Steel
Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a
manufacturing and marketing network in Europe, South East Asia and the
pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in
2008, has operations in the UK, the Netherlands, Germany, France, Norway
and Belgium. Tata Steel Thailand is the largest producer of long steel
products in Thailand, with a manufacturing capacity of 1.7 MTPA. Tata
Steel has proposed a 0.5 MTPA mini blast furnace project in Thailand.
NatSteel Holdings produces about 2 MTPA of steel products across its
regional operations in seven countries.
Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has
also entered the steel building and construction applications market.
The iron ore mines and collieries in India give the Company a distinct
advantage in raw material sourcing. Tata Steel is also striving towards raw
materials security through joint ventures in Thailand, Australia,
Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signed
an agreement with Steel Authority of India Limited to establish a 50:50
joint venture company for coal mining in India. Also, Tata Steel has
bought 19.9% stake in New Millennium Capital Corporation, Canada for
iron ore mining. Exploration of opportunities in titanium dioxide business in
Tamil Nadu, Ferro-chrome plant in South Africa and setting up of a deep-

STANDARD AUDITING
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 sea port in coastal Orissa are integral to the Growth and Globalization
objective of Tata Steel.
Tata Steel India is the first integrated steel company in the world, outside
Japan, to be awarded the Deming Application Prize 2008 for excellence in
Total Quality Management.

Business divisions of the company:

Bearings Division : Manufactures ball bearings, double row self-

aligning bearings, magneto bearings, clutch release bearings and tapered
roller bearings for two wheelers, fans, water pumps, etc.

Ferro Alloys and Minerals Division : Operates chrome mines and

has units for making Ferro chrome and Ferro manganese. It is one of
the largest players in the global Ferro chrome market.

Agric Division : Tata Agric is the first organized manufacturer in

India of hand tools and implements for application in agriculture.

Tata Growth Shop (TGS) : Has designed, developed, manufactured,

erected and commissioned thousands of tones of equipment ranging from
overhead cranes to high precision components, including a rocket launch
pad for the Indian Space and Research Organization.

Tubes Division : The biggest steel tube manufacturer with the

largest market share in India, it aspires to strengthen its market presence
by expanding and modernizing its commercial and precision tube
manufacturing capacity.

Wire Division : A pioneer in the manufacture of steel wires in

India, it produces coated and uncoated wires, branded as Tata Iron. The
division also operates a wholly owned subsidiary in Sri Lanka.

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 Joint ventures and Associates:

Corus- Europe second largest steel maker with operations in the UK

and mainland Europe

Tinplate Company of India Limited (TCIL)

Tao Rolls Limited

Tata Ryerson Limited (TRYL)

Tata Refractoriness Limited (TRL)

Tata Sponge Iron Limited (TSIL)

Tata Metallics

Tata Pigments Limited

Jamshedpur Injection Powder Limited (Jamison)

TM International Logistics Limited (TMILL)

junction services limited

TRF Limited

Jamshedpur Utility and Service Company Limited (JUSCO)

The Indian Steel and Wire Products Limited (ISWP)

Tata BlueScope Steel Limited

Dharma Port Company, Orissa

Hooghly Met Coke & Power Company

Lanka Special Steel Limited

Silo Eastern Company Limited

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 NatSteel Holdings (NSH)

Tata Steel Thailand

Tata Steel KZN- South Africa

Tata NYK : A joint venture with Nippon Yusen Kabushiki K

Achievements/ recognition:

Tata Steel stall bags first prize in 'Heavy Industry' category at Dog
Mela-2011, Ranchi , March 17, 2011

Tata Steel has won `The Business world Most Respected Company
Award 2011? in the Metals category.

TATA Steel received two awards under the Ashtray Keel Protsahan
Puraskar for its remarkable contribution spanning several decades in the
field of sports in 2009.

Tata Steel India awarded the Deming Application Prize 2008 for
excellence in Total Quality Management. It is the first integrated steel
company in the world, outside Japan to get this award.

World Steel Dynamics has ranked Tata Steel as the world's best
steel maker (for two consecutive years) in its annual listing in February
2006.

Tata Steel has been conferred the Prime Minister of India's Trophy
for the Best Integrated Steel Plant five times. It has been awarded Asia's
Most Admired Knowledge Enterprise award five times in 2003, 2004,
2006, 2007 and 2008.

Conferred the prestigious Global Business Coalition Award for

Business Excellence in the Community in recognition of its pioneering
work in the field of HIV/ AIDS awareness.

Tata Steel works has been conferred the prestigious social

accountability (SA) 8000 certification by social. Accountability

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 international (SAI), USA. It is the first steel company in the world to
receive this certificate.

Corporate Sustainability Report of Tata Steel hailed by United Nation's

Environment Programme (UNEP) and Standard and poor as strongest,
submitted by any corporate house from emerging economies.

Best governed company Award 2006 for setting high standards in

governance practices.

Tata Steel won 'Award for Corporate Social Responsibility in Public

health' by US Indian Business Council (USIBC), Population Services
International (PSI) and the center for Strategic and International Studies
(CSIS) in 2007.

3.2. AUDITORS' REPORT:

TO THE MEMBERS OF TATA STEEL LIMITED:

1. We have audited the attached Balance Sheet of TATA STEEL LIMITED

("the Company") as at 31 March, 2012, the Statement of Profit and Loss
and the Cash Flow Statement of the Company for the year ended on that
date, both annexed thereto. These financial statements are the responsibility
of the Company's Management. Our responsibility is to express an opinion
on these financial statements based on our audit.

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2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and the
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by the
Management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO)

issued by the Central Government in terms of Section 227(4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3

above, we report that:

(a) we have 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;

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(c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;

(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the
explanations given to us, the said financial statements give the information
required by the Companies Act, 1956 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, 2012;

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

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

5. On the basis of the written representations received from the Directors

and taken on record by the Board of Directors, none of the Directors is
disqualified as on 31 March, 2012 from being appointed as a director in
terms of Section 274(1)(g) of the Companies Act, 1956.

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ANNEXURE TO THE AUDITORS' REPORT:

(i) Having regard to the nature of the Company's business/activities/result,

clauses (x), (xii), (xiii) and (xiv) of CARO are not applicable.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.

(b) Some of the fixed assets were physically verified during the year by
the Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the fixed
assets at reasonable intervals. According to the information and explanations
given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not
constitute a substantial part of the fixed assets of the Company and such
disposal has, in our opinion, not affected the going concern status of the
Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories of finished and semi-finished goods

and raw materials at Works, Mines and Collieries were physically verified
during the year by the Management. In respect to stores and spare parts
and stocks at stockyards and with consignment/conversion agents, the
Company has a programme of verification of stocks over a three year
period. In our opinion, having regard to the nature and location of the
stocks, the frequency of verification is reasonable. In case of materials
lying with third parties, certificates confirming stocks have been received
for stocks held.

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(b) In our opinion and according to the information and explanation given
to us, the procedures of physical verification of inventories followed by the
Management were reasonable and adequate in relation to the size of the
Company and the nature of its business.

(c) In our opinion and according to the information and explanations given
to us, the Company has maintained proper records of its inventories and
no material discrepancies were noticed on physical verification.

(iv) In respect of loans, secured or unsecured, granted by the Company to

companies, firms or other parties covered in the Register under Section 301
of the Companies Act, 1956, according to the information and explanations
given to us:

(a) The Company has granted loans aggregating Rs.167.22 crores to one
party during the year. At the year-end, there is no balance outstanding and
the maximum amount involved during the year was Rs. 3,720.38 crores.

(b) The rate of interest and other terms and conditions of such loans are,
in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been regular/as per
stipulations.

(d) There were no loans outstanding as at the year-end, and therefore

clause (iii) (d) of paragraph 4 of CARO is not applicable.

The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the Register maintained under
Section 301 of the Companies Act, 1956. Accordingly, clauses (iii) (e) to
(iii) (g) of paragraph 4 of CARO are not applicable.

STANDARD AUDITING
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(v) In our opinion and according to the information and explanations given
to us, having regard to the explanations that some of the items purchased
are of special nature and suitable alternative sources are not readily
available for obtaining comparable quotations, there is an adequate internal
control system commensurate with the size of the Company and the nature
of its business with regard to purchases of inventory and fixed assets and
the sale of goods and services. During the course of our audit, we have
not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register

maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information. and
explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that

needed tobe entered in the Register maintained under the said Section have
been so entered.
(b) Where each of such transaction is in excess of Rs. five lakhs in
respect of anyparty, the transactions have been made at prices which are
prima facie reasonable havingregard to the prevailing market prices at the
relevant time.
(vii) In our opinion and according to the information and explanations
given to us, theCompany has complied with the provisions of Sections 58A
and 58AA or any other relevantprovisions of the Companies Act, 1956 and
the Companies (Acceptance of Deposits) Rules,1975 with regard to the
deposits accepted from the public. According to the informationand
explanations given to us, no order has been passed by the Company Law
Board or theNational Company Law Tribunal or the Reserve Bank of India
or any Court or any otherTribunal.
(viii) In our opinion, the Company has an adequate internal audit system
commensuratewith the size and the nature of its business.

STANDARD AUDITING
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(ix) We have broadly reviewed the cost records maintained by the
Company pursuant tothe Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Governmentunder Section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that, primafacie, the
prescribed cost records have been maintained. We have, however, not made
adetailed examination of the cost records with a view to determining
whether they areaccurate or complete.
(x) According to the information and explanations given to us in respect of
statutorydues:
(a) The Company has generally been regular in depositing undisputed
statutory dues,including Provident Fund, Investor Education and Protection
Fund, Income-tax, Sales Tax,Wealth Tax, Service Tax, Customs Duty,
Excise Duty, Cess and other material statutory dues applicable to it with
the appropriate authorities. We are informed that the Comp any intends to
obtain exemption from operations of Employees' State Insurance Act at
alllocations and necessary steps have been taken by the Company. We are
also informed that actions taken by the authorities at some locations to

STANDARD AUDITING
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bring the employees of the Company under the Employees' State Insurance.
Name of the Amount
Forum where Period to which the amount
Statute (Nature involved (Rs.
Dispute is pending relates
of Dues) In crores)
Supreme Court 1990-91 & 1993-94 9.68
Customs Act High Court 2002-03 0.03
Commissioner 1993-94 3.92
Supreme Court 2004-05 235.48
1988-89, 1989-90, 2000-01 &
High Court 14.54
2003-04 to 2008-09
1990-91, 1992-93, 1996-97 &
Central Excise Act Tribunal 755.32
1998-99 to 2012-13
1988-89, 1989-90 & 1993-94 to
Commissioner 14.17
2012-13
Deputy
1985-86, 1986-87 & 1998-99 0.18
Commissioner
Assistant
1983-84 to 2005-06 0.85
Commissioner
Supreme Court 2006-07 to 2011-12 25.59
1973-74, 1991-92, 1992-93, 1994-
High Court 95, 1996-97, 1999-2000 to 2005- 119.31
06, 2007-08 to 2009-10 & 2012-13
1980-81, 1981-82, 1984-85, 1987-
Sales Tax Tribunal 88, 1989-90, 1995-96 & 1997-98 to 71.97
2011-12
1983-84, 1984-85, 1988-89 to
Commissioner 248.58
1998-99 & 2008-09 to 2011-12
Deputy 1983-84, 1984-85, 1988-89 to
116.94
Commissioner 1998-99 & 2008-09 to 2011-12
Assistant 1973-74, 1980-81,1983-84 to 1997-
26.85
Commissioner 98, 1998-99 & 2000-01 to 2011-12
Cess on royalty,
education, welfare 1956-57 to 1993-94, 1999-2000 to 7.66
etc.
2001-02, 2003-04 to 2005-06 &
High Court 2007-08
to 2012-13

Scheme has been contested by the Company and full payment has not been
noticed during the year. made of the contributions demanded.
(b) There were no undisputed amounts payable in respect of Provident
Fund, InvestorEducation and Protection Fund, Employees' State Insurance,
Income-tax, Sales Tax, WealthTax, Service Tax, Customs Duty, Excise duty,
Cess and other material statutory dues in arrears as at 31 March, 2013 for
STANDARD AUDITING
Page 28
a period of more than six months from the date they became payable,
except for collection of sales tax which we are informed are refundable to
customers because they have been collected in excess or which have been
collected pending receipt of necessary certificates from the customers.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax,
Customs Duty,Excise Duty and Cess which have not been deposited as on
31 March, 2013 on account ofdisputes are given below:
(xi) In our opinion and according to the information and explanations given
to us, theCompany has not defaulted in the repayment of dues to banks,
financial institutions anddebenture holders.
(xii) In our opinion and according to the information and explanations
given to us, theterms and conditions of the guarantees given by the
Company for loans taken by others frombanks and financial institutions are
not, prima facie, prejudicial to the interests of theCompany.
(xiii) In our opinion and according to the information and explanations
given to us,the term loans have been applied by the Company during the
year for the purposes for whichthey were obtained, other than temporary
deployment pending application.
(xiv) In our opinion and according to the information and explanations
given to us, andon an overall examination of the Balance Sheet of the
Company, we report that funds raisedon short-term basis have, prima facie,
not been used during the year for long- terminvestment.
(xv) According to the information and explanations given to us, the
Company has notmade preferential allotment of shares to parties and
companies covered in the Registermaintained under Section 301 of the
Companies Act, 1956.
(xvi) According to the information and explanations given to us, during the
periodcovered by our audit report, the Company had issued unsecured
debentures which did notrequire creation of any charge or security.

STANDARD AUDITING
Page 29
(xvii) The Management has disclosed the end use of money raised by
public issue in Note2 to the financial statements and we have verified the
same.
(xviii) To the best of our knowledge and according to the information and
explanationsgiven to us, no fraud by the Company and no material fraud
on the Company has been noticedor reported during the year.

3.3. STANDARD AUDITING FOLLOWED BY TATA

STEEL COMAPNY
STANDARD AUDITING
Page 30
SA 220 Quality Control for an Audit of Financial
Statements

Introduction:

Scope of this SA
1. This Standard on Auditing (SA) deals with the specific responsibilities
of the auditor regarding quality control procedures for an audit of financial
statements. Italso addresses, where applicable, the responsibilities of the
engagement quality control reviewer. This SA is to be read in conjunction
with relevant ethical requirements.
System of Quality Control and Role of Engagement Teams
2. Quality control systems, policies and procedures are the responsibility of
the audit firm. Under SQC 1, the firm has an obligation to establish and
maintaina system of quality control to provide it with reasonable assurance
that:
(a) The firm and its personnel comply with professional standards and
regulatory and legal requirements; and
(b) The reports issued by the firm or engagement partners are appropriate
in the circumstance. Within the context of the firms system of quality
control, engagement teams have a responsibility to implement quality
control procedures that are applicable to the audit engagement and provide
the firm with relevant information to enable the functioning of that part of
the firms system of quality control relating to independence.
4. Engagement teams are entitled to rely on the firms system of quality
control, unless information provided by the firm or other parties suggests
otherwise.
Effective Date
5. This SA is effective for audits of financial statements for periods
beginning on or after April 1, 2010.
Objective
STANDARD AUDITING
Page 31
6. The objective of the auditor is to implement quality control procedures
at the engagement level that provide the auditor with reasonable assurance
that:
(a) The audit complies with professional standards and regulatory and legal
requirements; and
(b) The auditors report issued is appropriate in the circumstances.
Definitions
For purposes of the SAs, the following terms have the meanings attributed
below:
(a) Engagement partner the partner or other person in the firm who is a
member of the Institute of Chartered Accountants of India and is in full
time practice and is responsible for the engagement and its performance,
and for the report that is issued on behalf of the firm, and who, where
required, has the appropriate authority from a professional, legal or
regulatory body.
(b) Engagement quality control review a process designed to provide an
objective evaluation, before the report is issued, of the significant
judgments the engagement team made and the conclusions they reached in
formulating the report.
(c) Engagement quality control reviewer a partner, other person4 in the
firm, suitably qualified external person, or a team made up of such
individuals, with sufficient and appropriate experience and authority to
objectively evaluate, before the report is issued, the significant judgments
the engagement team made and the conclusions they reached in formulating
the report. However, in case the review is done by a team of individuals,
such team should be headed by a member of the Institute.
(d) Engagement team all personnel performing an engagement, including
any experts contracted by the firm in connection with that engagement.
(e) Firm a sole practitioner/proprietor, partnership, or any such entity of
professional accountants, as may be permitted by law.

STANDARD AUDITING
Page 32
(f) Inspection in relation to completed engagements, procedures designed
to Such other person should be a member of the Institute of Chartered
Accountants of India.Quality Control for an Audit of Financial Statements
provide evidence of compliance by engagement teams with the firms
quality control policies and procedures.
(g) Listed entity an entity whose shares, stock or debt are quoted or
listed on a recognized stock exchange, or are traded under the regulations
of a recognized stock exchange or other equivalent body.
(h) Monitoring a process comprising an ongoing consideration and
evaluation of the firms system of quality control, including a periodic
inspection of a selection of completed engagements, designed to enable the
firm to obtain reasonable assurance that its system of quality control is
operating effectively.
(i) Network firm A firm or entity that belongs to a network.
(j) Network A larger structure:
(i) That is aimed at cooperation, and
(ii) That is clearly aimed at profit or cost-sharing or shares common
ownership, control or management, common quality control policies and
procedures, common business strategy, the use of a common brand name,
or a significant part of professional resources.
(k) Partner any individual with authority to bind the firm with respect to
the performance of a professional services engagement.
(l) Personnel partners and staff.
(m) Professional Standards Engagement Standards, as defined in the
Preface to the Standards on Quality Control, Auditing, Review, Other
Assurance and Related Services, issued by the Institute of Chartered
Accountants of India and relevant ethical requirements as contained in the
Code of Ethics issued by the Institute.
(n) Relevant ethical requirements Ethical requirements to which the
engagement team and engagement quality control reviewer are subject,

STANDARD AUDITING
Page 33
which ordinarily comprise the Code of Ethics of the Institute of Chartered
Accountants of India related to an audit of financial statements.
(o) Staff professionals, other than partners, including any experts which
the firm employs.Handbook of Auditing Pronouncements-I.A
(p) Suitably qualified external personan individual outside the firm with
the capabilities and competence to act as an engagement partner, for example
a partner or an employee5 (with appropriate experience) of another firm.

Requirements
Leadership Responsibilities for Quality on Audits
The engagement partner shall take responsibility for the overall quality on
each audit engagement to which that partner is assigned. (Ref: Para. A3)
Relevant Ethical Requirements
Throughout the audit engagement, the engagement partner shall remain
alert, through observation and making inquiries as necessary, for evidence
of non-compliance with relevant ethical requirements by members of the
If matters come to the engagement partners attention through the firms
system of quality control or otherwise that indicate that members of the
engagement team have not complied with relevant ethical requirements, the
engagement partner, in consultation with others in the firm, shall determine
the appropriate action. Independence
The engagement partner shall form a conclusion on compliance with
Independence requirements that apply to the audit engagement. In doing so,
the engagement partner shall:
(a) Obtain relevant information from the firm and, where applicable,
network firms, to identify and evaluate circumstances and relationships that
create threats to independence;
(b) Evaluate information on identified breaches, if any, of the firms
independence policies and procedures to determine whether they create a
threat to independence for the audit engagement; and

STANDARD AUDITING
Page 34
(c) Take appropriate action to eliminate such threats or reduce them to an
acceptable level by applying safeguards, or, if considered appropriate, to
withdraw from the audit engagement, where withdrawal is permitted by law
Such employee should be a member of the Institute of Chartered
Accountants of India.Quality Control for an Audit of Financial Statements
or regulation. The engagement partner shall promptly report to the firm any
inability to resolve the matter for appropriate action. (Ref: Para. A5-A7)
Acceptance and Continuance of Client Relationships and Audit
Engagements
The engagement partner shall be satisfied that appropriate procedures
regarding the acceptance and continuance of client relationships and audit
engagements have been followed, and shall determine that conclusions
reached in this regard are appropriate.
If the engagement partner obtains information that would have caused the
firm to decline the audit engagement had that information been available
earlier, the engagement partner shall communicate that information promptly
to the firm, so that the firm and the engagement partner can take the
necessary action.
Assignment of Engagement Teams
The engagement partner shall be satisfied that the engagement team, and
any auditors experts who are not part of the engagement team, collectively
have the appropriate competence and capabilities to:
(a) Perform the audit engagement in accordance with professional standards
and regulatory and legal requirements; and
(b) Enable an auditors report that is appropriate in the circumstances to be
issued. Engagement Performance Direction, Supervision and Performance
The engagement partner shall take responsibility for:
(a) The direction, supervision and performance of the audit engagement in
compliance with professional standards and regulatory and legal
requirements; and (Ref: Para. A13-A15, A20)
(b) The auditors report being appropriate in the circumstances.
STANDARD AUDITING
Page 35
Reviews
The engagement partner shall take responsibility for reviews being
performed in accordance with the firms review policies and procedures.
(Ref: Para. A16-A17, A20)Handbook of Auditing Pronouncements-I.A On or
before the date of the auditors report, the engagement partner shall,
through a review of the audit documentation and discussion with the
engagement team, be satisfied that sufficient appropriate audit evidence has
been obtained to support the conclusions reached and for the auditors
report to be issued. (Ref: Para. A18-A20)
Consultation
18. The engagement partner shall:
(a) Take responsibility for the engagement team undertaking appropriate
consultation on difficult or contentious matters;
(b) Be satisfied that members of the engagement team have undertaken
appropriate consultation during the course of the engagement, both within
the engagement team and between the engagement team and others at the
appropriate level within or outside the firm;
(c) Be satisfied that the nature and scope of, and conclusions resulting
from, such consultations are agreed with the party consulted; and
(d) Determine that conclusions resulting from such consultations have been
implemented. (Ref: Para. A21-A22)
Engagement Quality Control Review
For audits of financial statements of listed entities, and those other audit
engagements, if any, for which the firm has determined that an engagement
quality control review is required, the engagement partner shall:
(a) Determine that an engagement quality control reviewer has been
appointed;
(b) Discuss significant matters arising during the audit engagement,
including those identified during the engagement quality control review,
with the engagement quality control reviewer; and

STANDARD AUDITING
Page 36
(c) Not date the auditors report until the completion of the engagement
quality control review. (Ref: Para. A23-A25)
The engagement quality control reviewer shall perform an objective
evaluation of the significant judgments made by the engagement team, and
thec onclusions reached in formulating the auditors report. This evaluation
shall involve: Quality Control for an Audit of Financial Statements
(a) Discussion of significant matters with the engagement partner;
(b) Review of the financial statements and the proposed auditors report;
(c) Review of selected audit documentation relating to the significant
judgments the engagement team made and the conclusions it reached; and
(d) Evaluation of the conclusions reached in formulating the auditors
report and consideration of whether the proposed auditors report is
appropriate.
For audits of financial statements of listed entities, the engagement quality
control reviewer, on performing an engagement quality control review, shall
also consider the following:
(a) The engagement teams evaluation of the firms independence in
relation to the audit engagement;
(b) Whether appropriate consultation has taken place on matters involving
differences of opinion or other difficult or contentious matters, and the
conclusions arising from those consultations; and
(c) Whether audit documentation selected for review reflects the work
performed in relation to the significant judgments made and supports the
conclusions reached. Differences of Opinion
If differences of opinion arise within the engagement team, with those
consulted or, where applicable, between the engagement partner and the
engagement quality control reviewer, the engagement team shall follow the
firms policies and procedures for dealing with and resolving differences of
opinion.
Monitoring

STANDARD AUDITING
Page 37
An effective system of quality control includes a monitoring process
designed to provide the firm with reasonable assurance that its policies and
procedures relating to the system of quality control are relevant, adequate,
and operating effectively. The engagement partner shall consider the results
of the firms monitoring process as evidenced in the latest information
circulated by the firm and, if applicable, other network firms and whether
deficiencies noted in that information may affect the audit engagement.
(Ref: Para A32-A34)Handbook of Auditing Pronouncements-I.A

Documentation
The auditor shall document:
(a) Issues identified with respect to compliance with relevant ethical
requirements and how they were resolved.
(b) Conclusions on compliance with independence requirements that apply
to the audit engagement, and any relevant discussions with the firm that
support these conclusions.
(c) Conclusions reached regarding the acceptance and continuance of client
relationships and audit engagements.
(d) The nature and scope of, and conclusions resulting from, consultations
undertaken during the course of the audit engagement. (Ref: Para. A35)
The engagement quality control reviewer shall document, for the audit
engagement reviewed, that:
(a) The procedures required by the firms policies on engagement quality
control review have been performed;
(b) The engagement quality control review has been completed on or
before the date of the auditors report; and
(c) The reviewer is not aware of any unresolved matters that would cause
the reviewer to believe that the significant judgments the engagement team
made and the conclusions they reached were not appropriate.

STANDARD AUDITING
Page 38
SA 501- Audit Evidence Specific Considerations for
Selected Items
Introduction
Scope of this SA
1. This Standard on Auditing (SA) deals with specific considerations by the
auditor in obtaining sufficient appropriate audit evidence in accordance with
and other relevant SAs, with respect to certain aspects of inventory,
litigation and claims involving the entity, and segment information in an
audit of financial statements.
Effective Date
2. This SA is effective for audits of financial statements for periods
beginning on or after April 1, 2010.
Objective
3. The objective of the auditor is to obtain sufficient appropriate audit
evidence regarding the:
(a) Existence and condition of inventory;
(b) Completeness of litigation and claims involving the entity; and
(c) Presentation and disclosure of segment information in accordance with
the applicable financial reporting framework.
Requirements
Inventory
When inventory is material to the financial statements, the auditor shall
obtain sufficient appropriate audit evidence regarding the existence and
condition of inventory by:
(a) Attendance at physical inventory counting, unless impracticable, to:
(Ref: Para. A1-A3)
(i) Evaluate managements instructions and procedures for recording and
controlling the results of the entitys physical inventory counting;
3 SA330, The Auditors Responses to Assessed Risks.

STANDARD AUDITING
Page 39
SA500, Audit Evidence.Audit EvidenceSpecific Considerations for
Selected Items
(ii) Observe the performance of managements count procedures
(iii) Inspect the inventory;
(iv) Perform test counts;
(b) Performing audit procedures over the entitys final inventory records to
determine whether they accurately reflect actual inventory count results.
If physical inventory counting is conducted at a date other than the date of
the financial statements, the auditor shall, in addition to the procedures
required by paragraph 4, perform audit procedures to obtain audit evidence
about whether changes in inventory between the count date and the date of
the financial statements are properly recorded.
If the auditor is unable to attend physical inventory counting due to
unforeseen circumstances, the auditor shall make or observe some physical
counts on an alternative date, and perform audit procedures on intervening
transactions.
If attendance at physical inventory counting is impracticable, the auditor
shall perform alternative audit procedures to obtain sufficient appropriate
audit evidence regarding the existence and condition of inventory. If it is
not possible to do so, the auditor shall modify the opinion in the auditors
report in accordance with SA 705
When inventory under the custody and control of a third party is material
to\ the financial statements, the auditor shall obtain sufficient appropriate
audit evidence regarding the existence and condition of that inventory by
performing one or both of the following:
(a) Request confirmation from the third party as to the quantities and
condition of inventory held on behalf of the entity. (Ref: Para. A15)
(b) Perform inspection or other audit procedures appropriate in the
circumstances. (Ref: Para. A16)
Litigation and Claims

STANDARD AUDITING
Page 40
The auditor shall design and perform audit procedures in order to identify
litigation and claims involving the entity which may give rise to a risk of
material misstatement, including: 5 SA705, Modifications to the Opinion
in the Independent Auditors Report. Handbook of Auditing
Pronouncements-I.A
(a) Inquiry of management and, where applicable, others within the entity,
including in-house legal counsel;
(b) Reviewing minutes of meetings of those charged with governance and
correspondence between the entity and its external legal counsel; and
(c) Reviewing legal expense accounts.
If the auditor assesses a risk of material misstatement regarding litigation
or claims that have been identified, or when audit procedures performed
indicate that other material litigation or claims may exist, the auditor shall,
in addition to the procedures required by other SAs, seek direct
communication with the entitys external legal counsel. The auditor shall do
so through a letter of inquiry, prepared by management and sent by the
auditor, requesting the entitys external legal counsel to communicate
directly with the auditor. If law, regulation or the respective legal
professional body prohibits the entitys external legal counsel from
communicating directly with the auditor, the auditor shall perform
alternative
audit procedures.
(a) management refuses to give the auditor permission to communicate or
meet with the entitys external legal counsel, or the entitys external legal
counsel refuses to respond appropriately to the letter of inquiry, or is
prohibited from responding; and
(b) the auditor is unable to obtain sufficient appropriate audit evidence by
performing alternative audit procedures, the auditor shall modify the opinion
in the auditors report in accordance with SA 705.
Written Representations

STANDARD AUDITING
Page 41
The auditor shall request management and, where appropriate, those charged
with governance to provide written representations that all known actual or
possible litigation and claims whose effects should be considered when
preparing the financial statements have been disclosed to the auditor and
appropriately accounted for and disclosed in accordance with the applicable
financial reporting framework.
Segment Information
The auditor shall obtain sufficient appropriate audit evidence regarding the
presentation and disclosure of segment information in accordance with the
applicable financial reporting framework by: (Ref: Para. A26) Audit
EvidenceSpecific Considerations for Selected Items 5 SA 501
(a) Obtaining an understanding of the methods used by management in m
determining segment information, and: (Ref: Para. A27)
(i) Evaluating whether such methods are likely to result in disclosure in
accordance with the applicable financial reporting framework; and
(ii) Where appropriate, testing the application of such methods; and
(b) Performing analytical procedures or other audit procedures appropriate
in the circumstances.SA 610 nature, timing or extent of the external
auditors procedures, the external auditor shall consider:
(a) The nature and scope of specific work performed, or to be performed,
by the internal auditors;
(b) The assessed risks of material misstatement at the assertion level for
particular classes of transactions, account balances, and disclosures; and
(c) The degree of subjectivity involved in the evaluation of the audit
evidence gathered by the internal auditors in support of the relevant
assertions.
Using Specific Work of the Internal Auditors
In order for the external auditor to use specific work of the internal
auditors, the external auditor shall evaluate and perform audit procedures
on that work to determine its adequacy for the external auditors purposes.
To determine the adequacy of specific work performed by the internal
STANDARD AUDITING
Page 42
auditors for the external auditors purposes, the external auditor shall
evaluate whether:
(a) The work was performed by internal auditors having adequate technical
training and proficiency;
(b) The work was properly supervised, reviewed and documented;
(c) Adequate audit evidence has been obtained to enable the internal
auditors to draw reasonable conclusions;
(d) Conclusions reached are appropriate in the circumstances and any
reports prepared by the internal auditors are consistent with the results of
the work performed; and
(e) Any exceptions or unusual matters disclosed by the internal auditors are
properly resolved.
Documentation
When the external auditor uses specific work of the internal auditors, the
external auditor shall document conclusions regarding the evaluation of the
adequacy of the work of the internal auditors, and the audit procedures
performed by the external auditor on that work, in accordance with
paragraph.

SA 610 Using The Work of Internal Auditors

Introduction
Scope of this SA
1. This Standard on Auditing (SA) deals with the external auditors
responsibilities regarding the work of internal auditors when the external
auditor has determined, in accordance with SA 315,3 that the internal
audit function is likely to be relevant to the audit.

STANDARD AUDITING
Page 43
2. This SA does not deal with instances when individual internal auditors
provide direct assistance to the external auditor in carrying out audit
procedures or where, in terms of the applicable legal and regulatory
framework, it is not permissible for the internal auditor to provide access
to his working papers to the third parties. Relationship between the Internal
Audit Function and the External Auditor
3. The role and objectives of the internal audit function are determined by
management and, where applicable, those charged with governance. While
the objectives of the internal audit function and the external auditor are
different, some of the ways in which the internal audit function and the
external auditor achieve their respective objectives may be similar.
4. Irrespective of the degree of autonomy and objectivity of the internal
audit function, such function is not independent of the entity as is required
of the external auditor when expressing an opinion on financial statements.
The external auditor has sole responsibility for the audit opinion expressed,
and that responsibility is not reduced by the external auditors use of the
work of the internal auditors.

Effective Date:
This SA is effective for audits of financial statements for periods
beginningon or after April 1, 2010.
Objectives
The objectives of the external auditor, where the entity has an internal
audit function that the external auditor has determined is likely to be
relevant to the audit, are to determine:
(a) Whether, and to what extent, to use specific work of the internal
auditors; and
(b) If so, whether such work is adequate for the purposes of the audit.
SA 315, Identifying and Assessing the Risks of Material Misstatement
Through Understanding the Entity and Its Environment, paragraph
23.Handbook of Auditing Pronouncements-I.A
STANDARD AUDITING
Page 44
Definitions
For purposes of the SAs, the following terms have the meanings attributed
below:
(a) Internal audit function An appraisal activity established or provided as
a service to the entity. Its functions include, amongst other things,
examining, evaluating and monitoring the adequacy and effectiveness of
internal control. The Preface to the Standards on Internal Audit, issued by
the Institute of Chartered Accountants of India, issued in November 2004
describes internal audit as an independent management function, which
involves a continuous and critical appraisal of the functioning of an entity
with a view to suggest improvements thereto and add value to and
strengthen the overall governance mechanism of the entity, including the
entitys strategic risk management and internal control system. Internal
audit, therefore, provides assurance that there is transparency in reporting,
as a part of good governance.
(b) Internal auditors Those individuals who perform the activities of the
internal audit function. Internal auditors may belong to an internal audit
department or equivalent function. Requirements Determining Whether and
to What Extent to Use the Work of the Internal Auditors
The external auditor shall determine:
(a) Whether the work of the internal auditors is likely to be adequate for
purposes of the audit;
(b) If so, the planned effect of the work of the internal auditors on the
nature, timing or extent of the external auditors procedures.
In determining whether the work of the internal auditors is likely to be
adequate for purposes of the audit, the external auditor shall evaluate:
(a) The objectivity of the internal audit function;
(b) The technical competence of the internal auditors;
(c) Whether the work of the internal auditors is likely to be carried out
with due professional care; and

STANDARD AUDITING
Page 45
(d) Whether there is likely to be effective communication between the
internal auditors and the external auditor.
In determining the planned effect of the work of the internal auditors on
the Using the Work of Internal Auditors

3.4.COMMENTS ON STANDARD AUDITING

FOLLOWED BY TATA STEEL COMPANY

1. We have obtained all information and explanations, which is to the best of

Auditor knowledge and belief, were necessary for the purpose of Standard
Auditing followed by TATA STEEL Company.

2. We have found The Auditor has followed SA 220- Quality Control for an
Audit of Financial Statements, 501 Audit EvidenceSpecific Considerations
for Selected Items, SA 610- Using The Work of Internal Auditors.

3. In our opinion, the balance sheet, the profit and loss statement and cash flow
statement dealt with by this report comply with Auditing and Accounting
Standards referred to in sub section (3C) of Section 211 of the companies Act,
1956.

4. Attention is invited to the following notes to Auditing statement :

a) TATA STEEL Company has followed Auditing Standard of India which

is applicable for all company in India which is Audited. Hence TATA
STEEL Company is 6th largest Company of India steel.

b) TATA STEEL audit in accordance with the auditing standards

generally accepted in India. Those Standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.

STANDARD AUDITING
Page 46
c) An audit also includes assessing the accounting principles used
and the significant estimates made by the Management, as well
as the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

CHAPTER 4

4.1.CONCLUSION:

In accordance with SA issued by ICAI for the auditors to audit the

company report. The International Auditing Standards Committee
and the Accounting Standard board of the Institute of Chartered
Accountants of India have developed standard accounting and
auditing practices to guide the. accountants and auditors in the
day to day work The later developments in auditing pertain
to the use of computers in accounting and auditing. Generally
Accepted Auditing Standards, or GAAS are sets of standards
against which the quality of audits are performed and may be
judged. Several organizations have developed such sets of
principles, which vary by territory.

TATA STEEL Company has maintained proper records showing full

particulars, including quantitative details and situation of the fixed
assets. TATA Steel has followed SA 220- Quality Control for an Audit
of Financial Statements, 501 Audit EvidenceSpecific Considerations
for Selected Items, SA 610- Using The Work of Internal
Auditors. There is This Three main Auditing standard Followed
By TATA steel Company.

STANDARD AUDITING
Page 47
4.2.BIBLIOGRAPHY:
Internet
www.icai.org
www.investopedia.com
www.wikipedia.com
www.tatasteel.com
www.moneycontrol.com
www.iifl.com

Text Book
Auditing and Assurance Services Author by lain A. Arenas, Mark S
Beasley, Randal J Elder, Hardcover Publisher Prentice Hall
Auditing Information Systems by Jack J. Champlain, Hardcover:,
Publisher: Wiley
Advanced Auditing by Dr. Marsha Ainapure Publisher: Manan
Prakashan

STANDARD AUDITING
Page 48