Private & Confidential Checklist - Companies (Auditor's Report) Order, 2003 Client: Audit Period: Clause No.

Area/Requirement 4(i) (a) 4(i) (b) 4(i)( c) 4(ii) (a) 4(ii) (b) 4(ii) ( c) 4(iii) (a) Fixed Assets Fixed Assets Fixed Assets Inventories Inventories Inventories Loans granted Loans taken 4(iii)(b) Loans granted Loans taken 4(iii)( c) Loans granted or taken 4(iii) (d) Loans granted or taken 4(iv) Internal Controls 4(v)(a) & (b) egister under Section 301etc., R 4(vi) Fixed Deposits 4(vii) Internal Audit 4(viii) Cost Records 4(xi) (a) & (b) Statutory dues 4(x) Accumulated losses etc., 4(xi) Dues to Banks & Fis etc., 4(xii) Loans and Advances granted 4(xiii)(a) Chit Fund company 4(xiii)(a) to (d) Nidhi/mutual benefit fund/society 4(xiv) Dealing or Trading in Securities 4(xv) Guarantees 4(xvi) Term Loans 4(xvii) Funds raised 4(xviii) Allotment of shares 4(xix) Debentures 4(xx) Money raised on public issue 4(xxi) Fraud

I have staisfied myself that the above checklist has been properly completed ( refered Statement on CA Completed by:

I have reviewed the work done by the assistant-in charge and have satisfied myself that the above check Reviewed by:

Report) Order, 2003

Guidance and Audit Procedures Proper records Physical verification-FA Disposal of Fixed Assets Physical verification- Inv. Procedures of Verification Proper records of Inventory Loans granted Loans taken Loans granted Loans taken Repayment Overdue amounts Internal controls on purchases,sales etc., 301 Register and transactions Public deposits Internal Audit Maintenance of Cost Records Statutory dues Losses etc., Default in repayment of dues Loans and Advances granted Chit fund company Nidhi/mutual benefit fund etc., Dealing etc.,in Securities Guarantees given Utlisation of Term Loans Utlisation of funds Preferential allotment Securities on Debentures End use of monies Fraud

Conclusion No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues N/A No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues No Reportable Issues Issue Sheet

ove checklist has been properly completed ( refered Statement on CARO whereever relevant) and all matters requiring the attention of the A Date:

the assistant-in charge and have satisfied myself that the above checklist has been satisfactorily completed in line with the Statement on CA Date:

iring the attention of the Audit Partner are set forth in the Issue sheet.(Refer the No. of the issue sheet).

with the Statement on CARO issued by ICAI. Working papers were reviewed and agree with the conclusions above.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse No Reportable Issues Refer Issue Sheet N/A

General Instructions 1 The home page contains the detailed description of the requirements of CARO under the respective clauses. 2. Please select the name of the audit firm from the dropdown menu on the home page.Please fill in other details like name of the client, audit period etc., The home page also contains affirmations as to work done, review made etc., Please fill in necessary details on completion and review of the checklist. 3. Critical matters and matters for reporting to management and other exceptions should be summarised in the Issue sheet' (last work sheet in the workbook). Issue sheet can also be accessed through the link on home page.

4. Please click on the respective clause under the 'Guidance and Audit Procedures' column on the home page for the detailed checklist containing audit steps to be performed, notes, responses and space for comments, if any, for the respective clauses.The conclusion column on the home page has a drop down menu for choosing the appro option.

5. Please complete the details as to prepared/reviewed by etc., on the individual checklist sheets. You can get back home page from the individual checklist sheet.

6. The Responses column contains a drop down menu with possible responses. Please select the appropriate resp from the options as applicable. Create a Working paper for work done under individual clauses or link to working pa if any, created in MYClient in this regard. Specific representations, where required, should be obtained as a part of firm's standard representation letter.

7. This checklist cannot be construed as a substitute for the Statement on CARO issued by ICAI. Reference should be made to the Statement for guidance and help in specific cases. 8. The words 'Act' as used in the checklist refer to the Companies Act,1956 unless otherwise stated.

Introduction Applicability of the Order 1.This order applies to all the companies includinga. Companies incorporated outside India, which established a place of business in India; b. All the Branches of Companies (section 228 (3) (a) of the Act). 2. This order does not apply to Banking Companies, Insurance Companies, Companies licensed to operate under section 25 of the Act and Private companies fulfilling the following criteriaa. having paid up capital and reserves less than Rs 50 lakhs; (beginning of the year or at anytime during the year);and b. no deposits are accepted from the public; and c. no outstanding loans in excess of Rs10 lakhs from banks and financial institutions; (at anytime during the year); and d. turnover less than Rs 5 crores ( not to exceed the limit either in the year or in the immediately preceding year).

O under the respective clauses.

me page.Please fill in other details ons as to work done, review made

ns should be summarised in the ed through the link on home page.

ures' column on the home page ses and space for comments, if any, p down menu for choosing the appropriate

al checklist sheets. You can get back to

s. Please select the appropriate response dividual clauses or link to working papers, red, should be obtained as a part of

O issued by ICAI. Reference should

ess otherwise stated.

Completed by: Date: Reviewed by: Date: Fixed Assets Audit Procedures Response Remarks 1. Whether records of fixed assets are maintained showing the following particulars:-

a).Year of acquisition b).Sufficient description of the assets to make identification possible. c).Classificaton, that is, the head under which it is shown in accounts eg. Land, Building, Plant and Machinery etc. d).Location e).Quantity,i.e number in units. f).Original cost g).Adjustment for revaluation or for increase or decrease in cost consequent on revaluation of Foreign currency Liabilities if any. h).Depreciation written off to date. i).Written down value. j)Rate of depreciation and particulars regarding amortisation and impairment k) Particulars regarding sale, discarding, demolition, destruction etc. l) Particulars of fixed assets that have been retired from active use and held for d m). Whether fixed assets as per Register/Records agree with General Ledger balances. If not, note the disagreements in respect of each class of assets e.g. Land freehold Land leasehold Building Land Plant and Machinery Vehicles Furniture and Fixtures Office Equipment etc.

ing amortisation and impairment molition, destruction etc. retired from active use and held for disposal.

Yes No N/A Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Completed by: Date: Reviewed by: Date: Fixed Assets Audit Procedures Response Remarks 1. Has a substantial portion of fixed assets been disposed off during the year? "Substantial" has to be judged in the backgorund of factors such as proportion of assets disposed off to that category of assets and also total assets of the company in value terms terms. 2. Determine whether such disposal affected the going concern status of company or not by procedures such as- analysis and discussion with the management of the significance of such assets to the company as a whole, reading the minutes of the meetings of the Board of directors and others to understand the entity's future business plans, review of the post balance sheet events to analyse the affect of such disposal on the going concern status of the company. 3. Consider any adverse implications on account of the same in the main report.

concern status of company or not by carrying out

Yes No N/A Done Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Completed by: Date: Reviewed by: Date: Inventories Audit Procedures Response Remarks 1. Has the management physically verified the following items of inventory during the year ? i)Finished Goods ii) Raw Materials and Components iii) Stores & Spares iv) Work-in-Progress v) Maintenance Supplies vi) Consumables and Loose Tools vii) Packing Materials

2. Review firm's completed stock take questionnaire and conclude on the effectiveness of th reasonable.

d conclude on the effectiveness of the process and whether the frequency of such verification is

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Inventories Audit Procedures Response Remarks 1 Have we observed the physical verification? 2. If so, have we completed the check list for attendance at physical stock taking? 3. Are we satisfied that stock taking procedures were reasonable and adequate in relation to the size of the Company, nature of its business and volume of stock? If not, list out the inadequacies/weaknesses observed by us. 4. In case we have not observed the physical verification, have we studied the stock taking instructions issued by the client? (Attach a copy where available)

5.Do these instructions cover, inter alia, the following key control points-The independence of persons taking stock - Proper stacking/arrangement of stocks to facilitate identification and counting? -Usage of counting tags or identification marks etc in order to prevent double counting? -Control of stock taking sheets/tags (e.g. numerical sequencing) and reconciliation of the she -Control over movement of stocks during the course of stock taking (Stoppage of movement -Collection of cut-off details viz. last challan No., GRN No., Excise Gate Pass No. etc. -Comparison of rough stock sheets with bin cards and preparation of shortage/excess list - Signing of stock sheets by the clients staff (both by the counter and by the supervisor) -Identification of damages, obsoletes and slow moving stocks - Proper segregation of goods invoiced and sold but yet to be despatched and other stocks o -Checking of the serviceability and adequacy of the measuring instruments 6. Is there any report/certificate from the clients official-in-charge of stock taking evidencing that the stock taking instructions were followed? (Attach a copy) 7. In case the client does not have any instructions in writing, is there any report from the clients official-in-charge of stock taking outlining the procedures followed during the course of stock taking? (Attach a copy)

8. On the basis of our findings, are we satisfied that stock taking procedures were reasonable and adequate in relation to the size of the Company and nature of its business? If not, list out the inadequacies/weaknesses.

ntification and counting? der to prevent double counting? uencing) and reconciliation of the sheets/tags at the conclusion of stock taking stock taking (Stoppage of movements during stock taking is highly desirable). o., Excise Gate Pass No. etc. reparation of shortage/excess list e counter and by the supervisor)

to be despatched and other stocks of third parties

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Inventories Audit Procedures Response Remarks 1.Whether the records of the Inventory show the following particulars: (i) details regarding dates of transactions; (ii) relevant document number and department identification, if any; (iii) identification code of the item; (iv) quantity of the receipts and issues and balances; (v) physical verification quantities; (vi) location; (vii) particulars of the item, like nomenclature, nature, etc. (vii) valuation details; etc. 2. Are the stock registers are updated as and when the transactions occur? 3. Verify that the transactions entered in stock registers are duly supported by relevant documents. 4. Verify whether inventories as per Register/Records agree with General Ledger balances. 5. Obtain a statement of descrepancies obtained and consider if they are material, whether the same have been properly adjusted in the books of account.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Loans granted Audit Procedures Response Remarks 1.Has the company granted any loans to companies,firms and other parties covered in the R 2. Obtain a statement containing the name of the company, firm or other Party, nature of rela 3. Examine the above statement with necessary documents and records on a reasonable test check basis.

4. Report information as per the table below in the case of all loans granted. 5. Check and conclude that the rate of interest and other terms and conditions are not prima prejudicial to the interest of the company or otherwise by consideration of factors such as- lo nature of security, the availability of alternative sources of finance, the urgency of borrowing, purpose of the loan, prevailing market rates of interest etc., Number of Parties involved end balance (In Rupees) Amount Year (In Rupees)

Notes:1. The requirement of this clause also covers advances which are in the nature of loan 2. Loan transactions that have been squared up during the year also would get covered unde

ms and other parties covered in the Register maintained under Section 301 of the Act? any, firm or other Party, nature of relationship, amounts and dates of loans granted, amounts and dates of loans refunded amounts and date

of all loans granted. r terms and conditions are not prima facie y consideration of factors such as- loan agreements, borrower's financial standing, its ability to lend, of finance, the urgency of borrowing,

ances which are in the nature of loans. he year also would get covered under the requirement.

of loans refunded amounts and dates of interest received, closing balance at year end, particulars of instalments (amount and period outsta

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

stalments (amount and period outstanding for) of overdue principal and interest together with the details regarding the rate of interest, if any,

regarding the rate of interest, if any, and brief terms and conditions like security, repayment particulars (principal and interest) etc.,

(principal and interest) etc.,

Completed by: Date: Reviewed by: Date:

Loans taken Audit Procedures Response Remarks 1.Has the company taken any loans from companies,firms and other parties covered in the R 2. Obtain a statement containing the name of the company, firm or other Party, nature of rela 3. Examine the above statement with necessary documents and records on a reasonable test check basis. 4. Report information as per the table below in the case of loans all loans taken. 5. Check and conclude that the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the company or otherwise by consideration of factors such as- loan agreements, company's financial standing, its ability to borrow, nature of security, the availability of alternative sources of finance, the urgency of borrowing, purpose of the loan, prevailing market rate of interest etc., Number of Parties involved end balance Amount Year (In Rupees) (In Rupees)

Notes:1. The requirement of this clause also covers advances which are in the nature of loan 2. Loan transactions that have been squared up during the year also would get covered unde

ms and other parties covered in the Register maintained under Section 301 of the Act? any, firm or other Party, nature of relationship, amounts and dates of loans taken, amounts and dates of loans repaid, amounts and dates o

ances which are in the nature of loans. he year also would get covered under the requirement.

loans repaid, amounts and dates of interest paid, closing balance at year end, particulars of instalments (amount and period outstanding fo

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse N/A Yes No s (amount and period outstanding for) of overdue principal and interestDone together with the details regarding the rate of interest, if any, and brie

Completed by: Date: Reviewed by: Date: Repayment of Loans Audit Procedures Response Remarks 1. The regularity of payment of principal amount and interest should be considered in the light of procedures such as-review of repayment schedule,loan agreements and other

2. The following particulars should considered in reporting the irregularity of principal and inte (In Rupees) Name of the Party Principal Interestend Balance Overdue Overdue Year

Notes: 1. If a due date for payment of interest is not specified, it would be reasonable to assu on each anniversary of the loan. 2. Where no stipulations have been made for repayment of the loan, the auditor should state comments in the absence of terms of repayment.

chedule,loan agreements and other relevant documents, actual dates of payment of principal and interest.

cified, it would be reasonable to assume that it falls due

t of the loan, the auditor should state his inability to make

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes Done N/A

Completed by: Date: Reviewed by: Date:

Loans overdue Audit Procedures Response Remarks 1. Obtain a statement with the names of the companies, firms or other parties, amount of loa 2. The reasonableness of steps taken by the company for recovery and payment should be judged in the light of factors such as issue of reminders, sending advocate's notice, management's representations, follow up with the borrowers, arrangement for raising finances, restructuring proposals, arrangement with lenders for compromise proposals etc., as the case may be. 3. If not satisfied about the reasonability of steps taken, consider the name of the party, overdue amount of principal and interest for reporting.

firms or other parties, amount of loan granted or taken, outstanding amount at the year end and steps taken for the recovery or payment the

aken for the recovery or payment thereof.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Internal controls procedures Audit Procedures Response Remarks 1. On the basis of our understanding, documentation and validation thereof in the Myclient file-control activities in the areas of Inventory cycle,property, plant and equipment cycle,revenue and receivables cycle, review of internal audit reports are we satisfied that there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods? If not document the inadequacies and weaknesses thereof and consider implications for reporting. Yes 2. Review the reports of internal audit, minutes of the Board, Audit committee, management committee, if any and anyother relevant internal reports to identify major weaknesses in internal controls and whether there is any continuing faliure to correct such weaknesses. Done 3. In the case of continuing failure to correct any major weakness identified, report the weakness and steps taken by the management to correct such weakness or the failure to correct as the caseDone be. may 4. Consider the implications of such control weaknesses on the nature, extent and timing of audit procedures in those areas and implications if any on the adequacy or reliability of the books of accountsDonethe overall report. and

Notes: 1. Ordinarily, any weakness in internal controls that may result into a significant loss t company or may result in a material misstatement in the financial statements is considered a weakness.

2. Continuing failure should be judged with reference to the weakness that existed at the tim previous year's audit. 3. If any major weakness is corrected by the date on which the audit report is issued the fact correction subsequently must also be reported.

hat may result into a significant loss to the e financial statements is considered a major

the weakness that existed at the time of

ich the audit report is issued the fact of such

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No Done

Completed by: Date: Reviewed by: Date:

Completeness of Register maintained under Section 301 of the Act and transactions thereof Audit Procedures Response Remarks 1.Has the company entered into transactions that need to be entered into the register mainta

2.Obtain a list containing the name of the party, nature of relationship, description of transact 3. Check the list for completeness of information with reference to- knowledge from previous year's audit, review of entity's procedures for identification of entries to be made in 301 register, inquiries as to the affiliation of directors and key management personnel, officers with other entities, review of shareholders records to identify the principal shareholders, review of entity's income tax returns, review of joint venture and other relevant agreements, minutes of board meetings, Form 24AAs submitted etc.,

4. In the case of transactions exceeding the value of Rs. five lakhs in respect of any party and in any one financial year examine information such as price lists, quotations and records relating to prices for similar t parties at the relevant time.

5.In cases where transactions are entered with sole suppliers examine the reasonableness

6. The reasonableness of the prices should be determined taking into account factors such as delivery period, quality of the product, quantity, credit terms, past performance of the party etc., Notes: 1. The requirement of this clause does not cover transactions with subsidiaries perse directors of the company are interested in the subsidiary.

1 of the Act and transactions thereof

to be entered into the register maintained under Section 301 of the Act?

of relationship, description of transaction and amount and date of each such transaction individually for all the transactions during the year.

ngs, Form 24AAs submitted etc.,

records relating to prices for similar transactions with other

pliers examine the reasonableness of prices paid with reference to list prices of the supplier concerned, other trade terms of the supplier, e

transactions with subsidiaries perse unless one or more of the

ll the transactions during the year.

d, other trade terms of the supplier, etc. and where required consider the same appropiately in the report.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Public Deposits Audit Procedures Response Remarks 1. Has the Company accepted any deposits from public within the meaning of Section 58A, 58AA and the rules framed thereunder? 2. Obtain a general understanding of Section 58A, 58AA and the relevant rules and ascertain the system and procedures in place to ensure compliance with the provisions of the said sections and the rules made thereunder. 3.Check the compliance with the requirements of the Act and the rules framed thereunder by completing the firm's checklist on Acceptance of deposit rules and Companies Act 1956. 4. Examine the internal controls in place for intimating the Tribunal (Company Law Board) any default in repayment of deposit made by small investors or part or any interest thereupon. Based on the understanding so gained, perform a reasonable test check of the deposits received from small investors. 5. Enquire of the management possible instances of non-compliances with Section 58A, 58AA and relevant rules and about any order passed by the Company Law Board for contravention of Section 58A, 58AA and the rules. 6. Examine the correspondence and documents filed with the Registrar of companies to ascertain whether there is any contravention or whether the Company Law Board has passed and order. If an order has been passed, examine the steps taken by the company to comply with the order.

Companies Act 1956.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Internal Audit Audit Procedures Response Remarks 1. Is the company a listed company or having paid up capital and reserves exceeding Rs. 50 lakhs as at the commencement of the financial concerned or having an average annual turnover exceeding five crores rupees for a period of three consecutive financial years immediately preceding the financial year? 2.Consider the following factors to determine whether the internal audit system is commensurate with the size of the and the nature of its business-Size of the internal audit department; - Qualifications of the internal audit staff; -Reporting levels of internal audit; - Areas of coverage; -Adequacy of technical assitance available to the internal audit department; -Reports submitted by the internal audit and follow up procedures thereof.

Notes: 1. The date of the balance sheet must be considered in reckoning the listing status of 2. While evaluating the adequacy of internal audit system, existence or otherwise of other for be taken into account.

ered in reckoning the listing status of the company. m, existence or otherwise of other forms of internal controls must also

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Maintenance of Cost Records Audit Procedures Response Remarks 1. Has maintenance of cost records prescribed by central government under Section 209(1)(d) to the company? 2. Obtain a list of books and records made and maintained by the company under Section 209(1)(d) of the Companies Act,1956. 3. Conduct a general review of the cost records to ensure that the records as prescribed are made and maintained.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes N/A Done No

Completed by: Date: Reviewed by: Date:

Statutory Dues Audit Procedures Response Remarks 1. Obtain a statement containing the list of various statutes under which the company is requ 2. Obtain a general understanding of various statutes governing the entities and dues payable under those statutes. Make enquiries of the management about the statutes under which the company is required to pay dues and the policies and procedures in place for identifying and payment of such dues. 3. Verify the statement under 1 above, with the general understanding obtained and gained, underlying documents and records.Compile the the following details in the case of arrears of statutory dues-Name of the statute - Nature of the dues - Amount - Due date -Date of payment

4.Whether the Company has been generally regular in depositing statutory dues or otherwise 5. In the case of disputed statutory dues, compile the following details- Name of the Statute - Nature of the dues - Amount - Forum where dispute is pending Information under this clause should be given separately for each period eventhough the dispute relates to the same nature of statutory dues, like income taxes etc.,

Notes: 1. The scope under this clause is restricted to only those statutory dues which are required to be paid regularly to a body. 2. Reporting under this clause is required irrespective of the fact whether or not there are an arrears as at the balance sheet date.

3. For a matter to be considered as "disputed" there must be a positive evidence or action on the part of the company to show that it has not accepted the demand for payment of duty or tax. Auditor need not make a judgement about the sustainability or otherwise of the claim. A mere representation to the department shall not constitute a dispute. 4. Penalites or interest would be covered under "amounts payable".

tes under which the company is required to make payments to appropriate authorities, the nature and amounts of payments under each stat

depositing statutory dues or otherwise, report the same appropriately.

e income taxes etc.,

ly those statutory dues which are the fact whether or not there are any

st be a positive evidence or action pted the demand for payment of he sustainability or otherwise of the t constitute a dispute.

mounts of payments under each statute, the due dates for making such payments, the dates on which the payments were made by the Com

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Yes N/A he payments were made by the Company, the arrears due for more than six months as at the Balance Sheet date and the date and amount o Done

Completed by: Date: Reviewed by: Date: Accumulated Losses etc., Audit Procedures Response Remarks 1.Has the company been registered for a period of five or more years as at the balance sheet date?

2.Compute the accumulated losses and net worth of the company as at the end of the financ whether the accumulated losses as at that date are more than 50% of company's net worth. 3. Compute and check whether the company has incurred cash losses for the period under review and in the immediately preceding financial year.

Notes: 1.The impact of qualifications which can be quantified must be adjusted in computing net worth, as at the balance sheet date and in arriving at the cash losses. The fact of such ad in reporting under this clause.Where the qualifications are not quantifiable, the report should effect of such unquantified qualifications has not been taken into consideration in computing 2. Net worth is the sum total of paid up capital and free reserves after deducting the provision prescribed. Free reserves means all reserves created out of profits and share premium acco revaluation reserve, write back of depreciation provisions and amalgamation. 3. Loss shown by the profit and loss account is adjusted for the effects of transactions of a n Depreciation, amoritisation, any deferrals or accruals of past or future cash receipts or paym

company as at the end of the financial year. Verify

tified must be adjusted in computing the accumulated losses and t the cash losses. The fact of such adjustment must be indicated re not quantifiable, the report should state the fact that the aken into consideration in computing the above amounts. eserves after deducting the provisions or expenses as may be ut of profits and share premium account but does not include s and amalgamation. for the effects of transactions of a non-cash nature such as past or future cash receipts or payments in determining the cash losses.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Default in repayment of dues to Banks,Financial Institutions or debentureholders Audit Procedures Response Remarks 1. Obtain a statement containing the names of the institution/bank/debenture holder, the period and amounts of default, due dates thereof and dates and amounts of subsequent payments, if any.

2. Verify the statement in 1 above, with documents such as agreements, other terms and co

Notes: 1. The requirement covers all the defaults exisiting on the balance sheet date, irrespe defaults have occurred. 2. Dues cover all amounts including interest and principal. 3. Applications for reschedulement/resturcturing will not be binding unless approved. 4. Dues not paid by the company on account of unilateral disputes tantamount to default.

ons or debentureholders

h as agreements, other terms and conditions, debenture trust deed as the case may be. Identify the period and amount of default for reportin

ng on the balance sheet date, irrespective of when the

be binding unless approved. al disputes tantamount to default.

od and amount of default for reporting.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Maintenace of documents and records for loans and advances granted Audit Procedures Response Remarks 1. Whether the company has granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities? 2. If yes, examine whether documents and records include details such as- name and address of the borrower, amount, terms and conditions such as period, rate of interest, security etc.,; disbursements, repayments, recovery of interest; full particulars of security- names of the companies, number and class of shares, distinctive numbers, particulars as to title etc; documents needed for transfer, details as to periodical ackowledgements of the parties, proof to establish the power of the party to borrow- e.g. board resolution etc., 3. Obtain a statement containing the details of such loans granted-name of the party, amount of loan/advance granted, amount outstanding as the balance sheet date and type and nature of security and verify the same on a reasonable test check basis with documents and records mentioned in 2 above. 4. Verify the securities pledged by reference to physical securities or statements from depository participants.In the case of dematerialized form of securities confirm that the company has a valid right to sell the shares in the event of default. 5.Whether security is in the custody of company and market value of security is adequate to 6. List the deficiencies for reporting. Notes: 1. The requirement of this clause does not extend to other forms of security like

hypothecation, guarantee etc., 2. Other securities may be construed to mean bonds or promissory notes issued by a govern or semi-government authority.

vances granted

arket value of security is adequate to cover the outstanding amount of loan and interest?

d to other forms of security like

promissory notes issued by a government

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Chit Fund Company Audit Procedures Response Remarks 1. Is the Company a chit fund company? 2. Gain an understanding of the relevant Acts and the rules applicable to the company situated in a particular state/union territory. 3. Test check compliance with the requirements under the Act and the rules as applicable. 3. Ensure that the requirements of the rules regarding the records to be maintained, returns to be filed etc., are complied with, where applicable.

Notes: 1. The requirement only applies to checking compliance with the provisions of specia as they have application to the accounts of the chit fund company. 2. If the company's branches are situated in more than one state, legal opinion may be soug applicability and compliance with the relevant provisions of the Acts/Rules.

pliance with the provisions of special statutes in so far

one state, legal opinion may be sought regarding the of the Acts/Rules.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Nidhi/mutual benefit fund/societies Audit Procedures Response Remarks 1. Is the Company a nidhi/mutual benefit fund/ society? 2. Check complaince with the followinga) whether the net ownedfunds to deposit liability ratio is more than 1:20 as on the date of balance sheet; b) whether the company has complied with the prudential norms on income recognition and provisioning against sub-standard / default / loss assets; c) Whether the company has adequate procedures for appraisal of credit proposals / requests, assessment of credit needs and repayment capacity of the borrowers by examination of the policies and procedures a reasonable test check of the transactions effected during the year with relevant documents such as individual borrower files, loan application forms,supporting documentation, sanctions, security documents etc., d) Whether the repayment schedule of various loans granted by the nidhi is based on the repayment capacity of the borrower and would be conducive to recovery of the loan amount by examination of the system of granting of loans and making a reasonable test check of transactions. 3. Ensure that the requirements of the rules regarding the records to be maintained, returns to be filed etc., are complied with, where applicable. 4. Consider the implications of non-compliances under 2 a) and b) above also in the auditors' report on the financial statements.

Notes: 1. Net owned funds means the aggregate of paid up equity capital and free reserves a by accumulated losses and intangible assets appearing in the last audited balance sheet of t i.e. balance sheet of the current year. 2. Deposit liability would mean aggregate of deposits accepted by the company.

up equity capital and free reserves as reduced in the last audited balance sheet of the company

cepted by the company.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Dealing or Trading in Securities Audit Procedures Response Remarks 1.Is the company dealing or trading in shares, securities, debentures and other investments? 2.Whether the records of the Investments show the following particulars: (i) details regarding dates of transactions-purchases and sales. (ii) classes of investments (iii) distinctive numbers and the face value ; (iv) quantity of the receipts and issues and balances; (v) physical verification quantities; (vi) cost, valuation details; (vii) profit/loss arising on sale (viii) amounts receivable/payable. 3. Examine the timeliness of updation of the records by adpoting procedures such as surprise inspection of the records, system of internal controls over updation, review of internal audit and other reports for exceptions, if any, in this regard. 4. Verify that the transactions entered in the registers are duly supported by relevant documents. 5. Verify whether the aggregate of balance as per the Registers/Records agrees with General Ledger balances. 6. Obtain a statement containing details of investments not held in the name of the company and those where exemption under Section 49 is available. Check the statement with necessary supporting documents as in 4 above and with the requirements of Section 49 of the Act.

7.In case investments which are intended to be sold immediately may not have been transfe

Notes:1. The requirement does not apply to companies which are not dealing or trading in in investments with a view to hold such investments and earn income from dividend or interest. in this regard include-objects of the company, period for which investments are normally held internal approvals covering such purchase and sale, method of valuation-cost or lower of cos of profits/gains in the tax assessments etc.,

egisters/Records

not held in the r Section 49 is ng documents

mediately may not have been transferred in the name of the company, whether, in the circumstances of each case, the failure to transfer the

which are not dealing or trading in investments but purchase arn income from dividend or interest.Factors to consider to decide which investments are normally held, reasons for purchase/sale, thod of valuation-cost or lower of cost or market value, treatment

each case, the failure to transfer the investments to the companys name is understandable.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed Date: by: Date: Date: Reviewed by: Date:

Guarantees given Audit Procedures Response Remarks 1. Has the company given any guarantees for loans taken by others from bank or financial in 2. Obtain a list containing the name of the party, nature of relationship, if any, amount of loans taken, closing balance as at the balance sheet date together with brief terms and conditions like description of security given, estimated amount of such security, default action conditions, if any. 3. Understand and document the internal controls over issue of guarantees and confirm its operation during the year. Consider implications, if any, on reporting or in management letter.

4. Verify the above statement with documents such as memorandum of association- to confirm whether the company can issue guarantees, maximum permissable amounts, the parties in respect of whom and the types of guarantees that can be given; minutes of the board of directors, compliance with the requirements of Section 372A of the Companies Act, letters o 295/372A of the Companies Act, letters of borrowing parties requesting the guarantee, company's letters, guarantee documents etc., 5. If the company has issued a guarantee in contravention of the clauses of the memorandum of association, consider the same appropriately in reporting.

6.Whether the tangible/ intangible benefits flowing to the company due to furnishing of guara 7. If in judgement and conclusion it was established that the terms are prejudicial to the interest of the company, obtain an explanation from the company why the company considers the same as not prejudicial.

8. If not convinced by management's explanation, consider appropriately in reporting disclosing the amount of such guarantee.

Notes:1. The requirement only applies to guarantees given for loans taken by others from ba financial institutions and not from other sources. 2. The requirement only relates to guarantees given during the year. 3. In determining whether the any guarantees given are prejudicial to the interest of the comp factors such as financial standing of the party, its ability to borrow, nature of security offered, availability of alternate sources of finance, urgency of the borrowing for which the guarantee

en by others from bank or financial institutions?

372A of the Companies Act, letters of borrowing parties requesting the

e company due to furnishing of guarantee are commensurate with risk undertaken by the company in doing so?

ven for loans taken by others from banks or

prejudicial to the interest of the company, to borrow, nature of security offered, e borrowing for which the guarantee was given etc.,

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Yes

No N/A Done

Completed by: Date: Reviewed by: Date: Utlisation of Term Loans Audit Procedures Response Remarks 1. Has the company obtained any term loans or made any utilisation during the year? 2.Obtain a statement containing the specific terms of loans and the details of application-amounts, dates and the purpose. 3.Verify the statement with documents such as sanction letters and other documents containing the terms and conditions and those relating to actual utilisation. 4. If term loans were not applied for the purpose for which they were obtained, indicate the amount and the purpose for which it was ultimately utilised. 5. In the case of temporary application of funds for other purposes before they were utilised for the stated purpose, mention such fact in the report.

6.Whether the funds flow statement has been reviewed where one to one correlation is not p Notes: 1. Working capital term loans are not within the scope of this clause. 2. The reporting requirement under this clause also covers temporary use of surplus funds. 3. It is not necessary to establish a one to one relationship with the amount of term loan and

ny utilisation during the year?

where one to one correlation is not possible?

cope of this clause. ers temporary use of surplus funds. hip with the amount of term loan and its utilisation.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Utlisation of Funds Audit Procedures Response Remarks 1.Obtain a statement containing the specific terms of funds and details of use-amounts and nature. 2. Compare the quantum of long term funds with the long term application of funds. 3. Compare the quantum of short term funds with the short term application of funds. 4. If the differences point towards use of short term funds for long term investment and vice versa , consider appropriately in reporting.

Notes: 1. Long-term sources of funds would include share capital, reserves and surplus, pro for depreciation, long term debt securities, long term loans. Long term application of funds w include investment in fixed assets, long term investments and other assets of similar nature, repayment of long term loans and advances or redemption of debt securities, use for core w capital etc., Short term sources of funds include temporary credit facilities like cash credits, overdraft, reduction in current assets or increase in current liabilities etc., Short term applicat funds includes all application otherwise than for long term use, increase in current assets or decrease in current liabilities etc., 2. The requirement has to be determined on the basis of the overall picture of the sources an application of funds based on the balance sheet of the company unless a one to one direct relationship can be established between a particluar source and application.

re capital, reserves and surplus, provision ns. Long term application of funds would s and other assets of similar nature, ion of debt securities, use for core working ary credit facilities like cash credits, ent liabilities etc., Short term application of m use, increase in current assets or

f the overall picture of the sources and ompany unless a one to one direct urce and application.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date: Preferential allotment of shares Audit Procedures Response Remarks 1. Has the company made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act,1956?

2. Obtain a statement containing the names of the parties and companies, nature of relations 3. In the case of listed companies check whether the price for shares issued on a preferential basis is not less than higher of the following-the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date. - the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the relevant date. 4. In the case of listed companies, confirm and verify that the company has complied with the requirements of guidelines laid down in this regard by SEBI. 5. In the case of private company and an unlisted public company , examine the method used for valuation of the shares and also ascertain the reasonableness of the assumptions underlying the calculation. 6.If in the judgement and conclusion it was eastablished that the price charged is not fair, obtain a representation from the management as to why such price charged is not prejuducial to the interest of the company and consider appropriately in reporting. 7. Consider compliance with the requirements of AAS-9 "Using the work of an Expert" if the valuation report of an expert is used as the basis. 8. If the company has made preferential issue by passing an ordinary

resolution, also examine the relevant order of the Government passed in this regard. If on the basis of order it is concluded that the price charged is not prejudicial, state the fact of reliance on such order for the purpose of reporting.

Notes: 1.The term "shares" includes both preference as well as Equity. 2. In the case of a listed company allotment of shares under Section 81(1A) of the Companie preferential allotment of shares.

es and companies, nature of relationship, description of allotments made-equity/preference, number of shares, price and terms and condition

that the price nagement as to

g an ordinary

nment passed

well as Equity. nder Section 81(1A) of the Companies Act,1956 is known as

hares, price and terms and conditions of the allotments made during the year.

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes No N/A Done

Completed by: Date: Reviewed by: Date:

Securites for Debentures Audit Procedures Response Remarks 1. Has the company issued any debentures and the same outstanding at the end of the year 2.Verify the debenture trust deed executed under Section 117A of the Act in respect of debentures issued during the year with particular reference to security requirements. 3.Verify whether such security is created as required under section 125 and 130 of the Act by examining the documents evidencing the charge-forms filed with ROC etc.,

me outstanding at the end of the year?

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Yes N/A Done No

Completed by: Date: Reviewed by: Date: End use of Public issue Monies Audit Procedures Response Remarks 1. Has the company made any public issue or made utilisation during the year? 2.Obtain a statement containing the quantum of money raised on public issue of any security made by the company during the year and details of end use of money so raised. 3. Verify such statement with reference to end use as set out in the Prospectus. Where the issue exceeds Rs. 500 Crores, refer the half yearly reports of the monitoring agency as submitted to SEBI. 4. Verify the disclosure made by the company in the financial statements in this regard. 5. If we are not satisfied with the disclosures made in the financial statements, consider the matter for reporting setting out clearly the information which should have been dislosed. 6.Whether the cash flow statement has been reviewed where one to one correlation is not possible? 7. If we are unable to determine the end use of money raised from public issues state the fact together with the reasons thereof in our report.

sation during the year?

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse Yes N/A Done No

Completed by: Date: Reviewed by: Date: Fraud Audit Procedures Response Remarks 1.Complete our understanding and assessment of fraud considerations as per steps given under "Fraud Risk" in MYClient file. 2. On the basis of work carried out as above, are we satisfied that there are no indications of fraud on or by the company noticed or reported during the year? 3. If any fraud is noticed or if there is a doubt about the existence of fraud, carry out procedures as mentioned in AAS-4 "The Auditor's Responsibility to consider fraud and error in an audit of Financial Statements" 4.If the response to 2 above is "No" determine the . nature and extent of such frauds and implications on our reporting. Note: The following are the indicative sources relating to identification of Fraud-

identification of Fraud-

i. the reports of internal reviews conducted, if any.ii.Inquiries of the mana

ducted, if any.ii.Inquiries of the management about any frauds on or by the company that its has noticed or that have been reported to it. iii. d

Price Waterhouse & Co Choksey Bhargava & Co Lovelock & Lewes Price Waterhouse

Completed Yes No Done

or that have been reported to it. iii. discussions with other employees of the company. iv. Examination of the minutes book of the meetings o

f the minutes book of the meetings of Board, audit committee etc.,

Clause No. Area/Requirement Brief Descriptionaddressed in the Audit How of the Issue 4(i) (a) Fixed Assets 4(i) (b) Fixed Assets 4(i)( c) Fixed Assets 4(ii) (a) Inventories 4(ii) (b) Inventories 4(ii) ( c) Inventories 4(iii) (a) Loans granted Loans taken 4(iii)(b) Loans granted Loans taken 4(iii)( c) Loans granted or taken 4(iii) (d) Loans granted or taken 4(iv) Internal Controls 4(v)(a) & (b) egister under Section 301etc., R 4(vi) Fixed Deposits 4(vii) Internal Audit 4(viii) Cost Records 4(xi) (a) & (b) Statutory dues 4(x) Accumulated losses etc., 4(xi) Dues to Banks & Fis etc., 4(xii) Loans and Advances granted 4(xiii)(a) Chit Fund company 4(xiii)(a) to (d) Nidhi/mutual benefit fund/society 4(xiv) Dealing or Trading in Securities 4(xv) Guarantees 4(xvi) Term Loans 4(xvii) Funds raised 4(xviii) Allotment of shares 4(xix) Debentures 4(xx) Money raised on public issue 4(xxi) Fraud

Lovelock & Lewes Price Waterhouse