AUDIT OF A COMPANY

MASTER OF COMMERCE
ACCOUNTANCY
SEMESTER IV
(2016-17)

SUBMITTED BY:
AKSHATA RAVINDRA GAWAND
ROLL NO. 7

GUIDE NAME:
Prof. SACHIN BHANDARKAR

VIVEKANAND EDUCATION SOCIETYS

COLLEGE OF ARTS, SCIENCE & COMMERCE
Sindhi Society, Chembur, Mumbai- 400071.
 AUDIT OF A COMPANY

MASTER OF COMMERCE
ACCOUNTANCY
SEMESTER IV

Submitted

In Partial Fulfillment of the requirements

For the Award of the Degree of
Master of Commerce Accountancy

By

AKSHATA .R. GAWAND

7

VIVEKANAND EDUCATION SOCIETYS COLLEGE OF

ARTS, SCIENCE & COMMERCE Sindhi Society,
Chembur, Mumbai- 400071.
 VIVEKANAND EDUCATION SOCIETYS
COLLEGE OF ARTS, SCIENCE & COMMERCE
Sindhi Society, Chembur, Mumbai- 400071

CERTIFICATE

This is to certify that Shri/Miss Akshata Ravindra Gawand M.Com.

Accountancy - Semester IV (2016-17) has successfully completed the

project on Audit of a Company under the guidance of Prof. Sachin

Bhandarkar.

Course Coordinator Principal

Project Guide/ Internal Examiner

External Examiner
 DECLARATION

I, Akshata Ravindra Gawand , the student of M. Com.

(Accountany) Semester IV (2016-17) hereby declare that I have
completed this Project on Audit of a Company.

The information submitted is true and original to the best of my

knowledge.

_____________________
Students Signature
Akshata Gawand
7
 Acknowledgement

First of all immensely and wholeheartedly I thank God and also my parents for
giving me this opportunity for successful completion of my project work . Also I
thank the management for giving us a chance for doing this course. I wish to
express my sincere thanks to all my teachers, for the continuous and creative ideas,
given during my studies and also for this project .I am deeply indebted to my
mentor, my guide and my respected teacher Mr. Sachin
Bhandarkar , for his patience, valuable inputs, motivations toperform more better a
nd his instincts support without which the
project work would not have completed .I am extremely indebted to the internet
technology for the valuable help rendered to me by providing the necessary
materials and support needed for the preparation of this project work.
 Research Methodology

The information collected is from secondary data.

Secondary Sources :

Secondary data is a data which is collected and complied for

different purpose, which is used in research for the study. The secondary
data includes material collected from internet, newspaper, books and
magazines.
 Executive Summary

The word audit is derived from a Latin word "audire" which means "to
hear". An audit is a systematic and independent examination of books, accounts,
statutory records, documents and vouchers of an organization to ascertain how far
the financial statements as well as non-financial disclosures present a true and fair
view of the concern. We perform an audit to ensure you have paid no more than the
appropriate premium for your exposure. An accurate audit is a benefit to you and
your business and could save you time and money. Company is the artificial being
which separate entity from the owner or management. At the end of the period
companys financial statement must be submitted to the user after proper
examination by the auditor. The auditors report shall be attached there to and the
report shall be read before the company in general meeting.
 INDEX

Sr. No Topic
1. Meaning of Audit
2. What is Company Audit?
3. Rights of an Auditor of a Company
4. Duties of an Auditor
5. Removal and Resignation of an auditor
6. The Audit Process
ULTRATECH CEMENT LTD
7. Introduction
8. Auditors Report
9. Balance Sheet
10. Notes of Accounts
 11. Conclusion
12. Bibliography

Meaning of audit :
An audit is a systematic and independent examination of books, accounts,
statutory records, documents and vouchers of an organization to ascertain how far
the financial statements as well as non-financial disclosures present a true and fair
view of the concern. It also attempts to ensure that the books of accounts are
properly maintained by the concern as required by law. Auditing has become such
a ubiquitous phenomenon in the corporate and the public sector that academics
started identifying an "Audit Society".The auditor perceives and recognises the
propositions before them for examination, obtains evidence, evaluates the same
and formulates an opinion on the basis of his judgement which is communicated
through their audit report.

What is Company Audit?

Company is the artificial being which separate entity from the owner or
management. At the end of the period companys financial statement must be
submitted to the user after proper examination by the auditor. when an auditor
apply auditing activities to examine the statement in order to give expert opinion
their on such types of Auditing activities are called company audit. Under the
section 183(3) of the company Act1994:Company Audit means The balance sheet
and profit and loss account or income or expenditure account, cash flow statement
of a company shall be caused to be audited by the auditor of the company as in the
companies act provided. and the auditors report shall be attached there to and the
report shall be read before the company in General meeting.

Rights of an auditor of a company

1. Right of Access to Books of Accounts:

Every auditor of a Company has a right of access at all times to the books of
accounts and vouchers of the company whether kept at the head office of the
company or elsewhere.

Thus, the auditor may consult all the books, vouchers and documents whenever he
so likes. This is his statutory right. He may pay a surprise visit without informing
the Directors in advance but in practice, the auditors inform the Directors before
they pay their visits.

2. Right to obtain Information and Explanations:

He has a right to obtain from the Directors and officers of the company any
information and explanation as he thinks necessary for the performance of his
duties as an auditor.

This is another important power in the hands of the auditor. He will, however,
decide as to which information or explanations he thinks necessary to obtain. It the
Directors or officers of the company refuse to supply some information on the
ground that in their opinion it is not necessary to furnish it, he has a right to
mention the fact in his report.
3. Right to Correct any Wrong Statement:

The auditor is required to make a report to the members of the company on the
accounts examined by him and on every Balance Sheet and Profit and Loss
Account and on every other document declared by this Act to be part of or annexed
to the Balance Sheet or Profit and Loss Account which are laid before the company
in General Meeting during his tenure of office. The Directors have a duty to
prepare them and present them to the auditor.

4. Right to visit Branches:

According to section 228, if a company has a branch office, the accounts of the
office shall be audited by the companys auditor appointed under section 224 or by
a person qualified for appointment as auditor of the company under section 226.

Where the Branch Accounts are not audited by a duly qualified auditor, the auditor
has a right of access at all time to the books, accounts and vouchers of the
company and thus, may visit the branch, if he deems it necessary.

5. Right to Signature on Audit Report:

Under section 229, only the person appointed as auditor of the company, or where
a firm is so appointed, only a partner in the firm practicing in India, may sign the
auditors report, or sign or authenticate any other document of the company
required by law to be signed or authenticated by the auditor.

6. Right to receive Notice and other Communications relating to General

Meeting and attend them:
 Under section 231 an auditor of a company has a right to receive notices and other
communications relating to General Meeting in the same way as a member of the
company. He is also entitled to attend any General Meeting which he attends or
any part of the business which concerns him as an auditor.

7. Right of being indemnified:

Under section 633, an auditor (being an officer of a company), has a right to be

indemnified out of the assets of the company against any liability incurred by him
defending himself against any civil and criminal proceedings by the company if it
is proved that the auditor has acted honestly or the judgement delivered is in his
favour.

8. Right to have Legal and Technical Advice:

He has a right to seek the opinion of the experts and, thus, take legal and technical
advice. This is necessary to give his opinion in his report. (Re. London and General
Bank Case, 1895).

He has a right to receive his remuneration provided he has completed the work
which he undertook to do.

Duties of an Auditor
1) To certify statutory report.
2) To report to the members of the company.
3) To inquire into particular issues.
4) To certify directors declaration of solvency.
5) To report for prospectus.
6) To assist / inspect.
7) To assist public prosecutor.

Removal & Resignation of Auditors

The auditor may be removed from his office before expiry of his term
only by a special resolution of the company after obtaining the previous approval
of CG. The concerned auditor shall be given the reasonable opportunity of being
heard.
The auditor who has resigned from the company shall file within a period of thirty
days from the date of resignation, a statement indicating the reasons and other facts
as may be relevant with regard to his resignation with the company and the
Registrar otherwise he is punishable with fine ( Rs. 50,000 to 5,00,000).
Special notice shall be required for a resolution at an AGM appointing as auditor a
person other than a retiring auditor or providing expressly that a retiring auditor
shall not be re-appointed, except where the retiring auditor has completed a
consecutive tenure of 5 or10 years. The company shall forward the notice to the
auditor. Auditor shall send representation in writing to the company. The company
shall circulate the representation of the auditor to the members. The auditor may
require that the representation shall be read out at the meeting. If the copy of
representation is not sent to members it shall be filed with ROC. If the Tribunal is
satisfied on an application either of the company or of any other aggrieved person
that the representation rights conferred are being abused by the auditor, then the
copy of the representation may not be sent and the representation need not be read
out at the meeting.
Tribunal suo motu or an application by CG or any other person if satisfied that
auditor has directly or indirectly has acted fraudulently it may order, direct the
company to change the auditor. If the final order is passed, the auditor shall not be
appointed as auditor of any company for a period of 5 years.

The Audit Process

There are five phases of our audit process: Selection, Planning, Execution,
Reporting, and Follow-Up.

Selection Phase

Internal Audit conducts a University-wide risk assessment near the end of each
calendar year. We develop the audit plan for the subsequent year based on the
results of this assessment and the departments available resources. The
Chancellor and the Fiscal Affairs and Audit Committee of the Kansas Board of
Regents review the audit plan before it is executed.

Planning Phase

During the planning phase of each project, the Internal Audit staff gather relevant
background information and initiate contact with the client. Auditors meet with
University leadership and clients to identify risks and determine the objectives and
scope of the audit as well as the timing of fieldwork and the report distribution.

Execution Phase

Once the audit is planned, fieldwork is executed by the Internal Audit staff. Clients
are kept informed of the audit process through regular status meetings. We discuss
audit observations, potential findings, and recommendations with the client as they
are identified.

Reporting Phase

A summary of the audit findings, conclusions, and specific recommendations are

officially communicated to the client through a draft report. Clients have the
opportunity to respond to the report and submit an action plan and time frame.
These responses become part of the final report which is distributed to the
appropriate level of administration.

Follow-Up

Internal Audit follows up on all audit findings within one year of when the report
was issued

ULTRA TECH CEMENT LTD

Introduction:

Ultra Tech Cement Limited (BSE: 532538) is India's biggest cement

company and Indias largest exporter of cement clinker based in Mumbai, India.
The company is part of the Aditya Birla Group and division of Grasim Industries.
It has an annual capacity of 64 million tonnes. UltraTech cement has been awarded
the Super brand status.

It manufactures and markets ordinary Portland cement,londonblast furnace

slag cement, white cement and Portland Pozzolana cement. It also
manufactures ready-mix concrete (RMC) and Autoclaved Aerated Concrete
Blocks(AAC Blocks) with brand name Ultratech Xtralite. The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle East. UltraTech
is India's largest exporter of cement clinker. The company's production facilities
are spread across twelve integrated plants, one white cement plant, one
clinkerisation plant in UAE, sixteen grinding units, and five terminals four in
India and one in Sri Lanka. Most of the plants have ISO 9001, ISO
14001 and OHSAS 18001 certification. In addition, two have received ISO
27001 certification and four have received SA 8000 certification. The process is
currently underway for the remaining plants. The company exports over 2.5
million tonnes per annum, which is about 30 per cent of the country's total exports.
The export market consists of countries around the Indian Ocean, Africa, Europe
and the Middle East. Export is a thrust area in the company's strategy for growth.

Independent Auditors Report

To the Members of
UltraTech Cement Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of UltraTech
Cement Limited, (the Company), which comprise the Balance Sheet as at 31
March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the
year then ended, and a summary of the significant accounting policies and other
explanatory information.

Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section
134 (5) of the Companies Act, 2013 (the Act) with respect to the preparation and
presentation of these standalone financial statements to give a true and fair view of
the financial position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India, including
the Accounting Standards specified under Section 133 of the Act, read with Rule 7
of the Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities, selection and application of appropriate
accounting policies, making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view and are free
from material misstatement, whether due to fraud or error.

Auditors Responsibility
Our responsibility is to express an opinion on these standalone financial
statements based on our audit. We have taken into account the provisions of the
Act, the accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the Rules made
thereunder.
We conducted our audit in accordance with the Standards on Auditing specified
under Section 143(10) of the Act. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
 An audit involves performing procedures to obtain audit evidence about the
amounts and the disclosures in the financial statements. The procedures selected
depend on the auditors judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal financial control relevant to
the Companys preparation of the financial statements that give a true and fair
view, in order to design audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of the accounting policies
used and the reasonableness of the accounting estimates made by the Companys
Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion on the standalone financial statements.

Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid standalone financial statements give the information
required by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India, of the state
of affairs of the Company as at 31 March 2016, and its profit and its cash flows for
the year ended on that date.

Other Matter
The standalone financial statements of the Company for the year ended 31 March
2015, were audited jointly by Deloitte Haskins & Sells LLP and G. P. Kapadia &
Co. who expressed an unmodified opinion on those standalone financial statements
on 25 April 2015.
Report on Other Legal and Regulatory Requirements.
1. As required by the Companies (Auditors Report) Order, 2016 (the Order),
issued by the Central Government of India in terms of sub-section (11) of
Section 143 of the Act, we give in the Annexure A, a statement on the matters
specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by
the Company so far as it appears from our examination of those books.
(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 aforesaid standalone financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with Rule 7 of
the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on 31
March 2016 taken on record by the Board of Directors, none of the directors is
disqualified as on 31 March 2016 from being appointed as a director in terms of
Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, refer to
our separate Report in Annexure B and
(g) With respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and according to the explanations
given to us:
i. The Company has disclosed the impact of pending litigations on its financial
position in its standalone financial statements Refer Note 30(a) to the financial
statements.
ii. The Company did not have any long-term contracts including derivative
contracts as at 31 March 2016 for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company.

For B S R & Co. LLP For G.P. Kapadia & Co.

Chartered Accountants Chartered Accountants
Firms Registration No: 101248W/W-100022 Firms Registration No: 104768W

Vikas R Kasat Atul B. Desai

Partner Partner
Membership No: 105317 Membership No: 30850

Mumbai Mumbai
25 April 2016 25 April 2016
Notes to Financial Statements

Company Profile & Significant Accounting Policies:

(i) Company Overview:

Ultratech Cement Limited (the Company) is a Public Limited Company
incorporated in India under the provisions of Companies Act, 1956. Its shares are
listed on two stock exchanges in India. The company is engaged in the
manufacturing and selling of Cement and Cement related products. The Company
caters mainly to the domestic market.

(ii) Basis of Accounting and preparation of Financial Statements:

The financial statements are prepared and presented under the historical cost
convention on accrual basis of accounting in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP). These financial
statements comply in all material aspects with the Accounting Standards (AS)
specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act,
2013 (the Act), as applicable and guidelines issued by the Securities and
Exchange Board of India (SEBI), as applicable. The accounting policies adopted in
the preparation of these financial statements are consistent with those of the
previous year.

(iii) Use of estimates:

The preparation of financial statements in conformity with the Indian GAAP
requires the management to make judgements, estimates and assumptions that
affect the application of accounting policies and reported amounts of assets and
liabilities on the date of the financial statements, the reported amounts of revenues
and expenses during the reporting period and the disclosures relating to contingent
liabilities as of the date of the financial statements. Although these estimates are
based on the managements best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in outcomes
different from the estimates. Difference between actual results and estimates are
recognised in the period in which the results are known or materialise. Estimates
and underlying assumptions are reviewed on an ongoing basis. Any revision to
accounting estimates is recognised prospectively in the current and future periods.

(iv) Classification of Assets and Liabilities into Current/Non-current:

All assets and liabilities are presented as Current or Non-current as per the
Companys normal operating cycle and other criteria set out in the Schedule III of
the Act. Based on the nature of products and the time between the acquisition of
assets for processing and their realization, the Company has ascertained its
operating cycle as 12 months for the purpose of Current / Non-current
classification of assets and liabilities.

(v) Fixed Assets:

Fixed assets (whether Tangible or Intangible) are stated at cost less accumulated
depreciation / amortization / impairment loss (if any), net of Cenvat (wherever
claimed). The cost of fixed assets includes taxes, duties, freight, borrowing cost, if
capitalisation criteria are met, and other incidental expenses incurred in relation to
their acquisition / bringing the assets for their intended use. Spares which can be
used only in connection with a particular Plant and Equipment of the Company and
use is expected to be irregular, are capitalised at cost, net of Cenvat (wherever
claimed). Losses arising from the retirement of, and gains / losses arising from
disposal of fixed assets which are carried at cost are recognised in the Statement of
Profit and Loss. Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future benefits from the existing asset
beyond its previously assessed standard of performance. A fixed asset is eliminated
from the financial statements on disposal or when no further benefit is expected
from its use and disposal. Assets retired from active use and held for disposal are
stated at the lower of their net book value and net realisable value and shown under
Other Current Assets. UltraTech Cement Limited Annual Report 2015-16 081
Corporate Reports Financial Section Notes to Financial Statements.

(vi) Expenditure during construction period:

Expenditure/ Income, during construction period (including financing cost relating
to borrowed funds for construction or acquisition of qualifying fixed assets) is
included under Capital Work-in-Progress, and the same is allocated to the
respective fixed assets on the completion of their construction. Advances given
towards acquisition or construction of fixed assets outstanding at each Balance
Sheet date are disclosed as Capital Advances under Long-term loans and
advances.

(vii) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of a
qualifying asset are capitalised as part of the cost of such asset till such time the
asset is ready for its intended use. A qualifying asset is an asset that necessarily
takes a substantial period of time to get ready for its intended use. All other
borrowing costs are recognised as an expense in the period in which they are
incurred. Borrowing cost includes interest expense, amortization of discounts,
ancillary costs incurred in connection with borrowing of funds and exchange
difference arising from foreign currency borrowings to the extent they are regarded
as an adjustment to the Interest cost.

(viii) Depreciation and Amortisation: Depreciation is the systematic allocation of

the depreciable amount of an asset over its useful life and is provided on a straight-
line basis over the useful lives as prescribed in Schedule II to the Companies Act,
2013 and as estimated by the management. Depreciable amount for assets is the
cost of an asset less its estimated residual value. The useful life of an asset is the
period over which an asset is expected to be available for use by an entity, or the
number of production or similar units expected to be obtained from the asset by the
entity. In case of certain class of assets, the Company uses different useful life than
those prescribed in Schedule II to the Companies Act, 2013. Besides the useful life
of specific assets, the company follows the process of componentisation for fixed
assets w.e.f. 01.04.2015 as per the requirement of the Act. Accordingly, the
company has identified a part of an asset as a separate component in whole asset
value (beyond certain value) and useful life of the part is different from the useful
life of the remaining asset. The useful life has been assessed based on technical
advice, taking into account the nature of the asset / component of an asset, the
estimated usage of the asset / component of an asset on the basis of managements
best estimation of getting economic benefits from those class of assets /
components of an asset. The Company uses its technical expertise along with
historical and industry trends for arriving the economic life of an asset/component
of an asset. The useful lives are reviewed by management periodically and revised,
if appropriate. In case of a revision, the unamortised depreciable amount is charged
over the remaining useful life of the assets.
Conclusion
Audit is an official inspection of an organizations accounts,
typically by an independent body.Larger and more complicated
policies are handled by a field auditor, who will schedule an
appointment and visit your business. It is important for the
auditor to ask questions about your operations. Auditor should
check this very carefully. Auditor should check the assets and
liabilities appearing at the date of the balance sheet. It should be
verified that they are shown at the correct value. There are five
phases of audit process i.e selection, planning, execution,
reporting and follow-up. Secrecy must be maintained by the auditor during
the process of audit. He cannot disclose any information to the third party.

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 Bibliography

file:///C:/Users/abc/Desktop/Annual%20Report%20-
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http://www.ey.com/in/en/issues/governance-and-reporting/ey-
compass-on-companies-act-2013/ey-cfo-companies-act-
2013-audit-and-auditors