POLYGON ENTERPRISES PRIVATE LIMITED

Draft Audit Observations (For the period from April 2021 to September 2021)

M/S.POLYGON ENTERPRISES PRIVATE LIMITED

DRAFT AUDIT REPORT

For the Period from April-2021 to September-2021

Financial Year 2021-22

R.B. Associates, Page 1 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
 POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)
SCOPE OF WORK

As per the discussions had with the Management, the scope of work, nature and extent of coverage
of Audit is given below:

1. Vouching

a. Cash Vouchers
b. Purchase Vouchers
c. Bank Payment Vouchers
d. Journal Vouchers
e. Sales/Services Bill Vouchers.

6. Statutory Compliance

a. Income Tax Act

b. Labor Laws
c. Indirect Taxes

7. Bank Reconciliation Statements

8. Physical Cash Verification

In submitting our report to you, we wish to emphasize that internal control is a process affected

By the Board of the Company, Senior Management and other employees, designed to provide

Reasonable, but not absolute assurance that risks, including fraud risks, are properly managed

To ensure the achievement of the organization’s financial, operational and regulatory

Compliance objectives.

It is important to recognize that there are inherent limitations in our process. For example, our

procedures are generally based on the concept of selective testing of the data being examined and are,

therefore, subject to the limitation that material error, fraud and other illegal acts having a direct and

material financial impact, if they exist, August not be detected. Also, because of the characteristics of

fraud, particularly those involving concealment through collusion and falsified documentation

(including forgery), Internal Audit August not detect a material fraud. We will however,

communicate to you as appropriate, any illegal act, material errors or evidence that fraud August

exist, identified during the course of our work.

R.B. Associates, Page 2 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)
Our report runs as follows:

We have carried out the Audit of the company M/s. Polygon Enterprises Private Limited and
covered the following areas:

Si.N Reference
AREAS COVERED
o Page No.
1 FINANCIAL DATA

1.1 REVENUE/ INCOME /SALES

1.2 EXPENDITURE
2 CASH TRANSACTIONS
2.1 PHYSICAL VERIFICATION OF CASH
2.2 CASH VOUCHERS VERIFICATION
3 BANK TRANSACTIONS
3.1 BANK RECONCILIATION STATEMENT
3.2 BANK VOUCHERS VERIFICATION
4 JOURNAL VOUCHERS VERIFICATION
5 SALES/REVENUE INVOICES VERIFICATION
6 VERIFICATION OF PURCHASES
7 VERIFICATION OF STORES
8 STATUTORY PAYMENTS

8.1 ESI, EPF& PT DEDUCTION & PAYMENT

8.2 TDS DEDUCTION & PAYMENT

8.3 GOODS AND SERVICE TAX RECONCILATION

9 TIME STATISTICS

R.B. Associates, Page 3 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)

EXECUTIVE SUMMARY

Summary of Audit Observations April 2021 to September 2021

1) Polygon yet to post some entries of opening balance as on 01-04-2021 as per the
signed balance sheet of FY 2020-2021. (Difference in opening balance
Rs.10,35,420/-)

2) Polygon advised to account for the retention money claimed/received from

KSPL from bill to bill and adjust the same as and when the retention amount
claimed from KSPL.

3) Polygon has not yet posted the entry for salaries payable in tally for the month of
September-2021.
4) Polygon has not yet posted the Provident fund and ESI in TALLY for the month
of September2021.

5) Company not yet provided the Bank statements and BRS from April - Sep 2021
for our review.

6) Polygon received advance against works from KSPL amount of RS 40,00,000in

the month of July 2021 out of which bill raised on KSPL for 10,16,564 in the
month of august 2021. And, GST on balance advance received is paid by polygon
in the month of September 2021.Polygon required to pay interest on GST for the
delay payment of GST on advance received from KSPL.

7) Polygon advised to obtain the account statement from KSPL and reconcile with
polygon books up to date in view of receipt of advances and adjustment of bills
etc.

8) Polygon paying salary in form of cash to K. Ramesh babu @ Rs.18,175/- PM

(Posting entries in two different dates in tally each entry for Rs.9,174)/-. Polygon
advised to pay the salary through bank transfer instead of cash payment.

9) Polygon paid Amount RS 40,00,000 to Vanigolla in the month of May 2021,

purpose of payment and supporting is not available.

10)  Company Paid Bonus to Employees for the F.Y.2020-21 in the Month of Apr-21
amounting to Rs.1,29,331/-. As per the Payment of Bonus Rules 1975, Company
required to Fill Form- A, B,C, D.
  
         Form A – Computation of the Allocable Surplus
          Form B - Set-on and Set-off of Allocable Surplus
          Form C – Bonus Paid to Employees
          Form D – Annual Return for Bonus Paid to Employees.

R.B. Associates, Page 4 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)

11) Polygon accounted Sai pooja travels pvt ltd bill in the month of July 2021
towards travelling expenses (flight tickets) amount Rs.1,34,700- supporting
bills/documents not available in Kakinada office.

12) Poly started the execution of following works as per the Emails communication
received from the KSPL, formal work order from KSPL yet to be received by
Polygon.

Name of the Work Work order amount

Rs. (approx.)
Maintenance, Repairs & Painting works at BJ 2,50,000
Yard (HSE & Electrical Offices) in KDWP

Works at Online Gate Pass Counters & Weight 5,00,000

Bridges in KDWP

Maintenance, Repairs works - 2 1,00,000

Total 8,50,000

13) Polygon enterprises accounted purchase of HSD from UPSPL under vehicle
maintenance amounts to Rs.5,50,116/- from April 2021 to September 2021,
actually this diesel purchased for subcontractor vehicles and the same is reduced
from contractor bills. Polygon advised to account for the same under civil work
materials instead of vehicle maintenance.

14) Audit Observations related to Polygon GST reconciliation from April 2021 to
September 2021 given in Annexure-1. Polygon advised to provide replies against
the observations given in the Annexure.

R.B. Associates, Page 5 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)

1) FINANCIAL DATA

1.1) REVENUE/ INCOME /SALES (For Information Only)

APRIL-JUNE 2021 JULY-SEPT
Particulars Total Amount (Rs).
(Rs) 2021 (Rs)
Contracts Receipts (Sales) -- 14,40,511 14,40,511
Contracts Receipts (Services) 18,90,841 98,15,331 1,17,06,172
Total 18,90,841 1,12,55,842 1,31,46,683

1.2) EXPENDITURE (For Information Only)

APRIL-JUNE 2021 JULY-SEPT
Particulars Total Amount (Rs).
(Rs) 2021 (Rs)
Bank charges 880 868 1,747
Civil work material 29,49,310 57,01,721 86,51,031
Civil works 20,02,666 34,74,205 54,76,871
Civil works (Exempted, nil and
1,85,639 8,32,889 10,18,528
composite dealers
General expenses 590 -- 590
Insurance charges -- 8,260 8,260
Labour cess paid 48,695 31,281 79,976
Licence & Renewals -- 15,930 15,930
Loading and unloading charges 3,720 4,900 8,620
Mobile &Internet Exp -- 440 440
Petrol allowances 23,020 14,340 37,360
Printing and Stationary 840 13,164 14,004
Professional charges 40,000 -- 40,000
Professional tax expenses 2,500 -- 2,500
Rates and taxes 12,300 500 12,800
Salaries and wages 5,73,157 3,91,339 9,64,496
Staff welfare expenses 23,850 64,714 88,564
Transport charges -- 1,34,700 1,34,700
Vehicle maintenance 4,59,827 90,289 5,50,116
Total 63,26,993.50 1,07,79,539 1,71,06,533

Note: Above Statement is Prepared as per tally data as on 26-10-2021

Note: 1) Polygon Enterprises Private Limited is advised to account for the purchase of material
in purchases instead of direct expenses.

R.B. Associates, Page 6 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)
2) CASH TRANSACTIONS

2.1) PHYSICAL VERIFICATION OF CASH

The physical verification of cash at Kakinada was undertaken on 13-10-2021 @ 9:49AM

Cash balance in the books of Kakinada is Rs.35,802/-

Physical balance available Rs.35,802/-

The Denomination of cash as follows:

Particulars Amount (Rs)
500*71 35,500
100*1 100 (THIRTY-FIVE THOUSAND EIGHT HUNDERAD
50*2 100 AND TWO RUPEES ONLY).
20*4 80
10*2 20 Note: We have verified cash at Kakinada Office only.
Coins 02
Total 35,802 2.2) CASH VOUCHERS VERIFICATION

We have verified the Cash Payment & Receipt vouchers for the period from April-2021 to Sep-
2021 and no major discrepancies found. But following are the expenses from the period
July-21 to Sep-21 for which no entries were made in the tally.

DATE PARTICULARS AMOUNT

(IN Rs)
31-07-2021 Dewatering Expenses 1,637/-
31-07-2021 Siddhartha Tiles & Sanitary 2,040/-
31-07-2021 Dewatering Expenses 219/-
31-07-2021 Auto Charges 200/-
05-08-2021 Civil Work Expenses 1,691/-
09-08-2021 Internet Expenses 440/-
12-08-2021 Computer Accessories 2,000/-
30-08-2021 E-Filling Charges 1,800/-
24-08-2021 Lab Testing Expenses 2,478/-
30-08-2021 Uniform Stitching Expenses 1,440/-
30-08-2021 Dewatering Expenses 540/-
30-08-2021 Dewatering Expenses 1,627/-
30-08-2021 Lab Testing Expenses 6,000/-
27-09-2021 Office Expenses 350/-
27-09-2021 Dewatering Expenses 1,630/-
27-09-2021 Civil Work Expenses 300/-
27-09-2021 Civil Work Expenses 400/-
28-09-2021 Dewatering Expenses 940/-
29-09-2021 Civil Work Expenses 3,720/-
30-09-2021 Staff Conveyance 3,600/-
30-09-2021 Civil Work Expenses 770/-
30-09-2021 Dewatering Expenses 1,300/-
30-09-2021 Dewatering Expenses 1,080/-

3) BANK TRANSACTIONS:

R.B. Associates, Page 7 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)
3.1) BANK RECONCILIATION STATEMENT OF VARIOUS BANKS AS ON 3othSep 2021

Balance as per Balance as per Difference Remarks

Bank Name books (tally) Bank (Rs) (Rs)
(Rs)
Statement not
Axis Bank Limited-
15,39,168.05 Dr Available - Not Reconciled
KKD-10927
Statement not
Bank Of India-0385 21,185.61 Dr Available - Not Reconciled

Statement not
Kotak Mahindra Bank 2,16,486.65 Dr Available - Not Reconciled

Statement not
Axis Bank Limited_
69,818 Dr Available - Not Reconciled
Hyd-0960

3.2) BANK VOUCHERS VERIFICATION: -

We verified the Bank Payment & Receipt vouchers for the period from April-2021 to
September-2021, no major discrepancies found.

4) JOURNAL VOUCHERS VERIFICATION:

We verified the Journal vouchersfor the period from April-2021 to September-2021 and
found the following discrepancy.

i) No supporting documents available for the expenditure accounted under the

head travelling expenses as on 12-07-2021 amounting to Rs 1,34,700/-related
to party Sai pooja travel wings pvt ltd.
ii) Payment made to vani golla amounting to Rs.40,00,000/- no supporting’s
were available regarding the payment in Kakinada office.

5) SALES/REVENUE INVOICES VERIFICATION:

We verified the Revenue Vouchers for the period from April 2021 to September2021, no
major discrepancies found. Refer Annexure-2.

6) VERIFICATION OF PURCHASES:

We verified the Purchase vouchers for the period from April 2021 to September 2021
and found the following discrepancy.

i) Polygon has made purchases from the following parties at regular intervals
where polygon is not maintaining E-Way bills for the supplies exceeding Rs.
50,000/-
a) Priyanka minerals and projects LLP
b) Sri veeranjaneya Stone Crusher.

R.B. Associates, Page 8 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
 POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)

It is advisable to Polygon to maintain E-way Bills for the above suppliers, if the value of the
supply is exceeding Rs. 50,000/-

7)LOANS & ADVANCES:

Advance given to A.Veera Babu & Pinapothu Sivakumar amounting Rs.30,000/-, Rs.15,000/- no
supporting documents /note approvals available attached for advance paid.

8) VERIFICATION OF STORES:

We verified the postings of entries in stock register for the month of September-2021and
no major discrepancies found.

We conducted the physical verification of stock in stores and site and the detailed
report is given in Annexure-A.

9) STATUTORY PAYMENTS: -

9.1) ESI, EPF & PT DEDUCTION & PAYMENT

Employee Provident Fund (EPF)

Statement of Employee Provident fund for the period from April 2021 to September 2021: -

  As Per Books (PF) As Per Payment Challan (PF)    

Employer Employer
Employee Contribut Total Employee Contribut Total
Differ
Month contributi ion & Amount contributi ion & Amount  Due date  Paid date
ence
on Admin (Rs) on Admin (Rs)
Charges Charges
Apr-21 15,097 16,356 31,453 15,097 16,356 31,453 15-05-2021 12-05-2021
May-21 12,819 13,888 26,707 12,819 13,888 26,707 15-06-2021 11-06-2021
Jun-21 15,314 16,591 31,905 15,314 16,591 31,905 15-07-2021 06-07-2021
Jul-21 15,362 16,644 32,006 15,362 16,644 32,006 15-08-2021 06-08-2021
Aug-21 16,043 17,379 33,422 16,043 17,379 33,422 15-09-2021 09-09-2021
Sep-21 -- -- -- 17,021 18,438 35,459 15-10-2021 07-10-2021
Total 74,635 80,858 1,55,493 91,656 99,296 1,90,952    

Employee State Insurance (ESI)

Statement of Employee State Insurance for the period from April 2021 to September 2021:

As Per Books (ESI) As Per Payment Challan (ESI)   Due date Paid date

Employer
Employee Employer Total Employee Contribut Total
Differ
Month contributi contributi Amount contributi ion & Amount    
ence
on on (Rs) on Admin (Rs)
Charges

R.B. Associates, Page 9 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
 POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)
Apr-21 1,042 4,493 5,535 1,042 4,493 5,535 - 15-05-2021 10-05-2021
May-21 915 3,950 4,865 915 3,950 4,865 - 15-06-2021 10-06-2021
Jun-21 1,039 4,478 5,517 1,039 4,478 5,517 - 15-07-2021 06-07-2021
Jul-21 1,069 4,608 5,677 1,069 4,608 5,677 - 15-08-2021 06-08-2021
Aug-21 1,075 4,643 5,718 1,075 4,643 5,718 - 15-09-2021 09-09-2021
Sep-21 -- -- -- 1,678 7,247 8,925 - 15-10-2021 07-10-2021
Total 5,140 22,172 27,312 6,818 29,419 36,237 -    

Professional Tax

Professional tax (PT) Monthly wise Payment Details: -

Deducted
Amount Payment Delay
Month as per Diff Due date
Paid Date Days
Books
Apr-21 850 850 - 10-05-2021 07-05-2021 -
May-21 700 700 - 10-06-2021 08-06-2021 -
Jun-21 700 700 - 10-07-2021 08-07-2021 -
Jul-21 700 700 - 10-08-2021 07-08-2021 -
Aug-21 700 700 - 10-09-2021 09-09-2021 -
Sep-21 -- 1,050 1,050 10-10-2021 07-10-2021 -
Total 3,650 4,700 1,050

9.2) TDS DEDUCTION & PAYMENTS:

Gross TDS
Interest Payment
Month TDS Amount Deducted Due Date Delay
paid Date
Rs. & Paid
Apr-21 194 C – Contracts -- -- -- 07-05-2021 --  
May-21 194 C – Contracts 14,22,920 28,459 -- 07-06-2021 07-06-2021  
Jun-21 194 C – Contracts 7,19,986 14,401 -- 07-07-2021 07-07-2021  
Jul-21 194 C – Contracts 5,93,220 11,866 -- 07-08-2021 07-08-2021  

R.B. Associates, Page 10 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
 POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)
Aug-21 194 C – Contracts 16,70,605 33,415 -- 07-09-2021 07-09-2021  
Sep-21 194 C – Contracts 16,18,908 32,379 -- 07-10-2021 07-10-2021  
  Total 60,25,639 1,20,520 --      

194 J Professional Charges

TDS Liability for the period from April 2021 to September 2021

Gross TDS
Interest Payment
Month TDS Amount Deducted Due Date Delay
paid Date
Rs. & Paid
Apr-21 194 J – Professional 40,000 4,000 -- 07-05-2021 07-05-2021 -
Aug-21 194 J – Professional 32,250 3,225 -- 07-09-2021 07-09-2021 -
  Total 72,250 7,225 --      
TDS Payment Challans were not available at Kakinada office.

9.2) TDS Quarterly returns:

Quarterly E-TDS returns filed by the company are not available at Kakinada office return need
to be provided for Q1 &Q2.

As per Books As per Returns

Particulars Due date Date of filing
24Q 26Q 24Q 26Q
Quarter-1 - 46,860 - 31-07-2021
Quarter-2 - 80,885 - 31-10-2021
Quarter-3 - -- - 31-01-2022
Total - 1,27,745 -  

9.3) GOOD AND SERVICES TAX RECONCILATION

 Refer Annexure-1 for GST Reconciliation details for the Months April 2021 to
September-2021.

9) TIME STATISTICS: -

The Time Statistics in respect of Audit for the period from April 2021 to September-2021 are
given below:

R.B. Associates, Page 11 of 12

CHARTERED ACCOUNTANTS, HYDERABAD
POLYGON ENTERPRISES PRIVATE LIMITED
Draft Audit Observations (For the period from April 2021 to September 2021)

Audit Report No /Year Fy-2021-22

Period of Coverage April 2021 to Sep 2021
Date of Commencement 22-10-2021
Date of Completion 26-10-2021
Effective Number of Days 5 days
Date of email of Draft Report 29-10-2021
Date of Submission of Final Report
Audit Incharge N. Narendra
Audit Team 1) B. Aishwarya

2) C.Vijaya Raghava

R.B. Associates, Page 12 of 12

CHARTERED ACCOUNTANTS, HYDERABAD