TCS (Tata Consultancy Services)

Standalone Audit Report Summary for

2021-22
Tata Consultancy Services is a leading global IT services, consulting and business solutions
organization that has been delivering innovative solutions to businesses worldwide. Here is a
summary of the standalone auditors' report for the financial year 2021-22.

TCS Overview
Introduction

TCS is a multinational company with operations in over 46 countries. It is one of the largest
employers of IT professionals in the world and has been consistently ranked as one of the top
IT services companies globally.

Services

TCS provides a wide range of IT services including software development, cyber security,
data analytics, cloud computing and consulting services. Its clients include leading companies
in a variety of industries such as banking, healthcare, retail and manufacturing.

Auditors' Report Highlights

The auditors' report for TCS provides an overview of the company's financial position and
performance. It includes an assessment of the company's key accounting policies, estimates,
audit scope and methodology, and key audit matters.

Highlights of the auditors' report include:

Revenue Growth

TCS recorded strong revenue growth of 8.5% YoY in FY2021-22, despite the ongoing
pandemic and economic uncertainty.

Operational Efficiency

The company demonstrated a high level of operational efficiency with a margin of 26.2%,
which was an increase of 210 basis points compared to the previous year.

Audit Opinion

The auditors' report gave an unqualified opinion, indicating that the company's financial
statements present a true and fair view of its financial position and performance.
Revenue and Financial Performance
Revenue Breakdown

TCS's revenue in FY 2021-22 was $26.7 billion. The majority of the revenue came from the
company's digital services segment, which accounted for 52.2% of total revenue.

Net Profit

The company's net profit for the year was $6.4 billion, which was an increase of 16%
compared to the previous year. This was primarily due to revenue growth and operational
efficiencies.

Return on Equity

TCS had a return on equity of 29.1% in FY 2021-22, which was an increase of 260 basis
points compared to the previous year. This indicates the company's strong financial
performance and ability to create value for its shareholders.

Key Accounting Policies and Estimates

Policy/Estimate Significance
TCS recognizes revenue when it is realized or realizable and earned.
Revenue
This policy is critical as it impacts the company's financial statements
Recognition
and performance analysis.
The company tests the carrying value of its assets every year to ensure
Impairment Testing
they are not impaired. This estimate impacts the valuation of the
of Assets
company's assets and can impact its financial performance.
TCS provides stock options to its employees as part of its compensation
Valuation of Stock
plan. The valuation of these stock options impacts the company's
Options
expense and financial performance.

Audit Scope and Methodology

The audit of TCS was conducted in accordance with the auditing standards in India issued by
the Institute of Chartered Accountants of India. The auditors were responsible for obtaining
an understanding of the company's internal control system. They also performed substantive
procedures to obtain audit evidence about the amounts and disclosures in the financial
statements.

The audit scope covered all significant operations of the company and its subsidiaries
worldwide. The auditors also reviewed the company's internal audit reports and its
management representations to obtain assurance regarding the completeness and accuracy of
financial information.
Key Audit Matters
Impairment of Goodwill

The auditor evaluated the carrying value of goodwill and other intangible assets for
impairment, which involved significant estimation and judgment.

Revenue Recognition

The auditor evaluated the company's revenue recognition policies and assessed the impact of
significant contracts and customers on revenue recognition

Valuation of Stock Options

The auditor reviewed the company's stock option plan to ensure that it was in compliance
with applicable accounting standards and evaluated the valuation of stock options granted to
employees during the year.

Conclusion
Global Presence

TCS has a global presence with operations in over 46 countries. The company has a strong
track record of delivering innovative solutions to businesses worldwide.

Corporate Values

TCS has a strong set of corporate values that drive its business practices. These values
include integrity, respect for the individual, and a commitment to excellence.

Innovation and Research

TCS has a strong focus on research and innovation, and has established innovation labs
around the world to develop cutting-edge technology solutions.

TCS is a leading global IT services company that has demonstrated strong financial
performance and operational efficiency. The company's focus on innovation, research, and
corporate values have contributed to its success and position as a leader in the industry.
Certainly, here's a detailed summary of the key sections in the Independent Auditor’s Report for Tata
Consultancy Services Limited's standalone financial statements:

**Opinion:**

The auditor expresses their opinion on the standalone financial statements of Tata Consultancy
Services Limited (the "Company"). They state that, based on their audit and the information provided
to them, the standalone financial statements present a true and fair view of the Company's financial
position as of March 31, 2022, and its financial performance and cash flows for the year ended on
that date. This opinion is in accordance with the accounting principles generally accepted in India.

**Basis for Opinion:**

The auditor conducted the audit in compliance with the Standards on Auditing (SAs) specified under
Section 143(10) of the Companies Act, 2013. They confirm their independence as required by the
Code of Ethics issued by the Institute of Chartered Accountants of India. They obtained sufficient and
appropriate audit evidence to support their opinion on the standalone financial statements.

**Key Audit Matters (KAM):**

Key audit matters (KAM) are areas that were of most significance in the auditor's assessment of the
standalone financial statements. KAMs are addressed within the context of the overall audit but
don't result in a separate opinion. One key audit matter identified is the revenue recognition related
to fixed-price contracts.

**Description of Key Audit Matter - Revenue Recognition – Fixed Price Contracts:**

The Company is involved in fixed-price contracts, where revenue is recognized based on the
percentage of completion using an input method. This is a key audit matter due to the complexity of
these contracts and the inherent risk of accuracy. The application of the revenue recognition
accounting standard (Ind AS 115) involves key judgments and estimates.

The auditor's procedures included:

- Gaining an understanding of the Company's systems, processes, and controls for recording and
calculating revenue and related contract balances.

- Involving IT specialists to assess IT controls, including evaluating the IT environment, testing system
controls, and assessing controls related to resource allocation and budgeting.

- Random sampling tests of controls relating to contract cost estimation.

The audit also covered the assessment of onerous obligations and the recognition of contract assets.
Specific contract samples were tested for compliance with revenue recognition standards. This
included evaluating performance obligations, transaction prices, estimation of contract costs, and
onerous obligations. The auditor also assessed the appropriateness of work in progress (contract
assets) and reviewed documentation to identify changes in estimated costs.

The audit concluded that revenue recognition from fixed-price contracts was appropriately
accounted for and in compliance with relevant standards.

The auditor's report includes a confirmation that they fulfilled their ethical responsibilities, a
statement on the other information, management's responsibilities for financial statements, and the
auditor's responsibilities for the audit.

Please note that the summary provided here is condensed, and the actual report may contain more
detailed language and sections.

Certainly, here's a detailed summary of the section titled "Other Information" from the Independent
Auditor’s Report for Tata Consultancy Services Limited's standalone financial statements:

**Other Information:**

The Company's Management and Board of Directors hold responsibility for providing "other
information" which includes the content of the Company's annual report, excluding the financial
statements and the auditor's report. This information is expected to be made available to the auditor
after the date of the auditor’s report.

The auditor's opinion, as expressed in the report, pertains solely to the standalone financial
statements. It does not extend to the other information provided by the Company. The auditor does
not express any form of assurance conclusion on this other information.

As part of their audit of the standalone financial statements, the auditor is required to read the other
information when it becomes available. This reading aims to identify whether the other information
is materially inconsistent with the standalone financial statements or with the auditor's knowledge
obtained during the audit, and whether it appears to be materially misstated.

If, during the reading of the Company's annual report, the auditor comes to the conclusion that there
is a material misstatement in the other information, they are obligated to communicate this matter
to those charged with governance (such as the Company's Board of Directors) and undertake
necessary actions as required by relevant laws and regulations.

Furthermore, in the preparation of the standalone financial statements, the Management and Board
of Directors are responsible for assessing the Company's ability to continue as a going concern. They
are also responsible for disclosing any related matters and for utilizing the going concern basis of
accounting unless the Board intends to liquidate the Company, cease operations, or has no practical
alternative but to do so.

The Board of Directors additionally bears the responsibility of overseeing the Company's financial
reporting process.

**Auditor’s Responsibilities for the Audit of the Standalone Financial Statements:**

The auditor's objectives encompass obtaining reasonable assurance about the absence of material
misstatement, whether arising from fraud or error, in the standalone financial statements. The
auditor aims to issue an opinion in their auditor’s report based on this assessment.

Reasonable assurance represents a high level of confidence but does not equate to a guarantee that
the audit will invariably detect material misstatements. Misstatements can result from either fraud
or error, and they are considered material if they could potentially influence the economic decisions
of users relying on the standalone financial statements.

Throughout the audit process, the auditor exercises professional judgment and skepticism. They
identify and evaluate risks of material misstatement, design responsive audit procedures, and gather
appropriate audit evidence to support their opinion.

The auditor is also responsible for assessing the Company's internal control relevant to the audit and
expressing an opinion on its adequacy and effectiveness. They evaluate the appropriateness of
accounting policies and estimates made by the Management and Board of Directors. Additionally,
the auditor evaluates the use of the going concern basis of accounting and assesses whether
material uncertainties exist that cast doubt on the Company's ability to continue as a going concern.

The auditor evaluates the overall presentation, structure, and content of the standalone financial
statements, ensuring they provide a fair representation of the underlying transactions and events.

The auditor communicates with those charged with governance regarding audit scope, timing,
findings, and significant deficiencies in internal control. They also confirm their compliance with
ethical requirements and communicate matters that could impact their independence.

From these communications, the auditor determines key audit matters, which are then described in
the auditor's report, unless legal restrictions prevent disclosure or exceptional circumstances dictate
non-disclosure for the sake of public interest.
Certainly, here's a detailed summary of the section titled "Report on Other Legal and Regulatory
Requirements" from the Independent Auditor’s Report for Tata Consultancy Services Limited's
standalone financial statements:

1. The auditor is required to provide a statement on specific matters as per the Companies (Auditor’s
Report) Order, 2020 ("the Order") issued by the Central Government of India under Section 143(11)
of the Companies Act, 2013 ("the Act"). This statement is provided in "Annexure A" of the report,
covering matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. **Report under Section 143(3) of the Act:**

- The auditor reports that they have obtained all necessary information and explanations required
for the audit.

- Proper books of account, as required by law, have been maintained by the Company based on the
auditor's examination.

- The standalone financial statements (Balance Sheet, Statement of Profit and Loss, Statement of
Changes in Equity, and Statement of Cash Flows) are found to be in agreement with the books of
account.

- The standalone financial statements comply with the Indian Accounting Standards (Ind AS)
specified under Section 133 of the Act.

- Based on written representations received from directors and records taken on record by the
Board of Directors, no directors are disqualified under Section 164(2) of the Act.

- The auditor's separate Report in "Annexure B" covers the adequacy of internal financial controls
with reference to the standalone financial statements.

3. **Additional Matters as per Rule 11 of Companies (Audit and Auditor’s) Rules, 2014:**

- The Company has disclosed the impact of pending litigations on its financial position as of March
31, 2022 (Refer Note 19 to the standalone financial statements).

- The Company does not have significant long-term contracts, including derivative contracts, with
material foreseeable losses.

- There is no delay in transferring required amounts to the Investor Education and Protection Fund.

- The management's representation is that no funds have been advanced, loaned, invested, or
received in any form from Intermediaries or Funding Parties, including foreign entities, for lending,
investing, or providing guarantees or security to Ultimate Beneficiaries.

- The auditor has not identified any material misstatement in the representations made by the
management about the above-mentioned transactions.

- The dividend declared or paid by the Company during the year is in compliance with Section 123
of the Act.
4. **Report under Section 197(16) of the Act:**

- The auditor states that, based on the information and explanations provided to them, the
remuneration paid to directors during the year is in accordance with the provisions of Section 197 of
the Act. The remuneration paid to directors does not exceed the limit set by Section 197. The
Ministry of Corporate Affairs has not prescribed additional details under Section 197(16) of the Act
for commenting upon.

This section of the report addresses various legal and regulatory requirements, providing an
overview of the Company's compliance with these provisions and the auditor's findings in relation to
them.
The Independent Auditor's Report is a detailed document issued by an independent auditing firm to
express their opinion on the financial statements of Tata Consultancy Services Limited for the fiscal
year ending March 31, 2022. The report provides an assessment of the company's financial position,
its profit and loss, changes in equity, and cash flows, in accordance with the relevant accounting
standards and legal requirements.

**Opinion:**

The auditor's opinion, based on their audit, states that the standalone financial statements of Tata
Consultancy Services Limited present a true and fair view of the company's financial position as of
March 31, 2022, and its financial performance, changes in equity, and cash flows for the year ended
on that date. The information provided in the financial statements complies with the Companies Act,
2013, and is in conformity with the generally accepted accounting principles in India.

**Basis for Opinion:**

The audit was conducted in accordance with the Standards on Auditing specified under Section
143(10) of the Companies Act, 2013. The auditors express their independence from the company
and compliance with ethical requirements. They believe that the evidence gathered during the audit
is sufficient and appropriate to form the basis for their opinion on the standalone financial
statements.

**Key Audit Matters:**

Key audit matters are significant areas that the auditors identify as being of utmost importance in
their audit of the financial statements. One such key audit matter identified in the report is related to
revenue recognition for fixed-price contracts. The auditors elaborate on the complexity and risks
associated with revenue recognition for these contracts due to their customized nature and the
involvement of IT systems. The application of accounting standards (Ind AS 115) for revenue
recognition involves critical judgments and estimates. The auditors describe the specific audit
procedures they performed to verify the accuracy and completeness of revenue recognition,
including assessing IT controls, reviewing cost estimates, and evaluating work in progress.

**Other Information:**

The report emphasizes that the auditors' opinion only pertains to the standalone financial
statements and does not cover other information included in the company's annual report, except
for the matters required to be reported under the Companies (Auditor’s Report) Order, 2020.

**Management and Board Responsibilities:**

The responsibilities of the company's management and board of directors are outlined. They are
responsible for preparing the standalone financial statements in accordance with accounting
principles generally accepted in India, maintaining adequate accounting records, ensuring internal
financial controls, and assessing the company's ability to continue as a going concern.

**Auditor's Responsibilities:**

The auditors' responsibilities include obtaining reasonable assurance about the absence of material
misstatements in the financial statements due to fraud or error. They evaluate internal controls,
accounting policies, estimates, and disclosures. The auditors also report on the company's internal
financial controls and communicate significant findings to the governance body.

**Report on Other Legal and Regulatory Requirements:**

The report fulfills the requirements of the Companies (Auditor’s Report) Order, 2020, by addressing
specified matters. It confirms that the auditors have obtained the necessary information, the
company's books of accounts are in order, and the financial statements comply with relevant
accounting standards.

In conclusion, the Independent Auditor's Report provides a comprehensive overview of the audit
process, key audit matters, the company's financial position, and the auditor's opinion on the
fairness of the presented financial statements.

The provided text is an excerpt from Annexure A to the Independent Auditor’s Report on the
standalone financial statements of Tata Consultancy Services Limited for the year ended March 31,
2022. This annexure provides detailed information on various aspects of the company's financial
operations and compliance with relevant legal and regulatory requirements. Let's break down the
key points mentioned in this excerpt:

(i) Property, Plant, and Equipment (PPE) and Intangible Assets:

- The company maintains proper records of PPE and intangible assets.

- Physical verification of PPE is conducted periodically over a three-year cycle; no significant

discrepancies were found.

- Title deeds of immovable properties are held in the company's name.

- No revaluation of PPE or intangible assets during the year.

- No proceedings under the Prohibition of Benami Property Transactions Act, 1988.

(ii) Inventory:

- Physical verification of inventory is conducted by management; no major discrepancies were

found.

- Working capital limits obtained from banks are in agreement with the company's books.
(iii) Loans and Advances:

- The company has granted loans to parties other than subsidiaries.

- Loan terms and conditions are not prejudicial to the company's interest.

- Loan repayment and interest payments are regular; no overdue amounts exceeding ninety days.

(iv) Loans, Guarantees, and Investments:

- The company complies with provisions of Sections 185 and 186 of the Companies Act, 2013.

- No loans, guarantees, or security provided in violation of Sections 185 and 186.

(v) Deposits:

- The company has not accepted any deposits from the public.

(vii) Statutory Dues:

- Statutory dues such as GST, Provident Fund, Income Tax, etc., have been deposited regularly.

- Disputed dues exist, but they have not been deposited due to ongoing disputes.

(xi) Fraud and Compliance:

- No fraud reported or noticed during the audit.

- No report under Section 143(12) of the Companies Act, 2013, has been filed.

- Whistleblower complaints were considered during audit procedures.

(xiii) Related Party Transactions:

- Transactions with related parties comply with relevant sections of the Companies Act, 2013.

(xvii) Financial Performance:

- The company has not incurred cash losses in the current and preceding financial year.

(xix) Going Concern:

- There is no material uncertainty regarding the company's ability to meet its liabilities within the
next year.
(xx) Corporate Social Responsibility (CSR):

- No unspent CSR amount under Section 135 of the Companies Act, 2013.

The excerpt provides an overview of the audit findings related to various financial and compliance
aspects of Tata Consultancy Services Limited for the specified year. This summary captures the main
points but may not cover all the details and nuances present in the original document.

Annexure B to the Independent Auditor's Report on the standalone financial statements of Tata
Consultancy Services Limited for the year ended March 31, 2022, pertains to the auditor's evaluation
of the company's internal financial controls with reference to the standalone financial statements.
The annexure outlines the scope of the audit, the opinion rendered, the responsibilities of
management and the Board of Directors, the auditors' responsibilities, and discusses the concept
and limitations of internal financial controls. Here's a detailed summary of the key points:

Opinion:

The auditors conducted an audit of the company's internal financial controls with reference to
standalone financial statements as of March 31, 2022, in conjunction with the audit of the
standalone financial statements for the same period. In their opinion, the Company has effective
internal financial controls with reference to standalone financial statements that are adequate in all
material respects, based on the criteria set by the company and the essential components of internal
control outlined in the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting issued by the Institute of Chartered Accountants of India.

Responsibilities:

- Management and the Board of Directors are responsible for establishing, implementing, and
maintaining internal financial controls with reference to standalone financial statements. These
controls ensure the orderly and efficient conduct of the company's business, adherence to policies,
asset safeguarding, fraud and error prevention and detection, accurate accounting records, and
timely preparation of reliable financial information as required by the Companies Act.

- The auditors' responsibility is to express an opinion on the adequacy and effectiveness of the
company's internal financial controls with reference to standalone financial statements based on
their audit.

Auditors' Responsibility:

- The auditors conducted the audit in accordance with the Guidance Note and the Standards on
Auditing prescribed under Section 143(10) of the Companies Act. They obtained reasonable
assurance about whether the internal financial controls were established, maintained, and effectively
operated.
- The audit involved understanding the controls, assessing the risk of material weakness, testing and
evaluating the design and operating effectiveness of internal controls based on assessed risks.

Meaning of Internal Financial Controls with Reference to Standalone Financial Statements:

- Internal financial controls with reference to standalone financial statements ensure the reliability of
financial reporting and preparation of standalone financial statements for external purposes in line
with generally accepted accounting principles.

- These controls encompass policies and procedures that pertain to maintaining accurate and fair
transaction records, ensuring transactions are recorded accurately, and preventing or timely
detecting unauthorized asset acquisition, use, or disposition that could materially affect the financial
statements.

Inherent Limitations:

- Internal financial controls have inherent limitations, including the potential for collusion or
management override of controls, which could lead to undetected material misstatements due to
error or fraud.

- Future projections of control effectiveness are subject to the risk of controls becoming inadequate
due to changing conditions or deteriorating compliance with policies and procedures.

This summary captures the main points of Annexure B, which provides insights into the company's
internal financial controls, the audit process, and the auditors' opinion on the adequacy and
effectiveness of these controls. It's important to note that this summary might not encompass all the
details and nuances present in the original document.