Page 34 - DCOM204_AUDITING_THEORY

Auditing Theory

Notes

Caselet Auditors' Report to the Members of XYZ Limited

e report that we have audited the balance sheet of XYZ Limited as at 31st March
1996 signed by us under reference to this report, and the relative profit and loss
Waccount for the year ended on that date, which are in agreement with the books
of account.
In our opinion and to the best of our information and according to the explanations given
to us, the balance sheet and the profit and loss account together with the notes thereon
given, in the prescribed manner, the information required by the Companies Act, 1956
and also give, respectively, a true and fair view of the state of the Company’s affairs as at
31st March 1996 and its profit for the year ended on that date.
We have obtained all the information and explanations which to the best of our knowledge
and belief were necessary for our audit. In our opinion, proper books of account have been
kept as required by law so far as appears from our examination of those books.
As required by the Manufacturing and other Companies (Auditors’ Report) Order dated
7th September 1988 and issued by the Central Government and on the basis of such checks
as we considered appropriate and according to the information and explanations given to
us, we further report that
1. (a) The company has maintained proper records to show full particulars including
quantitative details and situation of its fixed assets;
(b) The fixed assets of the company have been physically verified during the
year by the management and no material discrepancies between the book
records and the physical inventory have been noticed.
2. The fixed assets of the company have not been revalued during the year.
3. The stocks of finished goods, stores, spares parts, and raw materials of the company
at all its locations have been physically verified by the management during/at the
end of the year.
4. In our opinion, the procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the company and
nature of its business.
5. The discrepancies between the physical stocks and the book stocks, which were not
material, have been properly dealt with in the books of account.
6. In our opinion, the valuation of stocks of finished goods, stores, spare parts, and raw
materials has been fair and proper in accordance with the normally accepted
accounting principles and is on the same basis as in the earlier years.
7. The company has not taken any loans secured or unsecured from companies, firms
or other parties listed in the register maintained under Section 301 of the Companies
Act, 1956 and/or companies under the same management as defined under
sub-section (1B) of Section 370 of the Companies Act, 1956.
8. The company has not granted any loans secured or unsecured to companies, firms or
other parties listed in the register maintained under Section 301 of the Companies
Act, 1956 and/or companies under the same management as defined under
sub-section(1B) of Section 370 of the Companies Act, 1956.
Contd...

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