Professional Documents
Culture Documents
Financial Statements
Financial Statements
Financial Statements
Lesson ID 101045
Version 01/23072020
Auditor’s Report: How to Read?
Apart from the above, from the lenders’ perspective, the Financial
Statements should also contains:
i. Independent / Statutory Auditors’ Report
ii. Directors’ Report (in case of Companies)
VERIFICATION Verification of financial statements include-
OF FINANCIAL i. Verification of items of financial statements
STATEMENTS ii. Verification of KYC of Auditor
iii. Verification of CA Certificates: https://udin.icai.org
Adverse
Issued when Financial Statements,
• Not in conformity with the Accounting Standards
• Are materially misstated
• Are grossly misrepresented
Still in some cases, where the impact is quantified & the reasons are
acceptable, necessary adjustments should be made.
Disclaimer Issued when Financial Statements,
• Not possible to form an opinion on the FS due to various reason
• In extremely rare circumstances where Auditors find multiple
uncertainties
These reports cannot be relied upon and requires to be
rejected.
instruments). Whether the term loans have been used for the
purpose for which the loans were obtained.
x. Fraud: Whether any fraud by the Company or on the Company by
its officers or employees has been noticed.
xi. Managerial Remuneration: Compliance of provisions of Section
197 read with Schedule-V of the Companies Act 2013 with
regard to managerial remuneration.
xii. Whether the Company is a Nidhi Company, if yes, whether the
Nidhi Rules, 2014 are applicable.
xiii. Transactions with Related Party: Whether the Company has
entered into transactions with related parties in
compliance with the provisions of Section 177 and 188 of the Act.
xiv. Whether the Company has made any preferential
allotment or private placement of shares or fully or partly
convertible debentures.
xv. Whether the Company has entered into any non-cash
transactions as referred in Section 192 of the Act with its
directors or persons connected with it.
xvi. Whether the Company is required to be registered under Section
45-IA of the Reserve Bank of India Act, 1934.
DIRECTORS’ ➢ Financial Results: Past / Present / Future
➢ Dividend Policy
REPORT: ➢ Directors’ responsibility statement
CONTENTS ➢ Compliance of Accounting Standards
➢ True & Fair view of Financial Statements
➢ Proper maintenance of books / records
➢ Assurance on Going Concern
➢ Adequate Internal Financial Control
➢ Compliance of all applicable laws
➢ Management views / comments on the
Auditors’ opinion
➢ Disclosures as required under Law