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· The significant audit observations were noted by the firm, for which there were no reference of the source document. Further, the available documentation was not linked up in all cases to enable an assessment that the work was performed as planned.

· Documentation of audit plan, the nature, timing and extent of auditing procedures was unsatisfactory.

· No documentation was maintained for the work done by the team, obtaining declarations about independence, client acceptance and continuance, engagement planning memoranda, working papers, deliverables etc.

· As per SA-230 the auditor shall prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing and extent of the audit procedures performed. However, the firm had not obtained any audit evidences for evaluation of estimates made by the management.

· The firm needed to improve its existing engagement documentation policy. Detailed procedures need to be stipulated regarding maintenance of confidentiality, safe custody, integrity, accessibility and retrieving of engagement documentation, along with electronic documentation.

· System of documentation did not provide proper segregation and indexation making it difficult to access and retrieve audit evidences.

· There were no working papers for verification of restructured accounts.

· The working papers for verification of Significant Accounting Policies, Notes on Accounts and Disclosures were not available on record.

· The audit firm had not documented any procedures to ensure that the firm or its staff adhered to other ethical standards outlined by the ICAI.

· There were no working papers available with the firm with regard to the nature of the income and in respect of calculation of Deferred Tax Liability.

· There was no documentary evidence in the audit files on qualification in Auditor’s Report with regard to the prior approval of the Central Govt. u/s 297(1) of Companies Act, 1956 for transactions, covered by register maintained u/s 301 of Companies Act, 1956.

· The firm did not effectively design and define the procedures sufficient enough in relation to the financial statement considering the company’s size, nature and complexity and document the same.

· The documentations were prepared only for certain areas and not for all the areas of risks.

· Audit documentations were not linked up to the audit planning and procedures as required by SA 230-Audit documentation.

· No audit conclusion was drawn on the litigation sheet wherein there were cases for and against the company. There were various litigations against the company as per list available in the Audit Firm’s file, however, none of this litigation appeared in the Contingent Liability of the company. (Ref to para 8-A2 of SA230).

· There was no document available in the Audit firm’s file, to show the conclusion arrived by them for loans to subsidiaries were not prejudicial to the Company as required by CARO under clause 4(iii)(b), especially when there was no qualification in their final report.

· Work papers on complex accounting areas had not been dated and signed by the team / audit partner.

· No evidences were held on record to show that senior team member of audit team conducted a planning, meeting, discussion and agreed on audit approach etc.

· Certain documents/working papers were prepared and reviewed after the date of audit report, and in some cases prepared before audit report date but reviewed after audit report date.

· Adequate work-papers for documenting whether or not the factoring was with-recourse or without-recourse had not been held in audit files.

· The policies stated in the audit manual for client acceptance and continuation was not in the name of the firm. Secondly, there were no documentary evidences to prove that the firm had performed the task of the said procedures.

· Working papers had been prepared and reviewed in the month of July which was well later than the date of report in May. There was no evidence available on record that the review was carried out in a timely manner at appropriate stages.

· Auditor had not documented the procedure adopted to arrive at the conclusion that there was reasonable certainty to recognize deferred tax asset as per AS-22.

· Audit File did not contain the loan agreement or a term loan profile containing the amount of loan, rate of interest, terms of repayment, securities created and duly signed by the client, which is normally recommended.

· There was mismatch in other long term liabilities between the amounts as per CARO and Balance Sheet. However, no calculations of the amounts were held on record and accordingly, the difference had not been documented appropriately.

· In respect of walkthrough conducted for cash payments, it was mentioned in the work papers that a particular voucher was tested for the walkthrough process, however, no evidence of the record were available in the physical file. Similarly, in case of walkthrough conducted for sales, the physical copy of the document verified was not available on record (Ref para A1 of SA 230).

· The work papers relating to testing of quantitative reconciliation of production and the closing stock were not tied up with the records. There was a difference between the actual report and calculation made by audit firm.

· Product wise workings for quantitative reconciliation were not evident from the work papers.

· Work papers relating to test of details for Interest Income on bank deposits were not tied up to the statement of profit and loss. There was difference in interest income as per financial statements and as per work papers.

· There was no documentation to ascertain whether the fair value of long term unquoted investments had been reviewed or not. Further, the said area was also not covered in the audit programme/checklist of the Audit firm.

· No document was there to support the verification of share capital received by the bank from qualified institutional buyers. Further, there were no notings in the working papers that how the share capital received during the year was verified.

· An office premise was purchased and that was the only addition under the head of ‘Office Premises’, however no documentations were available with the firm in support of the verification of the addition made.

· Company had sold land and the same was shown under exceptional item in the statement of Profit and Loss. However, the conclusion note from the audit firm was not available in the file, treating it as an exceptional item.

· Specific documentations were not maintained to determine the reportable segments for the year.

Quality Review Board Report on Quality Review Findings (2012-15) Click Here >>

Quality Review Board (QRB) Report 2012-15- Audit Documentation in Accordance with Standard on Auditing SA 230 |18-08-2015|