1. CHECK LIST FOR COMPANY AUDIT - CA.C.ANNAMALAI, Audit Manager, Suri & Co., Chartered Accountants, Coimbatore.

2. MAIN AUDIT REPORT SA 706 - EMPHASIS OF MATTER AND OTHER MATTER (w.e.f 01.04.2011) EMPAHSIS OF MATTER – Matter disclosed in financial statements OTHER MATTER – Matter not disclosed in financial statements

3. Example: (should be given after opinion paragraph) Emphasis of Matter: We draw attention to Note No. 27(b) to the financial statements which describe the change in method of depreciation followed by the company from Written down value method to Straight line method. Our opinion is not qualified in respect of this matter.

4. Example: (should be given after opinion paragraph) Other Matter: We did not audit the financial statements of the subsidiaries, whose financial statements reflect total assets of Rs.2,813.38 lacs as at 31 ST March 2012, total net profit of Rs.317.78 Lacs and net cash outflows amounting to Rs. 5,695.04 Lacs for the year then ended. These financial statements have been audited by other auditors, whose reports have been furnished to us, and our opinion is based solely on the reports of the other auditors. Our opinion is not qualified in respect of this matter.

5. CARO Confirm the applicability of CARO Specify all 21 points Correlate with -Other CARO Points Ex. 301 Register -Notes to Accounts Ex. Related party Disclosure, Provisions, Contingent liability e.t.c

6. Some of the clauses of CARO: (ix) (a) any undisputed statutory dues outstanding for 6 months (all statutes) (b) outstanding disputed statutory dues – (Direct & Indirect Taxes) (xvii) Whether the funds raised on short-term basis have been used for long-term investment - Negative working capital

7. FINANCIAL REPORITNG REVIEW BOARD – FRRB ICAI PUBLICATION A STUDY ON COMPLIANCE OF FINANCIAL REPORTING REQUIREMENTS

8. SIGNIFICANT ACCOUNTING POLICIES ACCOUTING STANDARDS COMPLIANCE

9. Accounting Standards Applicability: AS except 3 & 17 – Applicable to all the Companies AS 3 & 17 - Applicable only to Non SMC Non SMC: a.Turnover exceeds Rs.50 Crores during the previous year b.Borrowings exceeds Rs.10 Crores during the previous year c.Shares / debt securities are listed or in the process of listing d.Banking and insurance companies e.Holding / Subsidiaries of a to d

10. AS-3: CASH FLOW STATEMENT Cash and Cash Equivalent: Cash – Cash on Hand and Demand Deposits Cash Equivalent – Short term deposits with a maturity period of 3 months or less from the date of investment AS-10: ACCOUNTING FOR FIXED ASSETS Assets revalued upwards: - Depreciation on such increase to be debited to Revaluation Reserve Account

11. AS–11: THE EFFECTS OF CHANGE IN FOREIGN EXCHANGE RATES Forward Exchange Contract – Accounting Treatment AS-17: SEGMENT REPORTING If consolidated financial statements are prepared then Segment Reporting need not be given for Stand alone financials.

12. AS–18: RELATED PARTY DISCLOSURES Relationship: 1. Holding Company, Subsidiary Company and Fellow Subsidiaries 2. Associate 3. Joint Venture 4. Key Management Personal (KMP) (Whole Time Directors) 5. Individuals exercising significant control / influence (Promoters) 6. Enterprise in which 4 & 5 significant influence 7. Relatives of 4 & 5 (Parents, Spouse, Brother, Sister & Children) Correlate with Sec.40A(2)(b) Annexure of Form 3CD

13. AS–20: EARNINGS PER SHARE Show in face of P&L Disclose Basic & Diluted EPS Disclose EPS before and after extraordinary item Specify face vale Disclose computation in notes AS-22: ACCOUNTING FOR TAXES ON INCOME Deferred Tax Asset: Recognize only if virtual certainty exist – disclose evidence If virtual certainty does not exist - Recognize deferred tax asset to the extent of deferred tax liability available Offset the advance tax paid with provision for Income Tax – disclose the net amount

14. SA–210: AUDIT ENGAGEMENT LETTER Contents: 1. Management responsibility to prepare the financial statements 2. Access should be given to all the information 3. Management responsibility to inform the subsequent events – SA 560 4. Representation letters to be given by the management 5. Auditor’s responsibility to issue the report 6. Time of completion of audit 7. Audit Fees 8. Confidentiality of the information

15. SA-580: WRITTEN REPRESENTATIONS Contents: 1. Financial statements has been prepared in accordance with the financial reporting framework 2. Assumptions used by the management in making accounting estimates 3. Related party relationship & transactions 4. Subsequent events 5. All the information have been provided 6. All the transactions have been recorded 7. Information relating to fraud / suspected fraud 8. All known instance of non compliance with laws and regulations 9. CARO related representations

16. AUDIT OBSERVATIONS: Specify the decisions taken/reply given by the management in respect of each point Points requiring special concern for next year LEDGER SCRUTINY

17. VOUCHING: 1. Ask for the detailed procedure of area of vouching i.e. Purchase, Sales or Stores operations e.t.c. and document it. 2. Analyze the effectiveness of Internal Control – Inform the Management about the weakness. 3. Vouch all the vouchers for a month or for a period of 15 days depending upon the size of the company and nature of business in order to have a knowledge about nature of transactions. 4. Based on 3 above, determine a method of sampling. 5. The method of sampling selected should cover all the months, all the transactions and all the values.

18. SA-230: AUDIT DOCUMENTATION

19. QUESTIONS

20. THANK YOU