Unmodified Opinion
ANNEXURE B TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE
STANDALONE FINANCIAL STATEMENTS OF ABC COMPANY LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of
the Companies Act, 2013 (“the Act”)
I / We have audited the internal financial controls over financial reporting of ABC Company
Limited (“the Company”) as of March 31, 20X1 in conjunction with my / our audit of the
standalone financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Company’s management is responsible for establishing and maintaining internal
financial controls based on _____ [for example, “the internal control over financial reporting
criteria established by the Company considering the essential components of internal
control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting issued by the Institute of Chartered Accountants of India”.] These responsibilities
include the design, implementation and maintenance of adequate internal financial controls
that were operating effectively for ensuring the orderly and efficient conduct of its business,
including adherence to company’s policies, the safeguarding of its assets, the prevention and
detection of frauds and errors, the accuracy and completeness of the accounting records,
and the timely preparation of reliable financial information, as required under the
Companies Act, 2013.
Auditors’ Responsibility
My / Our responsibility is to express an opinion on the Company's internal financial controls
over financial reporting based on my / our audit. I / We conducted my / our audit in
accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed
to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable
to an audit of internal financial controls, both applicable to an audit of Internal Financial
Controls and, both issued by the Institute of Chartered Accountants of India. Those
Standards and the Guidance Note require that I / we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether adequate internal
financial controls over financial reporting was established and maintained and if such
controls operated effectively in all material respects. My / Our audit involves performing
procedures to obtain audit evidence about the adequacy of the internal financial controls
system over financial reporting and their operating effectiveness. My / Our audit of internal
financial controls over financial reporting included obtaining an understanding of internal
financial controls over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. The procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. I / We believe that the audit evidence I/we have obtained is sufficient
and appropriate to provide a basis for my /our audit opinion on the Company’s internal
financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal financial control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorisations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting,
including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may occur and not be detected. Also, projections of any
evaluation of the internal financial controls over financial reporting to future periods are
subject to the risk that the internal financial control over financial reporting may become
inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Opinion
In my / our opinion, the Company has, in all material respects, an adequate internal financial
controls system over financial reporting and such internal financial controls over financial
reporting were operating effectively as at March 31, 20X1, based on ______ [for example,
“the internal control over financial reporting criteria established by the Company
considering the essential components of internal control stated in the Guidance Note on
Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of
Chartered Accountants of India”].
For XYZ & ASSOCIATES
Chartered Accountants
(Firm‘s Registration No.______)
Signature
(Name of the Member Signing the Audit Report)
(Designation)
(Membership No. XXXXX)
Place:
Date:
