Investor Presentaiton
S. No. Key Audit Matter
1.
2.
3.
Defined Benefit Obligation
The valuation of the retirement benefit schemes in
the Group is determined with reference to various
actuarial assumptions including discount rate, future
salary increases, rate of inflation, mortality rates and
attrition rates. Due to the size of these schemes, small
changes in these assumptions can have a material
impact on the estimated defined benefit obligation.
Warranty Provision
The Holding Company makes an estimated provision
for assurance type warranties at the point of sale. This
estimate is based on historical claims data.
Litigation, Claims and Contingent Liabilities
(Refer Note 25 (j), to be read along with Emphasis of
matter in Independent Auditor's Report.)
The Group is exposed to variety of different⚫
laws, regulations and interpretations thereof.
Consequently, in the normal course of business,
Provisions and Contingent Liabilities may arise
from legal proceedings, constructive obligations
and commercial claims.
• Management applies significant judgement when
considering whether and how much to provide for
the potential exposure of each matter.
These estimates could change substantially over
time as new facts emerge as each legal case or
matters progresses.
Given the different views possible, basis the
interpretations, complexity and the magnitude of
potential exposures and the judgement necessary
to estimate the amount of provision required or
determine required disclosures.
Our Response
We have examined the key controls over the process involving member data, formulation
of assumptions and the financial reporting process in arriving at the provision for retirement
benefits. We tested the controls for determining the actuarial assumptions and the approval
of those assumptions by senior management. We found these key controls were designed,
implemented and operated effectively, and therefore determined that we could place reliance
on these key controls for the purposes of our audit.
We tested the employee data used in calculating the obligation and where material, we also
considered the treatment of curtailments, settlements, past service costs, remeasurements,
benefits paid, and any other amendments made to obligations during the year. From the
evidence obtained, we found the data and assumptions used by management in the actuarial
valuations for retirement benefit obligations to be appropriate.
We understood and tested the controls over the assumptions applied in arriving at the warranty
provision, particularly vouching of relevant data elements with provision calculations;
validation of formula used in the warranty spread sheet; management review control of the
relevant internal and external factors impacting the provision.
• We understood the processes, evaluated the design and implementation of controls and
tested the operating effectiveness of the Group's controls over the recording and re-
assessment of uncertain legal positions, claims and contingent liabilities.
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•
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We held discussions with senior management including the person responsible for legal
and compliance to obtain an understanding of the factors considered by management in
classification of the matter as 'probable', 'possible' and 'remote'.
Examined the Holding Company's legal expenses on sample basis and read the minutes of
the board meetings in order to ensure completeness.
With respect to tax matters, involving our tax specialists, and discussing with the Holding
Company's tax officers, their views and strategies on significant cases, as well as the related
technical grounds relating to their conclusions based on applicable tax laws.
Assessing the decisions and rationale for provisions held or for decisions not to record
provisions or make disclosures.
For those matters where management concluded that no provisions should be recorded,
considering the adequacy and completeness of the disclosures.
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