In an independent auditor's report, it is crucial to assess the integrity of a company’s accounting records and the adequacy of its internal controls related to financial reporting. The following variations of Clause VI address different scenarios encountered during the audit for the financial year ended March 31, 2024. Each scenario reflects the specific circumstances surrounding the company’s accounting practices and the implications for audit trail preservation.
Clause VI: Company Using Manual Accounting Systems
Clause VI: Auditor's Report Clause
Audit Trail Integrity: Based on our examination, which included a review of internal controls and transaction testing, we noted that the Company maintained its books of account using a manual accounting system for the financial year ended March 31, 2024. As this system does not provide for an automated audit trail (edit log), the traditional concept of an audit trail does not apply. However, we found that the Company has established adequate documentation procedures to maintain accuracy and accountability in its financial reporting.
Clause VI: Company with Incomplete Records
Clause VI: Auditor's Report Clause
Audit Trail Integrity: Our examination, which included substantive testing and analytical review, revealed that the Company utilized accounting software for maintaining its financial records for the financial year ended March 31, 2024. However, we identified several discrepancies and incomplete entries. While the software includes an audit trail (edit log) feature, our review indicated that it was not fully operational for all relevant transactions. We did not find any instances of tampering with the audit trail feature during our audit.
Given the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, effective from April 1, 2023, the requirement to report under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 regarding the preservation of an audit trail does not apply to the financial year ended March 31, 2024.
Clause VI: Company Transitioning to New Accounting Software
Clause VI: Auditor's Report Clause
Audit Trail Integrity: Based on our examination, which included system controls testing and transaction validation, we observed that the Company transitioned to a new accounting software for maintaining its financial records for the year ended March 31, 2024. The new software is equipped with an audit trail (edit log) feature, but we noted that its implementation was completed only midway through the financial year, resulting in incomplete audit trail coverage for some transactions.
In line with the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, effective April 1, 2023, the requirement to report under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 concerning the preservation of the audit trail does not pertain to the financial year ended March 31, 2024.
Clause VI: Company with an Automated System but No Audit Trail Feature
Clause VI: Auditor's Report Clause
Audit Trail Integrity: Our examination involved various test checks and an assessment of internal controls, revealing that the Company employed an automated accounting system for maintaining its financial records for the year ended March 31, 2024. Notably, the software does not incorporate an audit trail (edit log) feature, limiting the ability to track modifications to the records. Nonetheless, we found that the Company has implemented adequate documentation practices and internal controls to ensure transparency and accountability.
In accordance with the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, effective April 1, 2023, the requirement to report under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 regarding audit trail preservation is not applicable for the financial year ended March 31, 2024.
