“STANDARDS AUDITING FOLLOWED BY TATA

STEEL COMPANY ”

SUBMITTED BY

NAME: Ms. JEENAL N. RATHOD

CLASS: M.COM PART – II ACCOUNTS (SEM IV)

SUBMITTED TO

UNIVERSITY OF MUMBAI

PROJECTED GUIDE: Mrs. Dr. NATIK PODDAR

RAJATHANI SAMMELAN’S

GHANSHYAMDAS SARAF GIRL’S COLLEGE,

AFFILLIATED TO UNIVERSITY OF MUMBAI

REACCREDITED BY NAAC WITH “A” GRADE

&

DURGADEVI SARAF JUNIOR COLLEGE

( ARTS & COMMERCE)

S.V.ROAD MALAD (W)

MUMBAI – 400064

YEAR: 2013-14

STANDARD AUDITINGPage 1

RAJASTHANI SAMMELAN’S

Ghanshyamdas Saraf College

Affiliated to University of Mumbai

REACCREDITED BY NAAC WITH ‘A’ GRADE

R. S. Campus, S. V. Road,

Malad (W), Mumbai: 400 064

Year: 2013-2014

CERTIFICATE

I Prof. Dr. Natika Poddar here by certify that Ms. Jeenal Navratana

Rathod a student of Ghanshyamdas Saraf College of M.COM PART

II ACCOUNT (Semester IV) has completed Project on

“STANDARDS AUDITING FOLLOWED BY TATA

STEEL COMPANY” in the Academic year 2013-2014.

Thus information submitted is true and Original to the best of my

Knowledge.

External Examiner: Principal:

Date:

Project Co-ordinator: College Seal:

Date:

STANDARD AUDITINGPage 2

ACKNOWLEDGEMENT

I take this opportunity to thank the UNIVERSITY OF MUMBAI for

giving me a chance to do this Project.

I express my sincere gratitude to the Principal Mrs. Sujata

Karmarkar, course co-ordinator and Guide Prof. Mrs. Dr. Natika

Poddar, our librarian and other teachers for their constant support and

helping me for completing the project.

I am also grateful to my friends for giving support in my project.

Lastly, I would like to thank each and every person who helped me in

completing the project especially MY PARENTS.

Date: Signature of the Student :

STANDARD AUDITINGPage 3

DECLARATION

I Miss JEENAL NAVARATNA RATHOD a student of

Ghanshyamdas Saraf College of Arts and Commerce, Malad (W)

M.COM PART II ACCOUNT (Semester IV) hereby declare that I

have completed project on “STANDARDS AUDITING

FOLLOWED BY TATA STEEL COMPANY” in the

academic Year 2013-2014. This information submitted is true and

original to best of my Knowledge.

Date : Signature of the Student:

STANDARD AUDITINGPage 4

INDEX

Sr. No TITLE Page. No.

CHAPTER 1

1.1 Executive Summary (Preface) 6

1.2 Objectives of the Study 7

CHAPTER 2

2.1 Standard Auditing (SA) 8-12

2.2 Generally Accepted Auditing Standard (GAAS) 13-15CHAPTER 3

3.1 TATA STEEL Company profile 16-19

3.2 Auditor’s Reports of TATA STEEL Company 20-27

3.3 Standard Auditing Followed by TATA STEEL Company 28-46

3.4 Comments on Standard Auditing Followed by TATA

STEEL Company

47

CHAPTER 4

4.3 Conclusion 48

4.6 Bibliography 49

STANDARD AUDITINGPage 5

CHAPTER 1

1.1Executive Summary:

Tata Steel, established in 1907 is the flagship company of the $ 17.8

billion Tata Group, one of India’s largest and most respected business

houses. It is currently the world’s sixth largest steel producer. Tata Steel is the

world 6th largest steel company with an existing annual crude steel

production capacity of 30 Million Tones Per Annum (MTPA). Tata Steel

has a balanced global presence in over 50 developed European and fast

growing Asian markets, with manufacturing units in 26 countries.

This report, deals with the analysis of Auditors report on basis of financial

statement of TATA steel which is followed Auditing standards for Tata Steel,

The report integrates the Auditing standards which is generally followed in

India. This report has contained various types of Auditing Standard followed by

company. i.e. TATA Steel has followed SA 220- “Quality Control for an Audit

of Financial Statements”, 501 –“Audit Evidence—Specific Considerations for

Selected Items”, SA 610- “Using The Work of Internal Auditors”. There are

This Three main Auditing standard Followed By TATA steel Company.

Hence, In this report we have show various Auditing standard followed by

auditor in India and making audit report of company on basis of follow

Accounting and Auditing standard of India and also show Generally

Accepted Auditing Standards (GAAS) of India.

STANDARD AUDITINGPage 6

1.2 OBJECTIVES OF THE STUDY:

Since Auditing Standard is one of the most important aspects of

Auditors report, it enables to study in-depth the Various Auditing

Standard Followed in Audit report of Company; so that as a student

of Finance Advanced Auditing it gives me a chance to study the

Auditing standard followed of the industry. It offers scope to

understand various aspects of Auditing standard and all these aspects

are reflected in this report. The estimation of required Auditing

Standard is differs from organization to organization. So doing this

project in an industry will help in knowing more about the

Auditing Standard, its preparation and execution.

The study has the following

objectives:-

1. To see whether the Auditing Standard in “TATA STEEL”

is an effective one.

2. To find out the extent of the need and adequacy of the Auditing

Standard of the firm.

3. To evaluate or analyze the organizational financial discipline

and fiscal soundness.

4. To find out the variance attained in related to projected and actual

figure.

5. To see the Auditing Standard of the company.

6. To see the Various Auditing Standard followed in India.

7. To see the Auditing Standard is properly maintained.

8. To see the Generally Accepted Auditing Standards (GAAS) of India.

STANDARD AUDITINGPage 7

CHAPTER 2

2.1. STANDARD AUDITING

Standards on Quality Control (SQCs)

SQC 1, “Quality Control for Firms that Perform Audit and Reviews of

Historical Financial Information, and other Assurance and Related Services

Engagements”

Announcement on Amendment to SQC 1 - Retention Period for Engagement

Documentation (Working Papers)

Audits and Reviews of Historical Financial Information

New/Revised Standards (Auditing, Review and Others) issued

under the Clarity Project:

100-199 Introductory Matters

200-299 General Principles and Responsibilities

SA 200 (Revised) issued under the Clarity Project, “Overall Objectives of the

Independent Auditor and the Conduct of an Audit in Accordance with

Standards on Auditing”

SA 210 (Revised) under the Clarity Project, “Agreeing the Terms of Audit

Engagements”

SA 220 (Revised)issued under the Clarity Project , “Quality Control for an

Audit of Financial Statements”

SA 230 (Revised) under the Clarity Project, “Audit Documentation”

SA 240 (Revised) under the Clarity Project, “The Auditor’s Responsibilities

Relating to Fraud in an Audit of Financial Statements”

SA 250 (Revised) under the Clarity Project, “Consideration of Laws and

STANDARD AUDITINGPage 8

Regulations in an Audit of Financial Statements”

SA 260 (Revised) under the Clarity Project, “Communication with Those

Charged with Governance”

SA 265 issued under the Clarity Project, “Communicating Deficiencies in

Internal Control to Those Charged With Governance and Management”

SA 299 (AAS 12), “Responsibility of Joint Auditors”

300-499 Risk Assessment and Response to Assessed Risks

SA 300 (Revised) under the Clarity Project, “Planning an Audit of Financial

Statements” •

SA 315 under the Clarity Project, “Identifying and Assessing the Risks of

Material Misstatement through Understanding the Entity and Its Environment”

SA 320 (Revised) issued under the Clarity Project, “Materiality in Planning

and Performing an Audit”

SA 330 under the Clarity Project, “The Auditor’s Responses to Assessed

Risks”

SA 402 (Revised) issued under the Clarity Project, “Audit Considerations

Relating to an Entity Using a Service Organization”

SA 450 issued under the Clarity Project, “Evaluation of Misstatements

Identified During the Audit”

500-599 Audit Evidence

SA 500 (Revised) under the Clarity Project, “Audit Evidence”

SA 501 (Revised)issued under the Clarity Project, “Audit Evidence—Specific

Considerations for Selected Items”

STANDARD AUDITINGPage 9

SA 505 (Revised) issued under the Clarity Project, “External Confirmations”

SA 510 (Revised) under the Clarity Project, “Initial Audit Engagements –

Opening Balances”

SA 520 (Revised) issued under the Clarity Project, “Analytical Procedures”

SA 530 (Revised) under the Clarity Project, “Audit Sampling”

SA 540 (Revised) under the Clarity Project, “Auditing Accounting Estimates,

Including Fair Value Accounting Estimates, and Related Disclosures”

SA 550 (Revised) under the Clarity Project, “Related Parties”

SA 560 (Revised) under the Clarity Project, “Subsequent Events”

SA 570 (Revised) under the Clarity Project, “Going Concern”

SA 580 (Revised) under the Clarity Project, ”Written Representations”

600-699 Using Work of Others

SA 600 (AAS 10), “Using the Work of Another Auditor”

SA 610 (Revised) issued under the Clarity Project, “Using The Work of

Internal Auditors”

SA 620 (Revised) issued under the Clarity Project, “Using the Work of an

Auditor’s Expert”

700-799 Audit Conclusions and Reporting

SA 700 (Revised) issued under the Clarity Project, “Forming an Opinion and

Reporting on Financial Statements

SA 705 issued under the Clarity Project, “Modifications to the Opinion in the

Independent Auditor’s Report"

SA 706 issued under the Clarity Project, “Emphasis of Matter Paragraphs and

STANDARD AUDITINGPage 10

Other Matter Paragraphs in the Independent Auditor’s Report"

SA 710 (Revised) issued under the Clarity Project, “Comparative Information

—Corresponding Figures and Comparative Financial Statements”

SA 720 under the Clarity Project, “The Auditor’s Responsibility in Relation

to Other Information in Documents Containing Audited Financial Statements”

800-899 Specialized Areas

SA 800 issued under the Clarity Project, “Audits of Financial Statements

Prepared in Accordance with Special Purpose Frameworks”

SA 805 issued under the Clarity Project, “Special Considerations—Audits of

Single Financial Statements and Specific Elements, Accounts or Items of a

Financial Statement”

SA 810 issued under the Clarity Project, “Engagements to Report on

Summary Financial Statements”

2000-2699 Standards on Review Engagements (SREs)

SRE 2400 (Revised), “Engagements to Review Financial Statements

SRE 2410 “Review of Interim Financial Information Performed by the

Independent Auditor of the Entity”

General Clarifications issued

General Clarification (GC)-AASB/2/2004 on SA 210

General Clarification (GC)-AASB/1/2002 on SA 620

Assurance Engagements Other Than Audits or Reviews of

Historical Financial Information

STANDARD AUDITINGPage 11

3000-3699 Standards on Assurance Engagements (SAEs)

3000-3399 Applicable to All Assurance Engagements

3400-3699 Subject Specific Standards

SAE 3400 (AAS 35), “The Examination of Prospective Financial Information”

SAE 3402, “Assurance Reports on Controls At a Service Organization”

Related Services

4000-4699 Standards on Related Services (SRSs)

SRS 4400 (AAS 32), “Engagements to Perform Agreed-upon Procedures

Regarding Financial Information”

SRS 4410 (AAS 31), “Engagements to Compile Financial Information”

2.2. Generally Accepted Auditing Standards:

Generally Accepted Auditing Standards, or GAAS are sets of standards

against which the quality of audits are performed and may be judged.

STANDARD AUDITINGPage 12

Several organizations have developed such sets of principles, which vary by

territory. In the United States, the standards are promulgated by the

Auditing Standards Board, a division of the American Institute of Certified

Public Accountants (AICPA). Section 150 states that there are 10 standards:

3 general standards, 3 fieldwork standards, and 4 reporting standards. These

standards are issued and clarified Statement of Accounting Standards, with

the first issued in 1972 to replace previous guidance. Typically, the first

number of the AU section refers to which standard applies. However, in

2012 the Clarity Project significantly revised the standards and replaced AU

Section 150 with AU Section 200, which does not explicitly discuss the 10

standards. In the United States, the Public Company Accounting Oversight

Board develops standards (Auditing Standards or AS) for publicly traded

companies since the 2002 passage of the Sarbanes-Oxley Act; however, it

adopted many of the GAAS initially. The GAAS continues to apply to non-

public companies.

General :

1. The auditor must maintain independence in mental attitude in all matters related to the audit.

2. The auditor must have adequate technical training & proficiency to

perform the audit.

3. The auditor must exercise due professional care during the

performance of the audit and the preparation of the report.

Standards of Field Work:

1. The auditor must adequately plan the work and must properly

supervise any assistants.

2. The auditor must obtain a sufficient understanding of the entity and

its environment, including its internal control, to assess the risk of

material misstatement of the financial statements whether due to

STANDARD AUDITINGPage 13

error or fraud, and to design the nature, timing, and extent of

further audit procedures.

3. The auditor must obtain sufficient appropriate audit evidence by

performing audit procedures to afford a reasonable basis for an

opinion regarding the financial statements under audit.

Standards of Reporting:

1. The auditor must state in the auditor's report whether the financial

statements are presented in accordance with generally accepted

accounting principles.

2. The auditor must identify in the auditor's report those circumstances

in which such principles have not been consistently observed in the

current period in relation to the preceding period.

3. When the auditor determines that informative disclosures are not

reasonably adequate, the auditor must so state in the auditor's

report.

4. The auditor must either express an opinion regarding the financial

statements, taken as a whole, or state that an opinion cannot be

expressed, in the auditor's report. When the auditor cannot express

an overall opinion, the auditor should state the reasons therefore in

the auditor's report. In all cases where an auditor's name is

associated with financial statements, the auditor should clearly

indicate the character of the auditor's work, if any, and the degree

of responsibility the auditor is taking, in the auditor's report.

Clarity Project:

In 2004, a project was begun to clarify and converge the standards with

the International Standards in Auditing (ISAs). Many of the AU sections

are being remapped as part of the Clarity Project. In October 2011, SAS

122 was issued which superseded all previous SAS as except 51, 59, 65,

STANDARD AUDITINGPage 14

87, and 117-20. In the interim period, these new AU sections are referred

to as AU-C until 2014.[6] The AICPA provides a list of the AU-C standards.

ISAs:

International Standards on Auditing are developed by the International

Auditing and Assurance Standards Board of the International Federation of

Accountants. Derivatives of ISAs are used in the audit of several other

jurisdictions, including the United Kingdom.

CHAPTER 3

3.1. COMPANY PROFILE

TATA STEEL:

Tata Steel, formerly known as TISCO and Tata Iron and Steel Company

Limited, Established in 1907, Tata Steel, the flagship company of the Tata

STANDARD AUDITINGPage 15

group is the first integrated steel plant in Asia and is now the world`s

second most geographically diversified steel producer and a Fortune 500

Company. Backed by 100 glorious years of experience in steel making,

Tata Steel is the world 6th largest steel company with an existing annual

crude steel production capacity of 30 Million Tones Per Annum (MTPA).

Tata Steel has a balanced global presence in over 50 developed European

and fast growing Asian markets, with manufacturing units in 26 countries.

It was the vision of the founder; Jaksetic Nusserwanji Tata, that on

February 27, 1908, the first stake was driven into the soil of Sakchi. His

vision helped Tata Steel overcome several periods of adversity and strive

to improve against all odds.

Tata Steel`s Jamshedpur (India) Works has a crude steel production

capacity of 6.8 MTPA which is slated to increase to 10 MTPA by 2010.

The Company also has proposed three Greenfield steel projects in the

states of Jharkhand, Orissa and Chhattisgarh in India with additional

capacity of 23 MTPA and a Greenfield project in Vietnam.

Through investments in Corus, Millennium Steel (renamed Tata Steel

Thailand) and NatSteel Holdings, Singapore, Tata Steel has created a

manufacturing and marketing network in Europe, South East Asia and the

pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in

2008, has operations in the UK, the Netherlands, Germany, France, Norway

and Belgium. Tata Steel Thailand is the largest producer of long steel

products in Thailand, with a manufacturing capacity of 1.7 MTPA. Tata

Steel has proposed a 0.5 MTPA mini blast furnace project in Thailand.

NatSteel Holdings produces about 2 MTPA of steel products across its

regional operations in seven countries.

Tata Steel, through its joint venture with Tata BlueScope Steel Limited,

has also entered the steel building and construction applications market.

The iron ore mines and collieries in India give the Company a distinct

advantage in raw material sourcing. Tata Steel is also striving towards raw

materials security through joint ventures in Thailand, Australia,

STANDARD AUDITINGPage 16

Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signed

an agreement with Steel Authority of India Limited to establish a 50:50

joint venture company for coal mining in India. Also, Tata Steel has

bought 19.9% stake in New Millennium Capital Corporation, Canada for

iron ore mining. Exploration of opportunities in titanium dioxide business in

Tamil Nadu, Ferro-chrome plant in South Africa and setting up of a deep-

sea port in coastal Orissa are integral to the Growth and Globalization

objective of Tata Steel.

Tata Steel India is the first integrated steel company in the world, outside

Japan, to be awarded the Deming Application Prize 2008 for excellence in

Total Quality Management.

Business divisions of the company:

Bearings Division : Manufactures ball bearings, double row self-aligning

bearings, magneto bearings, clutch release bearings and tapered roller

bearings for two wheelers, fans, water pumps, etc.

Ferro Alloys and Minerals Division : Operates chrome mines and has

units for making Ferro chrome and Ferro manganese. It is one of the

largest players in the global Ferro chrome market.

Agric Division : Tata Agric is the first organized manufacturer in India

of hand tools and implements for application in agriculture.

Tata Growth Shop (TGS) : Has designed, developed, manufactured,

erected and commissioned thousands of tones of equipment ranging from

overhead cranes to high precision components, including a rocket launch

pad for the Indian Space and Research Organization.

Tubes Division : The biggest steel tube manufacturer with the largest

market share in India, it aspires to strengthen its market presence by

expanding and modernizing its commercial and precision tube

manufacturing capacity.

STANDARD AUDITINGPage 17

Wire Division : A pioneer in the manufacture of steel wires in India, it

produces coated and uncoated wires, branded as Tata Iron. The division

also operates a wholly owned subsidiary in Sri Lanka.

Joint ventures and Associates:

Corus- Europe second largest steel maker with operations in the UK and mainland Europe

Tinplate Company of India Limited (TCIL) Tao Rolls Limited Tata Ryerson Limited (TRYL) Tata Refractoriness Limited (TRL) Tata Sponge Iron Limited (TSIL) Tata Metallic’s Tata Pigments Limited Jamshedpur Injection Powder Limited (Jamison) TM International Logistics Limited (TMILL) junction services limited TRF Limited Jamshedpur Utility and Service Company Limited (JUSCO) The Indian Steel and Wire Products Limited (ISWP) Tata BlueScope Steel Limited Dharma Port Company, Orissa Hooghly Met Coke & Power Company Lanka Special Steel Limited Silo Eastern Company Limited NatSteel Holdings (NSH) Tata Steel Thailand Tata Steel KZN- South Africa Tata NYK : A joint venture with Nippon Yusen Kabushiki K

Achievements/ recognition:

Tata Steel stall bags first prize in 'Heavy Industry' category at Dog Mela-2011, Ranchi , March 17, 2011

Tata Steel has won `The Business world Most Respected Company Award 2011?óÔé¼Ôäó in the Metals category.

STANDARD AUDITINGPage 18

TATA Steel received two awards under the Ashtray Keel Protsahan Puraskar for its remarkable contribution spanning several decades in the field of sports in 2009.

Tata Steel India awarded the Deming Application Prize 2008 for excellence in Total Quality Management. It is the first integrated steel company in the world, outside Japan to get this award.

World Steel Dynamics has ranked Tata Steel as the world's best steel maker (for two consecutive years) in its annual listing in February 2006.

Tata Steel has been conferred the Prime Minister of India's Trophy for the Best Integrated Steel Plant five times. It has been awarded Asia's Most Admired Knowledge Enterprise award five times in 2003, 2004, 2006, 2007 and 2008.

Conferred the prestigious Global Business Coalition Award for Business Excellence in the Community in recognition of its pioneering work in the field of HIV/ AIDS awareness.

Tata Steel works has been conferred the prestigious social accountability (SA) 8000 certification by social. Accountability international (SAI), USA. It is the first steel company in the world to receive this certificate.

Corporate Sustainability Report of Tata Steel hailed by United Nation's Environment Programme (UNEP) and Standard and poor as strongest, submitted by any corporate house from emerging economies.

Best governed company Award 2006 for setting high standards in governance practices.

Tata Steel won 'Award for Corporate Social Responsibility in Public health' by US Indian Business Council (USIBC), Population Services International (PSI) and the center for Strategic and International Studies (CSIS) in 2007.

3.2. AUDITORS' REPORT:

TO THE MEMBERS OF TATA STEEL LIMITED :

STANDARD AUDITINGPage 19

1. We have audited the attached Balance Sheet of TATA STEEL

LIMITED ("the Company") as at 31 March, 2012, the Statement of Profit

and Loss and the Cash Flow Statement of the Company for the year ended

on that date, both annexed thereto. These financial statements are the

responsibility of the Company's Management. Our responsibility is to

express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards

generally accepted in India. Those Standards require that we plan and

perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and the

disclosures in the financial statements. An audit also includes assessing the

accounting principles used and the significant estimates made by the

Management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our

opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO)

issued by the Central Government in terms of Section 227(4A) of the

Companies Act, 1956, we enclose in the Annexure a statement on the

matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3

above, we report that:

(a) we have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purposes of our

audit;

(b) in our opinion, proper books of account as required by law have been

kept by the Company so far as it appears from our examination of those

books;

STANDARD AUDITINGPage 20

(c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow

Statement dealt with by this report are in agreement with the books of

account;

(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss

and the Cash Flow Statement dealt with by this report are in compliance

with the Accounting Standards referred to in Section 211(3C) of the

Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the

explanations given to us, the said financial statements give the information

required by the Companies Act, 1956 in the manner so required and give

a true and fair view in conformity with the accounting principles generally

accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the

Company as at 31 March, 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit of the

Company for the year ended on that date and

(iii) in the case of the Cash Flow Statement, of the cash flows of the

Company for the year ended on that date.

5. On the basis of the written representations received from the Directors

and taken on record by the Board of Directors, none of the Directors is

disqualified as on 31 March, 2012 from being appointed as a director in

terms of Section 274(1)(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT:

(i) Having regard to the nature of the Company's business/activities/result,

clauses (x), (xii), (xiii) and (xiv) of CARO are not applicable.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars,

including quantitative details and situation of the fixed assets.

STANDARD AUDITINGPage 21

(b) Some of the fixed assets were physically verified during the year by

the Management in accordance with a regular programme of verification

which, in our opinion, provides for physical verification of all the fixed

assets at reasonable intervals. According to the information and explanations

given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not

constitute a substantial part of the fixed assets of the Company and such

disposal has, in our opinion, not affected the going concern status of the

Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories of finished and semi-finished goods

and raw materials at Works, Mines and Collieries were physically verified

during the year by the Management. In respect to stores and spare parts

and stocks at stockyards and with consignment/conversion agents, the

Company has a programme of verification of stocks over a three year

period. In our opinion, having regard to the nature and location of the

stocks, the frequency of verification is reasonable. In case of materials

lying with third parties, certificates confirming stocks have been received

for stocks held.

(b) In our opinion and according to the information and explanation given

to us, the procedures of physical verification of inventories followed by the

Management were reasonable and adequate in relation to the size of the

Company and the nature of its business.

(c) In our opinion and according to the information and explanations given

to us, the Company has maintained proper records of its inventories and

no material discrepancies were noticed on physical verification.

(iv) In respect of loans, secured or unsecured, granted by the Company to

companies, firms or other parties covered in the Register under Section 301

of the Companies Act, 1956, according to the information and explanations

given to us:

STANDARD AUDITINGPage 22

(a) The Company has granted loans aggregating Rs.167.22 crores to one

party during the year. At the year-end, there is no balance outstanding and

the maximum amount involved during the year was Rs. 3,720.38 crores.

(b) The rate of interest and other terms and conditions of such loans are,

in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been regular/as per

stipulations.

(d) There were no loans outstanding as at the year-end, and therefore

clause (iii) (d) of paragraph 4 of CARO is not applicable.

The Company has not taken any loans, secured or unsecured, from

companies, firms or other parties covered in the Register maintained under

Section 301 of the Companies Act, 1956. Accordingly, clauses (iii) (e) to

(iii) (g) of paragraph 4 of CARO are not applicable.

(v) In our opinion and according to the information and explanations given

to us, having regard to the explanations that some of the items purchased

are of special nature and suitable alternative sources are not readily

available for obtaining comparable quotations, there is an adequate internal

control system commensurate with the size of the Company and the nature

of its business with regard to purchases of inventory and fixed assets and

the sale of goods and services. During the course of our audit, we have

not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register

maintained in pursuance of Section 301 of the Companies Act, 1956, to

the best of our knowledge and belief and according to the information. and

explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that

needed tobe entered in the Register maintained under the said Section have

been so entered.

(b) Where each of such transaction is in excess of Rs. five lakhs in

respect of anyparty, the transactions have been made at prices which are

STANDARD AUDITINGPage 23

prima facie reasonable havingregard to the prevailing market prices at the

relevant time.

(vii) In our opinion and according to the information and explanations

given to us, theCompany has complied with the provisions of Sections 58A

and 58AA or any other relevantprovisions of the Companies Act, 1956 and

the Companies (Acceptance of Deposits) Rules,1975 with regard to the

deposits accepted from the public. According to the informationand

explanations given to us, no order has been passed by the Company Law

Board or theNational Company Law Tribunal or the Reserve Bank of India

or any Court or any otherTribunal.

(viii) In our opinion, the Company has an adequate internal audit system

commensuratewith the size and the nature of its business.

(ix) We have broadly reviewed the cost records maintained by the

Company pursuant tothe Companies (Cost Accounting Records) Rules, 2011

prescribed by the Central Governmentunder Section 209(1)(d) of the

Companies Act, 1956 and are of the opinion that, primafacie, the

prescribed cost records have been maintained. We have, however, not made

adetailed examination of the cost records with a view to determining

whether they areaccurate or complete.

(x) According to the information and explanations given to us in respect of

statutorydues:

(a) The Company has generally been regular in depositing undisputed

statutory dues,including Provident Fund, Investor Education and Protection

Fund, Income-tax, Sales Tax,Wealth Tax, Service Tax, Customs Duty,

Excise Duty, Cess and other material statutory dues applicable to it with

the appropriate authorities. We are informed that the Comp any intends to

obtain exemption from operations of Employees' State Insurance Act at

alllocations and necessary steps have been taken by the Company. We are

also informed that actions taken by the authorities at some locations to

Name of the Statute (Nature

Forum where Dispute is pending

Period to which the amount relates

Amount involved (Rs.

STANDARD AUDITINGPage 24

of Dues) In crores)

Supreme Court 1990-91 & 1993-94 9.68

Customs Act High Court 2002-03 0.03

Commissioner 1993-94 3.92

Supreme Court 2004-05 235.48

High Court1988-89, 1989-90, 2000-01 & 2003-04 to 2008-09

14.54

Central Excise Act

Tribunal1990-91, 1992-93, 1996-97 & 1998-99 to 2012-13

755.32

Commissioner1988-89, 1989-90 & 1993-94 to 2012-13

14.17

Deputy Commissioner

1985-86, 1986-87 & 1998-99 0.18

Assistant Commissioner

1983-84 to 2005-06 0.85

Supreme Court 2006-07 to 2011-12 25.59

High Court1973-74, 1991-92, 1992-93, 1994-95, 1996-97, 1999-2000 to 2005-06, 2007-08 to 2009-10 & 2012-13

119.31

Sales Tax Tribunal1980-81, 1981-82, 1984-85, 1987-88, 1989-90, 1995-96 & 1997-98 to 2011-12

71.97

Commissioner1983-84, 1984-85, 1988-89 to 1998-99 & 2008-09 to 2011-12

248.58

Deputy Commissioner

1983-84, 1984-85, 1988-89 to 1998-99 & 2008-09 to 2011-12

116.94

Assistant Commissioner

1973-74, 1980-81,1983-84 to 1997-98, 1998-99 & 2000-01 to 2011-12

26.85

Cess on royalty, education, welfare etc.

1956-57 to 1993-94, 1999-2000 to 7.66

High Court2001-02, 2003-04 to 2005-06 & 2007-08to 2012-13

bring the employees of the Company under the Employees' State Insurance.

Scheme has been contested by the Company and full payment has not been

noticed during the year. made of the contributions demanded.

(b) There were no undisputed amounts payable in respect of Provident

Fund, InvestorEducation and Protection Fund, Employees' State Insurance,

Income-tax, Sales Tax, WealthTax, Service Tax, Customs Duty, Excise

duty, Cess and other material statutory dues in arrears as at 31 March,

2013 for a period of more than six months from the date they became

STANDARD AUDITINGPage 25

payable, except for collection of sales tax which we are informed are

refundable to customers because they have been collected in excess or

which have been collected pending receipt of necessary certificates from the

customers.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax,

Customs Duty,Excise Duty and Cess which have not been deposited as on

31 March, 2013 on account ofdisputes are given below:

(xi) In our opinion and according to the information and explanations given

to us, theCompany has not defaulted in the repayment of dues to banks,

financial institutions anddebenture holders.

(xii) In our opinion and according to the information and explanations

given to us, theterms and conditions of the guarantees given by the

Company for loans taken by others frombanks and financial institutions are

not, prima facie, prejudicial to the interests of theCompany.

(xiii) In our opinion and according to the information and explanations

given to us,the term loans have been applied by the Company during the

year for the purposes for whichthey were obtained, other than temporary

deployment pending application.

(xiv) In our opinion and according to the information and explanations

given to us, andon an overall examination of the Balance Sheet of the

Company, we report that funds raisedon short-term basis have, prima facie,

not been used during the year for long- terminvestment.

(xv) According to the information and explanations given to us, the

Company has notmade preferential allotment of shares to parties and

companies covered in the Registermaintained under Section 301 of the

Companies Act, 1956.

(xvi) According to the information and explanations given to us, during the

periodcovered by our audit report, the Company had issued unsecured

debentures which did notrequire creation of any charge or security.

STANDARD AUDITINGPage 26

(xvii) The Management has disclosed the end use of money raised by

public issue in Note2 to the financial statements and we have verified the

same.

(xviii) To the best of our knowledge and according to the information and

explanationsgiven to us, no fraud by the Company and no material fraud

on the Company has been noticedor reported during the year.

3.3. STANDARD AUDITING FOLLOWED BY TATA

STEEL COMAPNY

STANDARD AUDITINGPage 27

SA 220 “Quality Control for an Audit of Financial

Statements”

Introduction:

Scope of this SA

1. This Standard on Auditing (SA) deals with the specific responsibilities

of the auditor regarding quality control procedures for an audit of financial

statements. Italso addresses, where applicable, the responsibilities of the

engagement quality control reviewer. This SA is to be read in conjunction

with relevant ethical requirements.

System of Quality Control and Role of Engagement Teams

2. Quality control systems, policies and procedures are the responsibility of

the audit firm. Under SQC 1, the firm has an obligation to establish and

maintaina system of quality control to provide it with reasonable assurance

that:

(a) The firm and its personnel comply with professional standards and

regulatory and legal requirements; and

(b) The reports issued by the firm or engagement partners are appropriate

in the circumstance. Within the context of the firm’s system of quality

control, engagement teams have a responsibility to implement quality

control procedures that are applicable to the audit engagement and provide

the firm with relevant information to enable the functioning of that part of

the firm’s system of quality control relating to independence.

4. Engagement teams are entitled to rely on the firm’s system of quality

control, unless information provided by the firm or other parties suggests

otherwise.

STANDARD AUDITINGPage 28

Effective Date

5. This SA is effective for audits of financial statements for periods

beginning on or after April 1, 2010.

Objective

6. The objective of the auditor is to implement quality control procedures

at the engagement level that provide the auditor with reasonable assurance

that:

(a) The audit complies with professional standards and regulatory and legal

requirements; and

(b) The auditor’s report issued is appropriate in the circumstances.

Definitions

For purposes of the SAs, the following terms have the meanings attributed

below:

(a) Engagement partner – the partner or other person in the firm who is a

member of the Institute of Chartered Accountants of India and is in full

time practice and is responsible for the engagement and its performance,

and for the report that is issued on behalf of the firm, and who, where

required, has the appropriate authority from a professional, legal or

regulatory body.

(b) Engagement quality control review – a process designed to provide an

objective evaluation, before the report is issued, of the significant

judgments the engagement team made and the conclusions they reached in

formulating the report.

STANDARD AUDITINGPage 29

(c) Engagement quality control reviewer – a partner, other person4 in the

firm, suitably qualified external person, or a team made up of such

individuals, with sufficient and appropriate experience and authority to

objectively evaluate, before the report is issued, the significant judgments

the engagement team made and the conclusions they reached in formulating

the report. However, in case the review is done by a team of individuals,

such team should be headed by a member of the Institute.

(d) Engagement team – all personnel performing an engagement, including

any experts contracted by the firm in connection with that engagement.

(e) Firm – a sole practitioner/proprietor, partnership, or any such entity of

professional accountants, as may be permitted by law.

(f) Inspection – in relation to completed engagements, procedures designed

to Such other person should be a member of the Institute of Chartered

Accountants of India.Quality Control for an Audit of Financial Statements

provide evidence of compliance by engagement teams with the firm’s

quality control policies and procedures.

(g) Listed entity – an entity whose shares, stock or debt are quoted or

listed on a recognized stock exchange, or are traded under the regulations

of a recognized stock exchange or other equivalent body.

(h) Monitoring – a process comprising an ongoing consideration and

evaluation of the firm’s system of quality control, including a periodic

inspection of a selection of completed engagements, designed to enable the

firm to obtain reasonable assurance that its system of quality control is

operating effectively.

(i) Network firm – A firm or entity that belongs to a network.

(j) Network – A larger structure:

STANDARD AUDITINGPage 30

(i) That is aimed at cooperation, and

(ii) That is clearly aimed at profit or cost-sharing or shares common

ownership, control or management, common quality control policies and

procedures, common business strategy, the use of a common brand name,

or a significant part of professional resources.

(k) Partner – any individual with authority to bind the firm with respect to

the performance of a professional services engagement.

(l) Personnel – partners and staff.

(m) Professional Standards – Engagement Standards, as defined in the

“Preface to the Standards on Quality Control, Auditing, Review, Other

Assurance and Related Services”, issued by the Institute of Chartered

Accountants of India and relevant ethical requirements as contained in the

Code of Ethics issued by the Institute.

(n) Relevant ethical requirements – Ethical requirements to which the

engagement team and engagement quality control reviewer are subject,

which ordinarily comprise the Code of Ethics of the Institute of Chartered

Accountants of India related to an audit of financial statements.

(o) Staff – professionals, other than partners, including any experts which

the firm employs.Handbook of Auditing Pronouncements-I.A

(p) Suitably qualified external person–an individual outside the firm with

the capabilities and competence to act as an engagement partner, for example

a partner or an employee5 (with appropriate experience) of another firm.

Requirements

Leadership Responsibilities for Quality on Audits

STANDARD AUDITINGPage 31

The engagement partner shall take responsibility for the overall quality on

each audit engagement to which that partner is assigned. (Ref: Para. A3)

Relevant Ethical Requirements

Throughout the audit engagement, the engagement partner shall remain

alert, through observation and making inquiries as necessary, for evidence

of non-compliance with relevant ethical requirements by members of the

If matters come to the engagement partner’s attention through the firm’s

system of quality control or otherwise that indicate that members of the

engagement team have not complied with relevant ethical requirements, the

engagement partner, in consultation with others in the firm, shall determine

the appropriate action. Independence

The engagement partner shall form a conclusion on compliance with

Independence requirements that apply to the audit engagement. In doing so,

the engagement partner shall:

(a) Obtain relevant information from the firm and, where applicable,

network firms, to identify and evaluate circumstances and relationships that

create threats to independence;

(b) Evaluate information on identified breaches, if any, of the firm’s

independence policies and procedures to determine whether they create a

threat to independence for the audit engagement; and

(c) Take appropriate action to eliminate such threats or reduce them to an

acceptable level by applying safeguards, or, if considered appropriate, to

withdraw from the audit engagement, where withdrawal is permitted by law

Such employee should be a member of the Institute of Chartered

Accountants of India.Quality Control for an Audit of Financial Statements

or regulation. The engagement partner shall promptly report to the firm any

inability to resolve the matter for appropriate action. (Ref: Para. A5-A7)

STANDARD AUDITINGPage 32

Acceptance and Continuance of Client Relationships and Audit

Engagements

The engagement partner shall be satisfied that appropriate procedures

regarding the acceptance and continuance of client relationships and audit

engagements have been followed, and shall determine that conclusions

reached in this regard are appropriate.

If the engagement partner obtains information that would have caused the

firm to decline the audit engagement had that information been available

earlier, the engagement partner shall communicate that information promptly

to the firm, so that the firm and the engagement partner can take the

necessary action.

Assignment of Engagement Teams

The engagement partner shall be satisfied that the engagement team, and

any auditor’s experts who are not part of the engagement team, collectively

have the appropriate competence and capabilities to:

(a) Perform the audit engagement in accordance with professional standards

and regulatory and legal requirements; and

(b) Enable an auditor’s report that is appropriate in the circumstances to be

issued. Engagement Performance Direction, Supervision and Performance

The engagement partner shall take responsibility for:

(a) The direction, supervision and performance of the audit engagement in

compliance with professional standards and regulatory and legal

requirements; and (Ref: Para. A13-A15, A20)

(b) The auditor’s report being appropriate in the circumstances.

STANDARD AUDITINGPage 33

Reviews

The engagement partner shall take responsibility for reviews being

performed in accordance with the firm’s review policies and procedures.

(Ref: Para. A16-A17, A20)Handbook of Auditing Pronouncements-I.A On

or before the date of the auditor’s report, the engagement partner shall,

through a review of the audit documentation and discussion with the

engagement team, be satisfied that sufficient appropriate audit evidence has

been obtained to support the conclusions reached and for the auditor’s

report to be issued. (Ref: Para. A18-A20)

Consultation

18. The engagement partner shall:

(a) Take responsibility for the engagement team undertaking appropriate

consultation on difficult or contentious matters;

(b) Be satisfied that members of the engagement team have undertaken

appropriate consultation during the course of the engagement, both within

the engagement team and between the engagement team and others at the

appropriate level within or outside the firm;

(c) Be satisfied that the nature and scope of, and conclusions resulting

from, such consultations are agreed with the party consulted; and

(d) Determine that conclusions resulting from such consultations have been

implemented. (Ref: Para. A21-A22)

Engagement Quality Control Review

For audits of financial statements of listed entities, and those other audit

engagements, if any, for which the firm has determined that an engagement

quality control review is required, the engagement partner shall:

STANDARD AUDITINGPage 34

(a) Determine that an engagement quality control reviewer has been

appointed;

(b) Discuss significant matters arising during the audit engagement,

including those identified during the engagement quality control review,

with the engagement quality control reviewer; and

(c) Not date the auditor’s report until the completion of the engagement

quality control review. (Ref: Para. A23-A25)

The engagement quality control reviewer shall perform an objective

evaluation of the significant judgments made by the engagement team, and

thec onclusions reached in formulating the auditor’s report. This evaluation

shall involve: Quality Control for an Audit of Financial Statements

(a) Discussion of significant matters with the engagement partner;

(b) Review of the financial statements and the proposed auditor’s report;

(c) Review of selected audit documentation relating to the significant

judgments the engagement team made and the conclusions it reached; and

(d) Evaluation of the conclusions reached in formulating the auditor’s

report and consideration of whether the proposed auditor’s report is

appropriate.

For audits of financial statements of listed entities, the engagement quality

control reviewer, on performing an engagement quality control review, shall

also consider the following:

(a) The engagement team’s evaluation of the firm’s independence in

relation to the audit engagement;

STANDARD AUDITINGPage 35

(b) Whether appropriate consultation has taken place on matters involving

differences of opinion or other difficult or contentious matters, and the

conclusions arising from those consultations; and

(c) Whether audit documentation selected for review reflects the work

performed in relation to the significant judgments made and supports the

conclusions reached. Differences of Opinion

If differences of opinion arise within the engagement team, with those

consulted or, where applicable, between the engagement partner and the

engagement quality control reviewer, the engagement team shall follow the

firm’s policies and procedures for dealing with and resolving differences of

opinion.

Monitoring

An effective system of quality control includes a monitoring process

designed to provide the firm with reasonable assurance that its policies and

procedures relating to the system of quality control are relevant, adequate,

and operating effectively. The engagement partner shall consider the results

of the firm’s monitoring process as evidenced in the latest information

circulated by the firm and, if applicable, other network firms and whether

deficiencies noted in that information may affect the audit engagement.

(Ref: Para A32-A34)Handbook of Auditing Pronouncements-I.A

Documentation

The auditor shall document:

STANDARD AUDITINGPage 36

(a) Issues identified with respect to compliance with relevant ethical

requirements and how they were resolved.

(b) Conclusions on compliance with independence requirements that apply

to the audit engagement, and any relevant discussions with the firm that

support these conclusions.

(c) Conclusions reached regarding the acceptance and continuance of client

relationships and audit engagements.

(d) The nature and scope of, and conclusions resulting from, consultations

undertaken during the course of the audit engagement. (Ref: Para. A35)

The engagement quality control reviewer shall document, for the audit

engagement reviewed, that:

(a) The procedures required by the firm’s policies on engagement quality

control review have been performed;

(b) The engagement quality control review has been completed on or

before the date of the auditor’s report; and

(c) The reviewer is not aware of any unresolved matters that would cause

the reviewer to believe that the significant judgments the engagement team

made and the conclusions they reached were not appropriate.

SA 501- “Audit Evidence Specific Considerations for

Selected Items”

STANDARD AUDITINGPage 37

Introduction

Scope of this SA

1. This Standard on Auditing (SA) deals with specific considerations by

the auditor in obtaining sufficient appropriate audit evidence in accordance

with and other relevant SAs, with respect to certain aspects of inventory,

litigation and claims involving the entity, and segment information in an

audit of financial statements.

Effective Date

2. This SA is effective for audits of financial statements for periods

beginning on or after April 1, 2010.

Objective

3. The objective of the auditor is to obtain sufficient appropriate audit

evidence regarding the:

(a) Existence and condition of inventory;

(b) Completeness of litigation and claims involving the entity; and

(c) Presentation and disclosure of segment information in accordance with

the applicable financial reporting framework.

Requirements

Inventory

When inventory is material to the financial statements, the auditor shall

obtain sufficient appropriate audit evidence regarding the existence and

condition of inventory by:

STANDARD AUDITINGPage 38

(a) Attendance at physical inventory counting, unless impracticable, to:

(Ref: Para. A1-A3)

(i) Evaluate management’s instructions and procedures for recording and

controlling the results of the entity’s physical inventory counting;

3 SA330, “The Auditor’s Responses to Assessed Risks”.

SA500, “Audit Evidence”.Audit Evidence—Specific Considerations for

Selected Items

(ii) Observe the performance of management’s count procedures

(iii) Inspect the inventory;

(iv) Perform test counts;

(b) Performing audit procedures over the entity’s final inventory records to

determine whether they accurately reflect actual inventory count results.

If physical inventory counting is conducted at a date other than the date of

the financial statements, the auditor shall, in addition to the procedures

required by paragraph 4, perform audit procedures to obtain audit evidence

about whether changes in inventory between the count date and the date of

the financial statements are properly recorded.

If the auditor is unable to attend physical inventory counting due to

unforeseen circumstances, the auditor shall make or observe some physical

counts on an alternative date, and perform audit procedures on intervening

transactions.

If attendance at physical inventory counting is impracticable, the auditor

shall perform alternative audit procedures to obtain sufficient appropriate

audit evidence regarding the existence and condition of inventory. If it is

STANDARD AUDITINGPage 39

not possible to do so, the auditor shall modify the opinion in the auditor’s

report in accordance with SA 705

When inventory under the custody and control of a third party is material

to\ the financial statements, the auditor shall obtain sufficient appropriate

audit evidence regarding the existence and condition of that inventory by

performing one or both of the following:

(a) Request confirmation from the third party as to the quantities and

condition of inventory held on behalf of the entity. (Ref: Para. A15)

(b) Perform inspection or other audit procedures appropriate in the

circumstances. (Ref: Para. A16)

Litigation and Claims

The auditor shall design and perform audit procedures in order to identify

litigation and claims involving the entity which may give rise to a risk of

material misstatement, including: 5 SA705, “Modifications to the Opinion

in the Independent Auditor’s Report”. Handbook of Auditing

Pronouncements-I.A

(a) Inquiry of management and, where applicable, others within the entity,

including in-house legal counsel;

(b) Reviewing minutes of meetings of those charged with governance and

correspondence between the entity and its external legal counsel; and

(c) Reviewing legal expense accounts.

If the auditor assesses a risk of material misstatement regarding litigation

or claims that have been identified, or when audit procedures performed

indicate that other material litigation or claims may exist, the auditor shall,

in addition to the procedures required by other SAs, seek direct

STANDARD AUDITINGPage 40

communication with the entity’s external legal counsel. The auditor shall do

so through a letter of inquiry, prepared by management and sent by the

auditor, requesting the entity’s external legal counsel to communicate

directly with the auditor. If law, regulation or the respective legal

professional body prohibits the entity’s external legal counsel from

communicating directly with the auditor, the auditor shall perform

alternative

audit procedures.

(a) management refuses to give the auditor permission to communicate or

meet with the entity’s external legal counsel, or the entity’s external legal

counsel refuses to respond appropriately to the letter of inquiry, or is

prohibited from responding; and

(b) the auditor is unable to obtain sufficient appropriate audit evidence by

performing alternative audit procedures, the auditor shall modify the opinion

in the auditor’s report in accordance with SA 705.

Written Representations

The auditor shall request management and, where appropriate, those charged

with governance to provide written representations that all known actual or

possible litigation and claims whose effects should be considered when

preparing the financial statements have been disclosed to the auditor and

appropriately accounted for and disclosed in accordance with the applicable

financial reporting framework.

Segment Information

The auditor shall obtain sufficient appropriate audit evidence regarding the

presentation and disclosure of segment information in accordance with the

STANDARD AUDITINGPage 41

applicable financial reporting framework by: (Ref: Para. A26) Audit

Evidence—Specific Considerations for Selected Items 5 SA 501

(a) Obtaining an understanding of the methods used by management in m

determining segment information, and: (Ref: Para. A27)

(i) Evaluating whether such methods are likely to result in disclosure in

accordance with the applicable financial reporting framework; and

(ii) Where appropriate, testing the application of such methods; and

(b) Performing analytical procedures or other audit procedures appropriate

in the circumstances.SA 610 nature, timing or extent of the external

auditor’s procedures, the external auditor shall consider:

(a) The nature and scope of specific work performed, or to be performed,

by the internal auditors;

(b) The assessed risks of material misstatement at the assertion level for

particular classes of transactions, account balances, and disclosures; and

(c) The degree of subjectivity involved in the evaluation of the audit

evidence gathered by the internal auditors in support of the relevant

assertions.

Using Specific Work of the Internal Auditors

In order for the external auditor to use specific work of the internal

auditors, the external auditor shall evaluate and perform audit procedures

on that work to determine its adequacy for the external auditor’s purposes.

To determine the adequacy of specific work performed by the internal

auditors for the external auditor’s purposes, the external auditor shall

evaluate whether:

STANDARD AUDITINGPage 42

(a) The work was performed by internal auditors having adequate technical

training and proficiency;

(b) The work was properly supervised, reviewed and documented;

(c) Adequate audit evidence has been obtained to enable the internal

auditors to draw reasonable conclusions;

(d) Conclusions reached are appropriate in the circumstances and any

reports prepared by the internal auditors are consistent with the results of

the work performed; and

(e) Any exceptions or unusual matters disclosed by the internal auditors are

properly resolved.

Documentation

When the external auditor uses specific work of the internal auditors, the

external auditor shall document conclusions regarding the evaluation of the

adequacy of the work of the internal auditors, and the audit procedures

performed by the external auditor on that work, in accordance with

paragraph.

SA 610 “Using The Work of Internal Auditors”

Introduction

STANDARD AUDITINGPage 43

Scope of this SA

1. This Standard on Auditing (SA) deals with the external auditor’s

responsibilities regarding the work of internal auditors when the external

auditor has determined, in accordance with SA 315,3 that the internal

audit function is likely to be relevant to the audit.

2. This SA does not deal with instances when individual internal auditors

provide direct assistance to the external auditor in carrying out audit

procedures or where, in terms of the applicable legal and regulatory

framework, it is not permissible for the internal auditor to provide access

to his working papers to the third parties. Relationship between the Internal

Audit Function and the External Auditor

3. The role and objectives of the internal audit function are determined by

management and, where applicable, those charged with governance. While

the objectives of the internal audit function and the external auditor are

different, some of the ways in which the internal audit function and the

external auditor achieve their respective objectives may be similar.

4. Irrespective of the degree of autonomy and objectivity of the internal

audit function, such function is not independent of the entity as is required

of the external auditor when expressing an opinion on financial statements.

The external auditor has sole responsibility for the audit opinion expressed,

and that responsibility is not reduced by the external auditor’s use of the

work of the internal auditors.

Effective Date:

This SA is effective for audits of financial statements for periods

beginningon or after April 1, 2010.

STANDARD AUDITINGPage 44

Objectives

The objectives of the external auditor, where the entity has an internal

audit function that the external auditor has determined is likely to be

relevant to the audit, are to determine:

(a) Whether, and to what extent, to use specific work of the internal

auditors; and

(b) If so, whether such work is adequate for the purposes of the audit.

SA 315, “Identifying and Assessing the Risks of Material Misstatement

Through Understanding the Entity and Its Environment,” paragraph

23.Handbook of Auditing Pronouncements-I.A

Definitions

For purposes of the SAs, the following terms have the meanings attributed

below:

(a) Internal audit function – An appraisal activity established or provided

as a service to the entity. Its functions include, amongst other things,

examining, evaluating and monitoring the adequacy and effectiveness of

internal control. The Preface to the Standards on Internal Audit, issued by

the Institute of Chartered Accountants of India, issued in November 2004

describes internal audit as “an independent management function, which

involves a continuous and critical appraisal of the functioning of an entity

with a view to suggest improvements thereto and add value to and

strengthen the overall governance mechanism of the entity, including the

entity’s strategic risk management and internal control system. Internal

audit, therefore, provides assurance that there is transparency in reporting,

as a part of good governance.”

STANDARD AUDITINGPage 45

(b) Internal auditors – Those individuals who perform the activities of the

internal audit function. Internal auditors may belong to an internal audit

department or equivalent function. Requirements Determining Whether and

to What Extent to Use the Work of the Internal Auditors

The external auditor shall determine:

(a) Whether the work of the internal auditors is likely to be adequate for

purposes of the audit;

(b) If so, the planned effect of the work of the internal auditors on the

nature, timing or extent of the external auditor’s procedures.

In determining whether the work of the internal auditors is likely to be

adequate for purposes of the audit, the external auditor shall evaluate:

(a) The objectivity of the internal audit function;

(b) The technical competence of the internal auditors;

(c) Whether the work of the internal auditors is likely to be carried out

with due professional care; and

(d) Whether there is likely to be effective communication between the

internal auditors and the external auditor.

In determining the planned effect of the work of the internal auditors on

the Using the Work of Internal Auditors

3.4.COMMENTS ON STANDARD AUDITING

FOLLOWED BY TATA STEEL COMPANY

STANDARD AUDITINGPage 46

1. We have obtained all information and explanations, which is to the best of

Auditor knowledge and belief, were necessary for the purpose of Standard

Auditing followed by TATA STEEL Company.

2. We have found The Auditor has followed SA 220- “Quality Control for an

Audit of Financial Statements”, 501 –“Audit Evidence—Specific Considerations

for Selected Items”, SA 610- “Using The Work of Internal Auditors”.

3. In our opinion, the balance sheet, the profit and loss statement and cash flow

statement dealt with by this report comply with Auditing and Accounting

Standards referred to in sub –section (3C) of Section 211 of the companies Act,

1956.

4. Attention is invited to the following notes to Auditing statement :

a) TATA STEEL Company has followed Auditing Standard of India which

is applicable for all company in India which is Audited. Hence TATA

STEEL Company is 6th largest Company of India steel.

b) TATA STEEL audit in accordance with the auditing standards

generally accepted in India. Those Standards require that we plan

and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement.

c) An audit also includes assessing the accounting principles used

and the significant estimates made by the Management, as well

as the overall financial statement presentation. We believe that

our audit provides a reasonable basis for our opinion.

CHAPTER 4

4.1.CONCLUSION:

STANDARD AUDITINGPage 47

In accordance with SA issued by ICAI for the auditors to audit the

company report. The International Auditing Standards Committee

and the Accounting Standard board of the Institute of Chartered

Accountants of India have developed standard accounting and

auditing practices to guide the. accountants and auditors in the

day to day work The later developments in auditing pertain

to the use of computers in accounting and auditing. Generally

Accepted Auditing Standards, or GAAS are sets of standards

against which the quality of audits are performed and may be

judged. Several organizations have developed such sets of

principles, which vary by territory.

TATA STEEL Company has maintained proper records showing full

particulars, including quantitative details and situation of the fixed

assets. TATA Steel has followed SA 220- “Quality Control for an

Audit of Financial Statements”, 501 –“Audit Evidence—Specific

Considerations for Selected Items”, SA 610- “Using The Work of

Internal Auditors”. There is This Three main Auditing standard

Followed By TATA steel Company.

4.2.BIBLIOGRAPHY:

InternetSTANDARD AUDITING

Page 48

www.icai.org

www.investopedia.com

www.wikipedia.com

www. tatasteel .com

www.moneycontrol.com  

www.iifl.com

Text Book

Auditing and Assurance Services Author by lain A. Arenas, Mark S

Beasley, Randal J Elder, Hardcover Publisher Prentice Hall

Auditing Information Systems by Jack J. Champlain, Hardcover:,

Publisher: Wiley

Advanced Auditing by Dr. Marsha Ainapure Publisher: Manan

Prakashan

STANDARD AUDITINGPage 49