Atul Ltd 2018-19

Key audit matters Auditor’s responses Contingent liabilities and provisions Certain claims received from the government authorities and customers are under dispute. These ĿŠǄūŕǄĚ ĺĿijĺ ēĚijƑĚĚ ūlj ŏƭēijĚŞĚŠƥ ƥū determine the possible outcomes and estimates relating to the timing and ƥĺĚ îŞūƭŠƥ ūlj ūƭƥǜūǅƙ ūlj ƑĚƙūƭƑČĚƙ ĚŞċūēǋĿŠij ĚČūŠūŞĿČ ċĚŠĚǛƥƙȦ The audit procedures included but were not limited to: - Obtaining a detailed understanding of processes and controls of the Management with respect to claims or disputes. - Evaluation of the design of the controls relating to compilation of the claims; assessment of probability of outcome, estimates of the timing and the amount ūlj ƥĺĚ ūƭƥǜūǅƙȡ îŠē îƎƎƑūƎƑĿîƥĚ ƑĚƎūƑƥĿŠij ċǋ ƥĺĚ qîŠîijĚŞĚŠƥ îŠē ƥĚƙƥĿŠij implementation and operating effectiveness of the key controls. - Performing following procedures on samples selected: ȟ ÀŠēĚƑƙƥîŠēĿŠij ƥĺĚ ŞîƥƥĚƑƙ ċǋ ƑĚîēĿŠij ƥĺĚ ČūƑƑĚƙƎūŠēĚŠČĚƙ ʈ ČūŞŞƭŠĿČîƥĿūŠƙȡ minutes of the Audit Committees and | or the Board meetings and discussions with the appropriate Management personnel. ȟ qîŒĿŠij ČūƑƑūċūƑîƥĿǄĚ ĿŠƐƭĿƑĿĚƙ ǅĿƥĺ îƎƎƑūƎƑĿîƥĚ ŕĚǄĚŕ ūlj ƥĺĚ qîŠîijĚŞĚŠƥ ƎĚƑƙūŠŠĚŕ ĿŠČŕƭēĿŠij ƙƥîƥƭƙ ƭƎēîƥĚȡ ĚǊƎĚČƥîƥĿūŠ ūlj ūƭƥČūŞĚƙ ǅĿƥĺ ƥĺĚ ċîƙĿƙ and the future course of action as contemplated and perusing legal opinions, if any, obtained by the Management. ȟ ~ċƥîĿŠĿŠij ēĿƑĚČƥ ČūŠǛƑŞîƥĿūŠ ljƑūŞ ƥĺĚ ŕĚijîŕ îƥƥūƑŠĚǋƙ ūlj ƥĺĚ HƑūƭƎ îŠē considering their opinions | probability assessment of the outcomes. ȟ /ǄîŕƭîƥĿŠij ƥĺĚ ĚǄĿēĚŠČĚƙ ƙƭƎƎūƑƥĿŠij ƥĺĚ ŏƭēijĚŞĚŠƥ ūlj ƥĺĚ qîŠîijĚŞĚŠƥ îċūƭƥ possible outcomes and the reasonableness of the estimates. We involved our ĿŠƥĚƑŠîŕ ĚǊƎĚƑƥƙ ljūƑ ƥĚČĺŠĿČîŕ ijƭĿēîŠČĚ îŠē ĚǄîŕƭîƥĿūŠ ūlj îƙƙĚƙƙŞĚŠƥƙ ūlj ƥĺĚ Management, as appropriate. - Evaluating appropriateness of adequate disclosures in accordance with the applicable accounting standards. Adoption of Ind AS 115, Revenue from contracts with customers (new revenue accounting standard) The products are sold to the customers under different types of contractual terms. The application of the new revenue accounting standard involved assessing if distinct ƎĚƑljūƑŞîŠČĚ ūċŕĿijîƥĿūŠƙ ĚǊĿƙƥ ƭŠēĚƑ each type of the contracts and ensuring appropriate and adequate disclosures in the Consolidated Financial Statements. The audit procedures included but were not limited to: - Assessment of the processes of the Management for adoption of the new accounting standard. - Selecting a sample from each type of the contracts with the customers and ƥĚƙƥĿŠij ƥĺĚ ūƎĚƑîƥĿŠij ĚljljĚČƥĿǄĚŠĚƙƙ ūlj ƥĺĚ ĿŠƥĚƑŠîŕ ČūŠƥƑūŕȡ ƑĚŕîƥĿŠij ƥū ĿēĚŠƥĿǛČîƥĿūŠ of the distinct performance obligations and determination of transaction price. Carrying out a combination of procedures involving enquiry and observation, re-performance and inspection of evidence in respect of operation of these controls. - Testing the relevant controls including access of Information Technology (IT) systems and changemanagement controls relevant for appropriatemeasurement and presentation of revenue and related account balances. - Performing following procedures on the samples selected: ȟ ¤ĚîēĿŠijȡ îŠîŕǋƙĿŠij îŠē ĿēĚŠƥĿljǋĿŠij ƥĺĚ ēĿƙƥĿŠČƥ ƎĚƑljūƑŞîŠČĚ ūċŕĿijîƥĿūŠƙ ĿŠ these contracts ȟ ūŞƎîƑĿŠij ƥĺĚƙĚ ƎĚƑljūƑŞîŠČĚ ūċŕĿijîƥĿūŠƙ ǅĿƥĺ ƥĺîƥ ĿēĚŠƥĿljĿĚē îŠē ƑĚČūƑēĚē by the Management ȟ ūŠƙĿēĚƑĿŠij ƥĺĚ ƥĚƑŞƙ ūlj ƥĺĚ ČūŠƥƑîČƥƙ ƥū ēĚƥĚƑŞĿŠĚ ƥĺĚ ƥƑîŠƙîČƥĿūŠ ƎƑĿČĚ îŠē its allocation to the identified performance obligations ȟ ¹ĚƙƥĿŠij ƙîŞƎŕĚ ūlj ƑĚǄĚŠƭĚƙ ǅĿƥĺ ƥĺĚ ƎĚƑljūƑŞîŠČĚ ūċŕĿijîƥĿūŠƙ ƙƎĚČĿljĿĚē ĿŠ ƥĺĚ underlying contracts ȟ îƑƑǋĿŠij îŠîŕǋƥĿČîŕ ƎƑūČĚēƭƑĚƙ ljūƑ ƑĚîƙūŠîċŕĚŠĚƙƙ ūlj ƑĚǄĚŠƭĚƙ ēĿƙČŕūƙĚē ċǋ segments - Evaluating the appropriateness of adequate disclosures in accordance with the standard. Consolidated | Independent Auditor’s Report 175