112 Atul Ltd | Annual Report 2021-22 Key audit matter Auditor’s response Allowance for credit losses The Company determines the allowance for credit losses on trade receivables based on historical loss experience adjusted to reflect current and estimated future economic conditions of its customers, their industries and geography of operations. In calculating expected credit loss, the Company also considers the insurance covers and other securities, besides other related information for its customers, including credit reports, to estimate the probability of default in future and has taken into account estimates of possible effect from the COVID-19 pandemic. The Management has exercised significant judgement in estimating the allowance for credit losses. Refer Note 10 and 28.8(c) to the Standalone Financial Statements. Our principle procedures included the following, but were not limited to: Testing the effectiveness of controls over the: - classification of customers by the businesses and computing the net exposure as at the reporting date, - development of the expected credit model for the allowance for credit losses, including consideration of the current and estimated future economic conditions, - completeness and accuracy of information used in the estimation of probability of default and - computation of the allowance for credit losses. Testing the arithmetical accuracy and computation of the allowances prepared by the Management. Testing theallowance for credit loss throughalternate scenarios, including profiling of customers based on their attributes with various sensitivities around approach, the assumptions and factoring the possible effect of the pandemic, to independently validate the Management estimates. Information other than the Financial Statements and Auditor’s Report thereon 05. The Board of Directors is responsible for the other information. The other information comprises the information included in the letter to the shareholders, operational highlights, financial charts, Directors’ Report and its annexure, Management Discussion and Analysis, Corporate Governance Report, Business Responsibility and Sustainability Report, Dividend Distribution Policy and performance trend, but does not include the Standalone Financial Statements, the Consolidated Financial Statements and our Auditor’s Report thereon. 06. Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon. 07. In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. 08. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Management’s responsibility for the Standalone Financial Statements 09. The Board of Directors of the Company is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of appropriate accounting policies, making judgements and estimates that are reasonable and prudent, and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to
RkJQdWJsaXNoZXIy MjA2MDI2