Audit 4

CHAPTER 1

INTRODUCTION

COMPANY ACCOUNTS

For showing the revenue and financial performance of company, Accountant maintains

company accounts .All company accounts are made in corporate accounting. We can

define it as recording of issue of equity and pref. shares, debentures, bonus and right

shares. It is also duty to maintain all routine accounts like sole trade and partnership firm

In normal transactions, we can include purchase, sale, receipt and payment transactions

and it is recorded in journal first and after posted it to ledger of Company accounts.

Company accounts are also helpful for making company's final account.

COMPANY AUDIT

The general definition of an audit is a planned and documented activity performed by

qualified personnel to determine by investigation, examination, or evaluation of objective

evidence, the adequacy and compliance with established procedures, or applicable

documents, and the effectiveness of implementation. The term may refer to audits in

accounting, internal controls, quality management, project management, water

management, and energy conservation.

Auditing is defined as a systematic and independent examination of data, statements,

records, operations and performances (financial or otherwise) of an enterprise for a stated

purpose. In any auditing the auditor perceives and recognizes the propositions before him

for examination, collects evidence, evaluates the same and on this basis formulates his

judgment which is communicated through his audit report. The purpose is then to give an

opinion on the adequacy of controls (financial and otherwise) within an environment they

audit, to evaluate and improve the effectiveness of risk management, control, and

governance processes.

Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive

Company) is an Indian multinational automotive manufacturing company

headquartered in Mumbai, Maharashtra, India and a subsidiary of the Tata Group.

Its products include passenger cars, trucks, vans, coaches, buses, construction

equipment and military vehicles. It is the world's sixteenth-largest motor vehicle

manufacturing company, fourth-largest truck manufacturer and second-largest bus

manufacturer by volume.

Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar,

Lucknow, Sanand, Dharwad and Pune in India, as well as in Argentina, South

Africa, Thailand and the United Kingdom. It has research and development centres

in Pune, Jamshedpur, Lucknow and Dharwad, India, and in South Korea, Spain,

and the United Kingdom. Tata Motors' principal subsidiaries include the British

premium car maker Jaguar Land Rover (the maker of Jaguar, Land Rover and

Range Rover cars) and the South Korean commercial vehicle manufactuer Tata

Daewoo. Tata Motors has a bus manufacturing joint venture with Marcopolo S.A.

(Tata Marcopolo), a construction equipment manufacturing joint venture with

Hitachi (Tata Hitachi Construction Machinery) and a joint venture with Fiat which

manufactures automotive components and Fiat and Tata branded vehicles.

Founded in 1945 as a manufacturer of locomotives, the company manufactured its

first commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which

ended in 1969. Tata Motors entered the passenger vehicle market in 1991 with the

launch of the Tata Sierra, becoming the first Indian manufacturer to achieve the

capability of developing a competitive indigenous automobile.[6] In 1998 Tata

launched the first fully indigenous Indian passenger car, the Indica, and in 2008

launched the Tata Nano, the world's cheapest car. Tata Motors acquired the South

Korean truck manufacturer Daewoo Commercial Vehicles Company in 2004 and

purchased Jaguar Land Rover from Ford in 2008.

Tata Motors is listed on the Bombay Stock Exchange, where it is a

constituent of the BSE SENSEX index, the National Stock Exchange of

India and the New York Stock Exchange. Tata Motors is ranked 314th in

the 2012 Fortune Global 500 ranking of the world's biggest corporations.

History

Tata entered the commercial vehicle sector in 1954 after forming a joint

venture with Daimler-Benz of Germany. After years of dominating the

commercial vehicle market in India, Tata Motors entered the passenger

vehicle market in 1991 by launching the Tata Sierra, a multi utility vehicle.

Tata subsequently launched the Tata Estate (1992; a station wagon design

based on the earlier 'TataMobile' (1989), a light commercial vehicle), the

Tata Sumo (1994; LCV) and the Tata Safari (1998; India's first sports

utility vehicle).

Tata launched the Indica in 1998, the first fully indigenous Indian

passenger car. Although initially criticised by auto-analysts, its excellent

fuel economy, powerful engine and an aggressive marketing strategy made

it one of the best selling cars in the history of the Indian automobile

industry. A newer version of the car, named Indica V2, was a major

improvement over the previous version and quickly became a mass-

favourite. Tata Motors also successfully exported large quantities of the car

to South Africa. The success of Indica played a key role in the growth of

Tata Motors.

CHAPTER 2

Company Profile

Tata Motors Limited is India's largest automobile company, with

consolidated revenues of INR 1,88,818 crores (USD 34.7 billion) in 2012-

13. It is the leader in commercial vehicles in each segment, and among the

top in passenger vehicles with winning products in the compact, midsize

car and utility vehicle segments. It is also the world's fifth largest truck

manufacturer and fourth largest bus manufacturer.

The Tata Motors Group's over 60,000 employees are guided by the

mission "to be passionate in anticipating and providing the best vehicles

and experiences that excite our customers globally."

Established in 1945, Tata Motors' presence cuts across the length and

breadth of India. Over 8 million Tata vehicles ply on Indian roads, since

the first rolled out in 1954. The company's manufacturing base in India is

spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow

(Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad

(Karnataka). Following a strategic alliance with Fiat in 2005, it has set up

an industrial joint venture with Fiat Group Automobiles at Ranjangaon

(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The

company's dealership, sales, services and spare parts network comprises

over 6,600 touch points.

Tata Motors, also listed in the New York Stock Exchange (September

2004), has emerged as an international automobile company. Through

subsidiaries and associate companies, Tata Motors has operations in the

UK, South Korea, Thailand, South Africa and Indonesia. Among them is

Jaguar Land Rover, acquired in 2008. In 2004, it acquired the Daewoo

Commercial Vehicles Company, South Korea's second largest truck maker.

The rechristened Tata Daewoo Commercial Vehicles Company has

launched several new products in the Korean market, while also exporting

these products to several international markets. Today two-thirds of heavy

commercial vehicle exports out of South Korea are from Tata Daewoo. In

2006, Tata Motors formed a 51:49 joint venture with the Brazil-based,

Marcopolo, a global leader in body-building for buses and coaches to

manufacture fully-built buses and coaches for India - the plant is located in

Dharwad. In 2006, Tata Motors entered into joint venture with Thonburi

Automotive Assembly Plant Company of Thailand to manufacture and

market the company's pickup vehicles in Thailand, and entered the market

in 2008. Tata Motors (SA) (Proprietary) Ltd., Tata Motors' joint venture

with Tata Africa Holding (Pty) Ltd. set up in 2011, has an assembly plant

in Rosslyn, north of Pretoria. The plant can assemble, semi knocked down

(SKD) kits, light, medium and heavy commercial vehicles ranging from 4

tonnes to 50 tonnes.

Tata Motors is also expanding its international footprint, established

through exports since 1961. The company's commercial and passenger

vehicles are already being marketed in several countries in Europe, Africa,

the Middle East, South East Asia, South Asia, South America, CIS and

Russia. It has franchisee/joint venture assembly operations in Bangladesh,

Ukraine, and Senegal.

The foundation of the company's growth over the last 68 years is a deep

understanding of economic stimuli and customer needs, and the ability to

translate them into customer-desired offerings through leading edge R&D.

With over 4,500 engineers, scientists and technicians the company's

Engineering Research Centre, established in 1966, has enabled pioneering

technologies and products. The company today has R&D centres in Pune,

Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Italy, Spain,

and the UK.

It was Tata Motors, which launched the first indigenously developed Light

Commercial Vehicle in 1986. In 2005, Tata Motors created a new segment

by launching the Tata Ace, India's first indigenously developed mini-truck.

In 2009, the company launched its globally benchmarked Prima range of

trucks and in 2012 the Ultra range of international standard light

commercial vehicles. In their power, speed, carrying capacity, operating

economy and trims, they will introduce new benchmarks in India and

match the best in the world in performance at a lower life-cycle cost.

Tata Motors also introduced India's first Sports Utility Vehicle in 1991

and, in 1998, the Tata Indica, India's first fully indigenous passenger car.

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano. The

Tata Nano has been subsequently launched, as planned, in India in March

2009, and subsequently in 2011 in Nepal and Sri Lanka. A development,

which signifies a first for the global automobile industry, the Nano brings

the joy of a car within the reach of thousands of families.

Tata Motors is equally focussed on environment-friendly technologies in

emissions and alternative fuels. It has developed electric and hybrid

vehicles both for personal and public transportation. It has also been

implementing several environment-friendly technologies in manufacturing

processes, significantly enhancing resource conservation.

Through its subsidiaries, the company is engaged in engineering and

automotive solutions, automotive vehicle components manufacturing and

supply chain activities, vehicle financing, and machine tools and factory

automation solutions.

Tata Motors is committed to improving the quality of life of communities

by working on four thrust areas - employability, education, health and

environment. The activities touch the lives of more than a million citizens.

The company's support on education and employability is focused on

youth and women. They range from schools to technical education

institutes to actual facilitation of income generation. In health, the

company's intervention is in both preventive and curative health care. The

goal of environment protection is achieved through tree plantation,

conserving water and creating new water bodies and, last but not the least,

by introducing appropriate technologies in vehicles and operations for

constantly enhancing environment care.

With the foundation of its rich heritage, Tata Motors today is etching a

refulgent future.

OBJECTIVES OF AUDITING:-

Auditing main purpose or object is to find the opinion of an auditor about

correctness and reliability of accounts and the financial position of the

business concern. For this purpose,auditor has to check the arithmetically

accuracy of the books of account and find out that whether the transactions

entered in the book of account are correct or incorrect. This is done by

various methods like inspecting, comparing and checking. So all that work

which is done by the auditor ensures him that "figures are facts".

BASIC PRINCIPLES OF AUDITING:

1) Integrity, objectivity and independence:

The auditor should be honest and sincere in his audit work. He must be fair

and objective. He should also be independent.

2) Confidentiality:

The auditor should keep the information obtained during audit,

confidential. He should not disclose such information to any third party.

He should, keep his eyes and ears open but his mouth shut.

3) Skill and competence:

The auditor should have adequate training, experience and competence in

Auditing. He should have a professional qualification (i.e. be a Chartered

Accountant) and practical experience. He should be aware of recent

developments in the field of auditing such as statement of ICAI, changes

in company law, decisions of courts etc.

4) Working papers:

The auditor should maintain working papers of important matters to prove

that audit was conducted with due care according to the basic principles.

5) Planning:

The auditor should plan his audit work. He should prepare an audit

programmed to complete the audit efficiently and in time.

6) Audit evidence:

The report of the auditor should be base on evidence obtained in the course

of audit. The evidence may be obtained through vouching of transactions,

verification of assets and liabilities, ratio analysis etc.

7) Evaluation of accounting system and internal control:

The auditor should ensure that the accounting system is adequate. He

should see that all the transaction have been properly recorded. He should

study and evaluate the internal controls.

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8) Opinion and report:

The auditor should arrive at his opinion on the account based on the audit

evidence and submit his report. The opinion may be unqualified, qualified

or adverse. The audit reportshould clearly express his opinion. Law should

require the content and form of audit report

CHAPTER 3

AUDIT REPORT

AUDITORS' REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of TATA

MOTORS LIMITED ("the Company"), which comprise the Balance Sheet

as at March 31, 2013, the Profit and Loss Statement and the Cash Flow

Statement for the year then ended, and a summary of the significant

accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Management is responsible for the preparation of these

financial statements that give a true and fair view of the financial position,

financial performance and cash flows of the Company in accordance with

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

Act, 1956 ("the Act") and in accordance with the accounting principles

generally accepted in India. This responsibility includes the design,

implementation and maintenance of internal control relevant to the

preparation and presentation of the financial statements that give a true and

fair view and are free from material misstatement, whether due to fraud or

error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements

based on our audit. We conducted our audit in accordance with the

Standards on Auditing issued by the Institute of Chartered Accountants of

India. Those Standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about

the amounts and the disclosures in the financial statements. The

procedures selected depend on the auditor's judgment, including the

assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the

Company's preparation and fair presentation of the financial statements in

order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the

Company's internal control. An audit also includes evaluating the

appropriateness of the accounting policies used and the reasonableness of

the accounting estimates made by the Management, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

ADVANTAGES OF AUDITING

1) Assurance of true and fair accounts:

Audit provides an assurance to the various users of final accounts such as

owners, management, creditors, lenders, investors, government’s etc. that

the accounts are true and fair.

2) True and Fair balance sheet:

The user accounts can be sure that the assets and liabilities shown in the

audited balance sheet show the concern, as it is i.e. neither more nor less.

3) True and fair profit and loss account:

The user can be confident that the audited profit and loss account shows

the true amount of profit or loss as it is i.e. neither more nor less.

4) Tally with books:

The audited final account can be taken to tally with the books of accounts.

Thus, the income-tax officer can start with the figure of audited books

profit, make adjustments and compute the taxable income. An outside user

need not go through the entire books.

5) As per standard accounting and auditing practices:

The audited final accounts follow the standard accounting and auditing

principles laid down by professional bodies. Thus, audited accounts are

based on objectives standard and not on personal whims and fancies of a

particular accountant or auditor.

6) Detection and prevention of errors and frauds:

Audited accounts can be assumed reasonably free from errors and frauds.

The auditor with his expert knowledge would take due care to see that

Errors and frauds are detected so that the accounts shoe a true and fair

view.

7) Advice on system, taxation, finance:

The auditor can also advise the client about the accounting system, internal

control, internal check, internal audit, taxation, finances etc.

LIMITATIONS OF AUDITING

1. An auditor cannot check each and every transaction he has to check only

the selected areas and transaction on a sample basis.

2. Audit evidence is not conclusive in nature thus confirmation by a debtor

is not conclusive evidence that the amount will be collected. It is said

evidence is rather than conclusive in nature.

3.An auditor cannot be expected to discover deeply laid frauds usually

involves acts designed to conceal them such as forgery , celibate failure to

record transactions, false explanation and hence are difficult to detect.

4. Audit cannot assure the users of account about the future profitability,

prospects or the efficiency of the management.

5.An auditor has to rely upon expert auditor may have to rely on expert in

related field such as lawyers, engineers, value’s etc. for estimating

contingent liabilities, valuation of fixed assets etc.

Audit objectives

1. Completeness: to ensure that there is no unrecorded cash. This means

reconciling cash balances to records, ensuring that proper sales cut off has

been performed.

2. Accuracy of measurement: to ensure that amounts are correctly recorded

in the proper accounting period. This means that cut off is correct.

3. Existence: to ensure that the cash exist at a given date. The related

evidence includes cash count.

4. Rights and obligations: to ensure that the company has a right to the

cash.

5. Occurrence: to ensure that the cash belongs to the company at the year

end date. This means checking to ensure no cash receipts are post dated.

6. Presentation and disclosures: to ensure that the cash balance and related

income statement entries are correctly disclosed in the FS in accordance

with legislation and accounting standards.

Opinion

In our opinion and to the best of our information and according to the

explanations given to us, the aforesaid financial statements give the

information required by the Act in the manner so required and give a true

and fair view in conformity with the accounting principles generally

accepted in India in the case of the Balance Sheet, of the state of affairs of

the Company as at March 31, 2013;in the case of the Profit and Loss

Statement, of the profit of the Company for the year ended on that date;

and in the case of the Cash Flow Statement, of the cash flows of the

Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order, 2003 ("the

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

the Act, we give in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the Order.

As required by Section 227(3) of the Act, we report that:

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.

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.

The Balance Sheet, the Profit and Loss Statement, and the Cash Flow

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

account.

In our opinion, the Balance Sheet, the Profit and Loss Statement, and the

Cash Flow Statement comply with the Accounting Standards referred to in

Section 211(3C) of the Act.

On the basis of the written representations received from the directors as

on March 31, 2013 taken on record by the Board of Directors, none of the

directors is disqualified as on March 31, 2013 from being appointed as a

director in terms of Section 274(1)(g) of the Act.

AUDIT OF PAYMENT

Audit procedures for obtaining audit evidence

Auditors design detailed audit procedures to obtain sufficient appropriate audit evidence.

Procedures can include inspection, observation, confirmation, recalculation,

reperformance, and analytical procedures, often in some combination.

This section further explainsaudit procedures for obtaining audit evidence, andspecific

types of audit procedures.Audit procedures for obtaining audit evidence

The evidence-gathering process involves the following steps:

designing the audit procedures or tests;carrying out the audit procedures or tests and/or

gathering evidence;

analyzing evidence and drawing conclusions, which may also involve evaluating

performance against the audit criteria; and

making decisions about whether additional information is required and can be obtained

(go back to step 1) or whether sufficient appropriate evidence exists.

Audit procedures typically focus on the key risk areas identified through a risk analysis.

It is not unusual for audits to be redesigned during the examination stage as teams

encounter unforeseen difficulties in gathering sufficient evidence of appropriate quality.

Auditors have to be alert to any signs that the evidence-gathering process may not be

achieving the level of assurance required for the audit assignment and take appropriate

corrective action. If there are any potential amendments to the audit program,

communicate these changes and raise any other issues, on a timely basis, with the senior

members of the audit team. In instances where modifications did not take place before the

start of field work, modify the audit steps as the work progresses, obtain approval for

changes to audit programs, and include appropriate information on the nature, timing, and

extent of steps to be performed.

.

Inspection. Inspection of documents and records provides varying degrees of reliability,

depending on the nature and source of the documents. Inspection of physical assets

provides highly reliable evidence of existence and some indication of value (if it does not

appear damaged or obsolete) but not necessarily of ownership or value.

Observation. Observation of the application of a client's or entity's policy or procedure

provides assurance of that procedure at a given point in time, but not necessarily of its

performance at other times during the year.

Analytical procedures

Analytical procedures are used throughout the audit process and are conducted for the

following primary and secondary purposes:

Primary

Risk assessment—to direct attention to higher risk areas in determining the nature,

timing, and extent of audit procedures

Substantive testing—to obtain audit evidence of accuracy or to identify potential

misstatements/errors as a substitute for tests of details

Overall conclusion—to assist in assessing the propriety of audit conclusions reached and

in evaluating the overall opinion/report

Secondary

Understanding the business—to deepen our understanding of the entity

Entity communications—to develop more meaningful entity communications through a

deeper understanding of the relevant business and audit issues.

Auditors use analysis at various stages of the audit for different purposes. They use

preliminary analytical procedures when planning the audit to confirm the planned audit

approach or to identify new risk areas that need to be addressed during the audit. At the

reporting phase of the audit, auditors use analytical procedures to assess whether the

opinion/report taken as a whole is reasonable and consistent with their knowledge of the

subject matter and the expected results where applicable.

Inquiry

Inquiry is used throughout the engagement to obtain knowledge of the entity develop the

preliminary audit approach collect specific evidence; and corroborate evidence collected

by other means.

A solid understanding of the control environment is important in order to assess the

extent to which inquiry will be effective in obtaining reliable evidence. For example, in

an environment in which management's integrity and trustworthiness are high, the auditor

may be able to place relatively more reliance on inquiry. A decision regarding the extent

to which inquiry will provide sufficient, appropriate evidence is required.

Inquiry involves considering the knowledge, objectivity, experience, responsibility, and

qualifications of the individual to be interviewed asking clear and concise questions using

open or closed questions appropriately listening actively and effectively; and considering

the interviewee's responses and asking follow-up questions.

Inquiries can often be efficiently combined with other testing procedures such as

observation and will frequently be followed up by further audit procedures to obtain

sufficient appropriate evidence.

Inquiry is sometimes referred to as in-depth inquiry to emphasize that the technique is

expected to be performed with rigour. Do not infer from seeing the word inquiry on its

own that it means rigour is unnecessary.

Related guidance:

See OAG Annual Audit 9052 for guidance on written representations.

Although inquiry has always been an integral part of audit, it is becoming an increasingly

important method of collecting audit evidence due to the increasing use of “soft

information” in financial statements. Specifically, soft information is based on estimates,

expectations, and assumptions. In addition, more reliance is placed on management

controls where little documentation may exist to support the existence of the review

being performed and follow-up action taken when results are out of line with

management expectations. In such cases, inquiry may be the primary (or only) source of

evidence that the controls are in place and working effectively.

DISCLAIMER OF OPINION REPORT

• or not, which hinder the auditor's work in obtaining evidence and performing

procedures (SAS No. 58); A Disclaimer of Opinion is issued in either of the

following cases:

• When the auditor is not independent or when there is conflict of interest.

• When the limitation on scope is imposed by client, as a result the auditor is unable

to obtain sufficient appropriate audit evidence.

• When the circumstances indicate substantial problem of going concern in client.

• When there are significant uncertainties in the business of client.

The audit report changes significantly when there is Disclaimer of opinion. An additional

paragraph "Basis for Disclaimer" is added in audit report which is placed after Scope

paragraph and before Opinion paragraph. In Scope paragraph the wording changes to

"We were engaged to audit the financial statements of XYZ Co. Ltd." from "We have

audited the financial statements of XYZ Co. Ltd." In Opinion paragraph wording changes

to "We do not express an opinion on the financial statements of XYZ Co. Ltd. due to

situations explained in Basis for Disclaimer paragraph"

A Disclaimer of Opinion, commonly referred to simply as a Disclaimer, is issued when

the auditor could not form and consequently refuses to present an opinion on the financial

statements. This type of report is issued when the auditor tried to audit an entity but could

not complete the work due to various reasons and does not issue an opinion. The

disclaimer of opinion report can be traced back to 1949, when the Statement on Auditing

Procedure No. 23: Recommendation Made To Clarify Accountant's Representations

When Opinion Is Not Expressed was published in order to provide guidance to auditors

in presenting a disclaimer.

Statements on Auditing Standards (SAS) provide certain situations where a disclaimer of

opinion may be appropriate:

A lack of independence, or material conflict(s) of interest, exist between the auditor and

the auditee (SAS No. 26)

There are significant scope limitations, whether intentional

There is a substantial doubt about the auditee's ability to continue as a going concern or,

in other words, continue operating (SAS No. 59)

There are significant uncertainties within the auditee (SAS No. 79).

Although this type of opinion is rarely used,[6] the most common examples where

disclaimers are issued include audits where the auditee willfully hides or refuses to

provide evidence and information to the auditor in significant areas of the financial

statements, where the auditee is facing significant legal and litigation issues in which the

outcome is uncertain (usually government investigations), and where the auditee has

going concern issues (the auditee may not continue operating in the near future).[6]

Investors, lending institutions, and governments typically reject an auditee's financial

statements if the auditor disclaimed an opinion, and will request the auditee to correct the

situations the auditor mentioned and obtain another audit report.

A disclaimer of opinion differs substantially from the rest of the auditor's reports because

it provides very little information regarding the audit itself, and includes an explanatory

paragraph stating the reasons for the disclaimer. Although the report still contains the

letterhead, the auditee's name and address, the auditor's signature and address, and the

report's issuance date, every other paragraph is modified extensively, and the scope

paragraph is entirely omitted since the auditor is basically stating that an audit could not

be realized.

In the introductory paragraph, the first phrase changes from "We have audited" to "We

were engaged to audit" in order to let the user know that the auditee commissioned an

audit, but does not mention that the auditor necessarily completed the audit. Additionally,

since the audit was not completely and/or adequately performed, the auditor refuses to

accept any responsibility by omitting the last sentence of the paragraph. The scope

paragraph is omitted in its entirety since, effectively, no audit was performed. Similar to

the qualified and the adverse opinions, the auditor must briefly discuss the situations for

the disclaimer in an explanatory paragraph. Finally, the opinion paragraph changes

completely, stating that an opinion could not be formed and is not expressed because of

the situations mentioned in the previous paragraphs.

The following is a draft of the three main paragraphs of a disclaimer of opinion because

of inadequate accounting records of an auditee, which is considered a significant scope of

limitation:

We were engaged to audit the accompanying balance sheet of ABC Company, Inc. (the

"Company") as of December 31, 20XX and the related statements of income and cash

flows for the year then ended. These financial statements are the responsibility of the

Company's management.

The Company does not maintain adequate accounting records to provide sufficient

information for the preparation of the basic financial statements. The Company's

accounting records do not constitute a double-entry system which can produce financial

statements.

Because of the significance of the matters discussed in the preceding paragraphs, the

scope of our work was not sufficient to enable us to express, and we do not express, an

opinion of the financial statements referred to in the first paragraph.

AUDITOR'S REPORT ON INTERNAL CONTROLS OF PUBLIC

COMPANIES

Following the enactment of the Sarbanes-Oxley Act of 2002, the Public Company

Accounting Oversight Board (PCAOB) was established in order to monitor, regulate,

inspect, and discipline audit and public accounting firms of public companies. The

PCAOB Auditing Standards No. 2 now requires auditors of public companies to include

an additional disclosure in the opinion report regarding the auditee's internal controls, and

to opine about the company's and auditor's assessment on the company's internal controls

over financial reporting. These new requirements are commonly referred to as the COSO

Opinion.

The auditor's report is modified to include all necessary disclosures by either presenting

the report subsequent to the report on the financial statements, or combining both reports

into one auditor's report. The following is an example of the former version of adding a

separate report immediately after the auditor's report on financial statements.

INTERNAL CONTROL OVER FINANCIAL REPORTING

We have also audited management's assessment, included in the accompanying

Management's Annual Report on Internal Control Over Financial Reporting, that the

Company maintained effective internal control over financial reporting as of December

31, 20XX, based on criteria established in Internal Control—Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission

("COSO").The Company's management is responsible for maintaining effective internal

control over financial reporting and for its assessment of the effectiveness of internal

control over financial reporting. Our responsibility is to express an opinion on

management's assessment and on the effectiveness of the Company's internal control over

financial reporting based on our audit. We conducted our audits in accordance with the

standards of the Public Company Accounting Oversight Board (United States). Those

standards require that we plan and perform the audit to obtain reasonable assurance about

whether effective internal control over financial reporting was maintained in all material

respects. Our audit of internal control over financial reporting included obtaining an

understanding of internal control over financial reporting, evaluating management's

assessment, testing and evaluating the design and operating effectiveness of internal

control, and performing such other procedures as we considered necessary in the

circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with generally accepted

accounting principles. A company's internal control over financial reporting includes

those policies and procedures that

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use, or disposition of the company's assets that could have a

material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not

prevent or detect misstatements. Also, projections of any evaluation of effectiveness to

future periods are subject to the risk that controls may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures

may deteriorate.

In our opinion, management's assessment that ABC Company maintained effective

internal control over financial reporting as of December 31, 20XX, is fairly stated, in all

material respects, based on criteria established in Internal Control—Integrated

Framework issued by COSO. Furthermore, in our opinion, ABC Company maintained, in

all material respects, effective internal control over financial reporting as of December

31, 20XX, based on criteria established in Internal Control—Integrated Framework

issued by COSO.

GOING CONCERN

Going concern is a term which means that an entity will continue to operate in the near

future which is generally more than next 12 months, so long as it generates or obtains

enough resources to operate. If the auditee is not a going concern, it means that the entity

might not be able to sustain itself within the next twelve months. Auditors are required to

consider the going concern of an auditee before issuing a report. If the auditee is a going

concern, the auditor does not modify his/her report in any way. However, if the auditor

considers that the auditee is not a going concern, or will not be a going concern in the

near future, then the auditor is required to include an explanatory paragraph before the

opinion paragraph or following the opinion paragraph, in the audit report explaining the

situation, which is commonly referred to as the going concern disclosure. Such an

opinion is called an "unqualified modified opinion".

Unfortunately, many auditors are increasingly reluctant to include this disclosure in their

opinions, since it is considered a "self-fulfilling prophesy" by some. This is because a

disclosure for a lack of going concern is viewed negatively by investors, lending

institutions, and credit agencies, and therefore reduces the chance that the auditee may

obtain the capital or borrowing it needs to survive once the disclosure is made. If this

situation occurs, the auditee is more likely to stop being a going concern while the auditor

loses potential future audit engagements, and so the auditor may be pressured to avoid

including a going concern disclosure. In a study performed on 2001 bankruptcies, nearly

half (48%) of selected public companies who faced bankruptcy in 2001 did not have a

"going concern disclosure" in the previous auditor's reports. Additionally, 12 of the 20

largest bankruptcies in U.S. history occurred between 2001 and 2002 and none of them

had a "going concern disclosure" in their previous auditor's report.

As for the actual wording of the auditor's report, when a lack of going concern is

determined by the auditor, the disclosure paragraph should state the situation, state the

auditor's determination, and state the auditee's plan to correct the situation. The disclosure

paragraph should immediately follow the opinion paragraph.

Auditor responsibilities for front section of annual reports one of the reasons given by

investors for wanting more commentary from auditors is a feeling that the information

provided by directors in the front section of annual reports is presented in a favourable

light or tends to be standardised boilerplate.

The responsibilities of auditors for reporting on the front section of the financial

statements are currently limited. Auditors read this information and must report if the

information provided is inconsistent with the financial statements or contains material the

auditors know to be untrue. Annual reports have expanded over the years and banks and

other reporting entities provide significantly more information in the front section of

annual reports.

The scope of the audit report, by contrast, has remained relatively staticbeing largely

focused on the financial statements. it may be time to reassess this.

There was no particular demand from the stakeholders we interviewed for auditors to

provide a true and fair opinion over the front section of annual reports. However, there

was some surprise from investors that auditors’ responsibilities were so limited, and

particularly that audit reports do not provide comfort on the completeness of information

presented in the front section of annual reports in our view, auditors should report not

only on whether there are any inconsistencies between the information in the front ection

of annual reports and the financial statements, but also whether there are anymaterial

omissions in the information provided in the front section of annual reports, based upon

the auditors’ knowledge of the bank they are reporting on. Alternatively, the auditor could

report on whether the balance of the information is appropriate.

This would require the development of a new auditing or assurance standard to define the

terms to be used so that users are clear about the level of assurance they receive. Without

this there is a danger of a widened expectation gap over the role of the auditor but we see

no reason why an appropriate standard could not be developed.

AU Section 316

Consideration of Fraud in a Financial Statement Audit

(Supersedes SAS No. 82.)

Source: SAS No. 99; SAS No. 113.

Effective for audits of financial statements for periods beginning on or after

December 15, 2002, unless otherwise indicated.

Introduction and Overview

(i) Section 110, Responsibilities and Functions of the Independent Auditor, states, "The

auditor has a responsibility to plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material misstatement, whether caused

by error or fraud.This section establishes standards and provides guidance to auditors n

fulfilling that responsibility, as it relates to fraud, in an audit of financial statements

conducted in accordance with generally accepted auditing standards (GAAS).

(ii) The following is an overview of the organization and content of this section:

1) Description and characteristics of fraud. This section describes fraudand its

characteristics. The importance of exercising professional skepticism. This section

discusses the need for auditors to exercise professional skepticism when considering the

possibility that a material misstatement due to fraud could be present.

2) Discussion among engagement personnel regarding the risks of materialmisstatement

due to fraud. This section requires, as part of planning the audit, that there be a discussion

among the audit team members to consider how and where the entity's inimical

statements might be susceptible to material misstatement due to fraud and to reinforce the

importance of adopting an appropriate mindset of professional’s skepticism.

3) Obtaining the information needed to identify risks of material misstatement due to

fraud. This section requires the auditor to gather information necessary to identify risks of

material misstatement due to fraud, by

a. Inquiring of management and others within the entity about the risks of fraud.

b. Considering the results of the analytical procedures performed in planning the audit.

c. Considering fraud risk factors. and the Appendix, "Examples of Fraud Risk Factors"

d. Considering certain other information

AUDITORS' RESPONSIBILITY

1. Our responsibility is to express an opinion on these financial statements based on our

audit. We conducted our audit in accordance with the Standards on Auditing issued by the

Institute of Chartered Accountants of India. Those Standards require that we comply with

ethical requirements and plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free from material misstatement.

2. An audit involves performing procedures to obtain audit evidence, about the amounts

and disclosures in the financial statements. The procedures selected depend on the

auditors' judgment, including the assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error. In making those risk assessments, the

auditors consider internal control relevant to the Company's preparation and fair

presentation of the financial statements in order to design audit procedures that are

appropriate in the circumstances. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of the accounting estimates made by

Management, as well as evaluating the overall presentation of the financial statements.

3. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.

OPINION

In our opinion, and to the best of our information and according to the explanations

given to us, the accompanying financial statements give the information required by the

Act in the manner so required and give a true and fair view in conformity with the

accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March, 2013;

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that

date; and

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that

date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by 'the Companies (Auditor's Report) Order, 2003', as amended by 'the

Companies (Auditor's Report) (Amendment) Order, 2004', issued by the Central

Government of India in terms of sub-section (4A) of section 227 of the Act (hereinafter

referred to as the Order), and on the basis of such checks of the books and records of the

Company as we considered appropriate and according to the information and

explanations given to us, we give in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the Order.

As required by section 227(3) of the Act, 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 purpose of our audit;

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

Company so far as appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with

by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow

Statement dealt with by this report comply with the Accounting Standards referred to in

sub-section (3C) of section 211 of the Act;

(e) On the basis of written representations received from the directors as on 31st March,

2013, and taken on record by the Board of Directors, none of the directors is disqualified

as on 31st March, 2013, from being appointed as a director in terms of clause (g) of sub-

section

(1) of section 274 of the Act.

1. (a) The Company is maintaining proper records showing full particulars, including

quantitative details and situation, of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phased

programme designed to cover all the items over a period of two years which, in our

opinion, is reasonable having regard to the size of the Company and the nature of its

assets. Pursuant to the programme, a portion of the fixed assets has been physically

verified by the Management during the year and no material discrepancies have been

noticed on such verification.

(c) I n our opinion, and according to the information and explanations given to us, a

substantial part of fixed assets has not been disposed off by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by

the Management during the year. In respect of inventory lying with third parties, these

have substantially been confirmed by them. In our opinion, the frequency of verification

is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the

Management are reasonable and adequate in relation to the size of the Company and the

nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the

Company is maintaining proper records of inventory. The discrepancies noticed on

physical verification of inventory as compared to book records were not material.

3. The Company has neither granted nor taken any loans, secured or unsecured, to/ from

companies, firms or other parties covered in the register maintained under Section 301 of

the Act. Therefore, the provisions of Clause 4(iii)[(b), (c), (d), (f) and (g)] of the said

Order are not applicable to the Company.

4. In our opinion, and according to the information and explanations given to us, there is

an adequate internal control system commensurate with the size of the Company and the

nature of its business for the purchase of inventory and fixed assets and for the sale of

goods and services. Further, on the basis of our examination of the books and records of

the Company, and according to the information and explanations given to us, we have

neither come across, nor have been informed of, any continuing failure to correct major

weaknesses in the aforesaid internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion

that the particulars of all contracts or arrangements that need to be entered into the

register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion, and according to the information and explanations given to us, the

transactions made in pursuance of such contracts or arrangements and exceeding the

value of Rupees Five lakhs in respect of any party during the year have been made at

prices which are reasonable having regard to the prevailing market prices at the relevant

time.

6. The Company has not accepted any deposits from the public within the meaning of

Sections 58A and 58AA of the Act and the rules framed there under.

7. I n our opinion, the Company has an internal audit system commensurate with its size

and the nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in

respect of products where, pursuant to the rules made by the Central Government of

India, the maintenance of cost records has been prescribed under clause (d) of sub-section

(1) of Section 209 of the Act, and are of the opinion that, prima facie, the prescribed

accounts and records have been made and maintained. We have not, however, made a

detailed examination of the records with a view to determine whether they are accurate or

complete.

9. (a) According to the information and explanations given to us and the records of the

Company examined by us, in our opinion, the Company is generally regular in depositing

undisputed statutory dues in respect of provident fund, employees' state insurance,

service tax, excise duty and tax deducted at source, and is regular in depositing

undisputed statutory dues, including investor education and protection fund, income tax,

sales tax, wealth tax, customs duty and other material statutory dues, as applicable, with

the appropriate authorities.

(b) According to the information and explanations given to us and the records of the

Company examined by us, there are no dues of wealth tax which have not been deposited

on account of any dispute. The particulars of dues of income tax, sales tax, service tax,

customs duty and excise duty as at 31st March, 2013 which have not been deposited on

account of a dispute, are as follows:

1. The Company has no accumulated losses as at the end of the financial year and it has

not incurred any cash losses in the financial year ended on that date or in the immediately

preceding financial year.

2. As the Company does not have any borrowings from any financial

institution or bank nor has it issued any debentures as at the balance sheet

date, the provisions of Clause 4(xi) of the Order are not applicable to the

Company.

3. The Company has not granted any loans and advances on the basis of security by way

of pledge of shares, debentures and other securities. Therefore, the provisions of Clause

4(xii) of the Order are not applicable to the Company.

4. As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit

fund/ societies are not applicable to the Company, the provisions of Clause 4(xiii) of the

Order are not applicable to the Company.

5. I n our opinion, the Company is not dealing in or trading in shares, securities,

debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the

Order are not applicable to the Company.

6. In our opinion, and according to the information and explanations given to us, the

Company has not given any guarantee for loans taken by others from banks or financial

institutions during the year. Accordingly, the provisions of Clause 4(xv) of the Order are

not applicable to the Company.

7. The Company has not raised any term loans. Accordingly, the provisions of Clause

4(xvi) of the Order are not applicable to the Company.

8. The Company has not raised any loans on short term basis. Accordingly, the

provisions of Clause 4(xvii) of the Order are not applicable to the Company.

9. The Company has not made any preferential allotment of shares to parties and

companies covered in the register maintained under Section 301 of the Act during the

year. Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable to the

Company.

10. The Company has not issued any debentures during the year and does not have any

debentures outstanding as at the beginning of the year and at the year end. Accordingly,

the provisions of Clause 4(xix) of the Order are not applicable to the Company.

11. The Company has not raised any money by public issues during the year.

Accordingly, the provisions of Clause 4(xx) of the Order are not applicable to the

Company.

12. During the course of our examination of the books and records of the Company,

carried out in accordance with the generally accepted auditing practices in India, and

according to the information and explanations given to us, we have neither come across

any instance of material fraud on or by the Company, noticed or reported during the year,

nor have we been informed of any such case by the Management

Analysis of Financial Statement

BALANCE SHEET OF TATA MOTORS ------------------- IN RS. CR. -------------------Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths15

mths

Sources Of FundsTotal Share Capital 216.25 216.15 215.95 218.17 217.99Equity Share Capital 216.25 216.15 215.95 218.17 217.99Share Application Money 0.00 0.00 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 2,457.77 3,296.7 2,443.5 2,364.6 1,842.8

8 7 8 5Revaluation Reserves 0.00 0.00 0.00 0.67 0.67

Networth 2,674.023,512.9

3

2,659.5

2

2,583.5

2

2,061.5

1Secured Loans 0.00 0.00 0.00 0.00 144.65Unsecured Loans 0.00 0.00 0.00 0.00 277.30Total Debt 0.00 0.00 0.00 0.00 421.95

Total Liabilities 2,674.023,512.9

3

2,659.5

2

2,583.5

2

2,483.4

6

Mar '13 Mar '12 Mar '11 Mar '10Mar

'09

12 mths 12 mths 12 mths 12 mths15

mths

Application Of Funds

Gross Block 3,868.953,564.3

5

3,531.5

0

3,581.9

6

2,881.7

3

Less: Accum. Depreciation 1,576.051,416.8

8

1,362.4

0

1,419.8

5

1,274.9

5

Net Block 2,292.902,147.4

7

2,169.1

0

2,162.1

1

1,606.7

8Capital Work in Progress 215.64 215.45 288.76 273.96 472.07

Investments 2,330.662,438.2

1

1,260.6

7

1,264.0

8332.62

Inventories 2,526.992,516.6

5

2,810.7

7

2,179.9

3

2,528.8

6Sundry Debtors 833.48 678.99 943.21 678.44 536.89

Cash and Bank Balance 1,707.891,830.0

4

1,628.4

7231.37 190.59

Total Current Assets 5,068.365,025.6

8

5,382.4

5

3,089.7

4

3,256.3

4

Loans and Advances 1,604.911,131.4

6

1,061.6

8

1,068.3

1

1,196.9

5Fixed Deposits 0.00 0.00 0.00 1,660.8 1,586.7

4 6Total CA, Loans &

Advances6,673.27

6,157.1

4

6,444.1

3

5,818.8

9

6,040.0

5Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 6,260.095,499.4

2

5,782.8

4

5,493.9

7

4,440.0

8

Provisions 2,578.361,945.9

2

1,720.3

0

1,441.5

5

1,527.9

8

Total CL & Provisions 8,838.457,445.3

4

7,503.1

4

6,935.5

2

5,968.0

6

Net Current Assets -2,165.18

-

1,288.2

0

-

1,059.0

1

-

1,116.6

3

71.99

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 2,674.023,512.9

3

2,659.5

2

2,583.5

2

2,483.4

6

Contingent Liabilities 894.211,009.2

3922.92 468.49 417.26

Book Value (Rs) 12.37 16.25 12.32 11.84 9.45

PROFIT AND LOSSA/C

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 27.83 35.92 23.66 18.19 12.92PBDIT 35.97 38.81 27.28 22.43 14.99

Interest 24.82 19.89 11.85 8.14 8.34PBDT 11.15 18.92 15.43 14.29 6.65Depreciation 10.99 9.32 8.17 5.65 4.83Other Written Off 0.00 0.00 0.00 0.00 0.00Profit Before Tax 0.16 9.60 7.26 8.64 1.82Extra-ordinary items -0.38 -0.10 0.31 0.08 0.26PBT (Post Extra-ord Items) -0.22 9.50 7.57 8.72 2.08Tax 2.74 3.26 2.47 2.99 1.01Reported Net Profit 5.97 6.25 5.08 5.75 1.09Total Value Addition 99.77 83.98 67.78 56.50 47.63Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 1.08 1.08 1.08 1.08 0.86Corporate Dividend Tax 0.18 0.17 0.17 0.18 0.15Per share data (annualised)Shares in issue (lakhs) 71.88 71.88 71.88 71.88 71.88Earning Per Share (Rs) 8.31 8.70 7.07 8.00 1.51Equity Dividend (%) 15.00 15.00 15.00 15.00 12.00Book Value (Rs) 160.14 154.64 58.97 53.64 47.88

Chapter 4

ANALYSIS OF ACCOUNTS AND AUDIT OF Tata Motors

The financial information discussed in this section is derived from the Company's

Audited Consolidated Financial Statements.

Tata Motors Group primarily operates in the automotive segment. The acquisition of JLR

enabled the Company to enter the premium car market. The Company continues to focus

on profitable growth opportunities in global automotive business, through new products

and market expansion. The Company and JLR, continue to focus on integration, and

synergy through sharing of resources, platforms, facilities for product development and

manufacturing, sourcing strategy, mutual sharing of best practices.

1. We have examined the attached financial information of Tata Motors Limited

(‘the Company’), as approved by the Board of Directors of the Company, prepared in

terms of the requirements of Paragraph B of Part II of Schedule II of the Companies Act,

1956 (‘the Act’) and the Securities and Exchange Board of India (‘SEBI’) - (Disclosure

and Investor Protection) Guidelines, 2000 as amended till August 28, 2008 (the ‘SEBI

Guidelines’) issued by SEBI under Section 11 of the Securities and Exchange Board of

India Act, 1992 and related clarifications thereto and in terms of our engagement agreed

upon with the Company in accordance with our engagement letter dated July 3, 2008 in

connection with the proposed simultaneous but unlinked issue of Ordinary Shares and ‘A’

Ordinary Shares on a Rights basis (“Rights Issue”).

2. Financial Information as per Audited Financial Statements

We have examined the attached ‘Summary Statement of Assets and Liabilities, as restated

of Tata Motors Limited’ as at March 31, 2008, 2007, 2006, 2005 and 2004 (Annexure I)

and the attached ‘Summary Statement of Profit and Losses, as restated of Tata Motors

Limited’ (Annexure II) for each of the years ended March 31, 2008, 2007, 2006, 2005

and 2004 together referred to herein as ‘Non-consolidated Restated Summary

Statements’. These Non-consolidated Restated Summary Statements have been extracted

from the financial statements of Tata Motors Limited as at and for the years ended March

31, 2008, 2007, 2006, 2005 and 2004 and have been approved/ adopted by the Board of

Directors/ Members for those respective years. Audit for the financial years ended March

31, 2005 and 2004 was conducted by Messrs A. F. Ferguson & Co. (“AFF”) and Messrs

S. B. Billimoria & Co., (“SBB”) (AFF together with SBB, the “Erstwhile Auditors”) and

our opinion in so far as they relate to the amounts included in respect of these years are

based solely on the reports submitted by them. The financial statements of the Company

as at and for the year ended March 31, 2008, 2007 and 2006 have been audited by us.

Based on our examination of these Non-consolidated Restated Summary Statements, we

state that:

i. The ‘Non-consolidated Restated Summary Statements’ have to be read in

conjunction with the ‘Significant Accounting Policies and Notes to the Summary

Statements of Assets and Liabilities, Summary Statement of Profit and Loss and Cash

Flow Statement, as restated of Tata Motors Limited given in Annexure IV to this report.

ii. The restated profits have been arrived after adjusting for the changes in

accounting policies retrospectively in respective financial years to reflect the same

accounting treatment as per changed accounting policy for all the reporting periods.

iii. The restated profits have been arrived at after making such adjustments

and regroupings as in our opinion are appropriate in the year to which they relate and are

described under note [B] appearing in Annexure IV to this report;

iv. There are no extra ordinary items that need to be disclosed separately in

the Non-consolidated Restated Summary Statements.

v. There are no qualifications in the auditors’ report on the financial

statements that require adjustments to the Non-consolidated Restated Summary

Statements.

3. Other Financial Information

We have also examined the following financial information relating to the Company as at

and for the financial years ended March 31, 2008, 2007, 2006, 2005 and 2004 approved

by the Board of Directors and annexed to this report:

a. Statement of Cash Flows, as restated for the years ended March 31, 2008,

2007, 2006, 2005 and 2004 (Annexure III);

b. Significant Accounting Policies adopted by the Company and notes to the

Restated Summary Statements and Cash Flow Statement (Annexure IV);

c. Details of Secured and Unsecured Loans as at March 31, 2008, 2007,

2006, 2005 and 2004 (Annexure V)

d. Details of Sundry Debtors as at March 31, 2008, 2007, 2006, 2005 and

2004 (Annexure VI)

e. Details of Loans and Advances as at March 31, 2008, 2007, 2006, 2005

and 2004, (Annexure VII)

f. Details of Investments as at March 31, 2008, 2007, 2006, 2005 and 2004

(Annexure VIII)

g. Details of Deferred Tax as at March 31, 2008, 2007, 2006, 2005 and 2004

(Annexure IX)

h. Details of Dividend and Other Income for the years ended March 31,

2008, 2007, 2006, 2005 and 2004 (Annexure X)

i. Details of Dividends Paid for the years ended March 31, 2008, 2007,

2006, 2005 and 2004 (Annexure XI)

j. Statement of Tax Shelter for the years ended March 31, 2008, 2007, 2006,

2005 and 2004 (Annexure XII)

k. Accounting Ratios relating to earnings per share, net asset value and return

on net worth (Annexure XIII)

l. Capitalisation Statement as at March 31, 2008 (Annexure XIV)

CHAPTER 5

CONCLUSION

The goal of an audit is to form and express an opinion on financial statements. The audit

is performed to get reasonable assurance on whether the financial statements are free of

material misstatement. An audit also includes assessing the accounting principles used

and the significant estimates made by the management. Audit conclusions and reporting

are one of the principles governing an audit. Reporting is the last procedure of the process

of an audit.

STEPS INVOLVED

An audit involves the following steps: Gathering of audit evidence, evaluation of the

evidence, deciding on their reliability and acceptability, drawing a conclusion based on

such evaluations, forming an opinion based on a set of conclusions and expressing an

opinion. The auditor should get sufficient and appropriate audit evidence both at the

transaction level, as well as the account level. He should evaluate the adequacy of the

evidence in his possession, both in terms of quality and quantity. The auditor should draw

a conclusion on each of the line items of the financial statements, based on the

transactions examined by him. A set of conclusions, on such line items, leads to forming

an opinion on the financial statements as a whole, both at the transaction level as well as

at the account level, which, he should express in his report without any fear or favour.

Gathering of audit evidence: An auditor should be thorough in his efforts to gather the

audit evidence, and be impartial in its evaluation. Substantive procedures such as enquiry,

information, confirmation, observation, compilation, verification and valuation, etc. are

used to substantiate the transactions. Carrying out such procedures on a reasonable

number of transactions provides a basis for drawing a conclusion on a particular head of

account (line item). Having gathered the audit evidence by substantive procedures, the

auditor should ensure that the entity has complied with the necessary requirements such

as requirements of law, applicable Accounting Standards issued by the ICAI/ NACAS ,

accounting policies adapted by the entity from time to time, and internal control systems.

Evaluation of audit evidence: Having gathered the audit evidence, the auditor goes

through the evidence with a fine-toothed comb to properly evaluate it, judge their

reliability and draw logical conclusions. He has to document the reasons for accepting or

rejecting certain replies and reports.

Analysis of evidence: The auditor uses analytical procedures such as accounting ratios,

analyses; intercompany comparisons, comparing the industry norm with the data of the

unit, etc. to analyse the data.

Audit conclusions: Such analyses help the auditor to draw conclusions regarding various

aspects of the line items of the financial statements. These conclusions should be

independent and factual, and not based on assumptions. A set of such conclusions leads to

forming an opinion.

Compliance with code of conduct: Professional ethics of the ICAI hold an auditor guilty

of professional misconduct for negligence if he doesn't gather enough evidence to justify

his opinion. He would be liable if the evidence in his possession is contradictory to the

opinion expressed by him. This makes drawing a conclusion a critical aspect of an audit.

EXPRESSION OF OPINION

The auditor discusses his observations with those charged with governance, such as the

audit committee of the company, before finalising the report. The auditor should be firm

in his opinion, and exercise his independence at this level. This part of the audit is

critical, and calls for resilience on the part of the auditor. An audit report, being a public

document, should be drafted skilfully. The code of conduct prohibits an auditor from

divulging any information received by him in the course of his professional assignment,

unless legally required so to do. Therefore, the auditor shouldn't hesitate to take the help

of a legal expert on whether to include certain comments in his report.

BIBILOGRAPHY

1. Oriol Amat

2. Anne Cazavan-Jeny

3.Beatriz Garcia Osma

4. Lawrence Allan Gordon

Magzines &Journals

1.Accounting,Auditing and Accountability Journal

2.Audit and Beyond

3.Audit &Risk

4.Auditors Report

Website

www.tatamotors.comwww.icai.comhttp://www.icai.org/