Our Approach

We will be meeting with Client representative along with initial documents request for the following objectives:

• Conduct meetings / calls with the representatives from the Bank with an objective to identify the nodal contact point at the Bank for the engagement.
• Obtain details of the bank accounts held by the Borrower with the Bank and obtain bank statement for the loans sanctioned and operative accounts, in electronic format (text format).
• Obtain the audited financial statements / unaudited financial statements of the Borrower for period under review.
• Obtain details of loans and other facilities sanctioned and disbursed.
• Obtain the stock audit reports along with Borrower responses for the period under review.
• Obtain the receivable and stock statements submitted by the Borrower to the Bank for the period under review.
• Obtain statutory audit reports, internal audit reports, cost audit reports and any Special audit reports for the period under review.
• Gather any other relevant information / document required to perform the work on this assignment.

Option I: Books of accounts of Borrower not available

A. Money Trail and End Use of Funds

• Analyse the statement of bank accounts of the Borrower with the Bank with the help of proprietary forensic analytical tools for ascertaining the end use of funds disbursed to Borrower for Term Loan, working capital facilities and other loans. For disbursements of loan, subsequent debits and withdrawals will be identified for the end use of the disbursement.
• Analyse the statement of accounts of the Borrower with the Bank with the help of proprietary forensic analytical tools to identify the trend and patterns in the receipts and withdrawals of funds.
• Analyse the Statement of Accounts and the details of the facilities provided to Borrower by the Bank to ascertain patterns of circular transactions, if any.
• Identify details of the payees from the statement of accounts to the extent available. Bank will be requested to provide details of payees for transactions selected by us based on the analysis carried out as above.
• Obtain Bank account statements in electronic format (text format) for funds transferred within accounts of sister / group / associate entities, transferred within accounts of promoters / partners / directors (restricted up to 3 bank account statements) for identifying trail of fund movement.
• Obtain details of outstanding debtors for the period under review from the Bank.
• Identify top 10 debtors from the Stock and Debtors statement submitted by the Borrower to the Bank and from the analysis of bank account statements.
• Obtain Balance confirmation from Debtors by written communications through the Client for selected high value Debtors (Total 10 samples) as agreed with the client.
• Desktop searches would be conducted on these identified debtors pertaining to the underlying issues within the limited data as is available in the public domain: basic profile of the debtors; relationship / connections with the Borrower, if any; adverse media, if any.

Option II: Books of accounts of Borrower available

In addition to above activities mentioned in option I, following additional activities will be performed if the Books of accounts are made available by the Borrower:

• Conduct meetings with the Client / Borrower representatives with an objective to gather an understanding of the operations of Borrower and the organization structure in respect of the areas under the scope. Also understand processes related to sales and receivables accounting data and documents for sale of goods / services.
• Obtain the accounting records of the Borrower in the electronic format for the period under review.
• Analysis of accounting as well as relevant non accounting information, as necessary, focused on sales and debtors. The specific areas of focus will be:

• Review sample sales transactions recorded and reported along with the supporting documentation (total 10 samples per Financial Year) to identify any prima-facie instances of irregularities.
• Review of selected contractual agreements and documents with select Debtors, restricted up to maximum 10 debtor agreements, if any.
• Review of related party transactions to identify sale transactions within the group entities.
• Scrutiny of Debtor accounting ledgers to identify concentration of debtors and other unusual transactions within Debtor’s ledger, if any.

It is our understanding that the engagement is to be carried out based on the available records and interactions with Client and M/s K Jayaraman & Co will be provided access to the required information (financial statement etc.) by the Client. For purpose of the proposed engagement, we may have to rely on this information. Our work will not constitute an audit of the information and accounts provided to us nor will it be an evaluation of internal controls or review or attestation services in accordance with generally accepted practices in India or elsewhere. Our reliance on and use of the information should not be considered as an expression of our opinion on it.

After completing the field work, we will consolidate our findings / observations to prepare the report which will include the following findings:

• Finding and Observations of our work under the scope
• Any other relevant issue identified during the engagement

In accordance with our normal practice, prior to finalization of our report, in order to avoid mis-interpretations, we will confirm facts with the Client.