Page 92 - InterloopAnnualReport2021

S. No Key Audit Matter(s) How the Matter was addressed in audit
• Assessing procedures designed by management
to comply with the debt covenants and performing
covenant tests on sample basis.
• Obtaining confirmation from Banks of the
Company to confirm balances, terms & conditions
stated in the facility offer letter and compliance
thereof.

• Performing analytical procedures, recalculations
and other related procedures for verification of
finance costs.
• Ensuring that the outstanding liabilities have
been properly classified and related securities
and other terms are adequately disclosed in the
financial statements

2. Capital expenditures (Refer notes 7 to the financial statements)
The Company is investing significant amounts in Our audit procedures in relation to capitalization
its operations and there is a number of areas where of property, plant and equipment, amongst others
management’s judgment impacts the carrying value included the following:
of property, plant and equipment and its respective
depreciation profile. These include among others the • Understanding the design and implementation
decision to capitalize costs; and review of useful life of of management controls over capitalization and
the assets. performing tests of control over authorization of
capital expenditure and accuracy of its recording
The Company’s principal accounting policy on in the system.
operating fixed assets and capital work in progress
are disclosed in notes – 6.1 and 6.2 to the financial • Testing, on sample basis, the costs incurred
statements. on projects with supporting documents and
contracts.
We focused on this area since the amounts have a
significant impact on the financial position of the • Assessing the nature of costs incurred for capital
Company and there is significant management projects through testing, on sample basis, of
judgment required that has significant impact on the amounts recorded and considering whether the
reporting of the financial position for the Company. expenditure meets the criteria for capitalization
Therefore, considered as one of the key audit matters. as per the accounting policy and applicable
accounting standards.

• Checked the reasonableness of management’s
assessment of categories of assets and working
of reclassification in categories of assets including
impact of reclassification on both cost of assets
and accumulated depreciation in each category.

• Inspecting supporting documents for the date
of capitalization when project was ready for its
intended use to assess whether depreciation
commenced and further capitalization of costs
ceased from that date and assessing the useful
life assigned by management including the
calculation of related depreciation.

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