Page 93 - InterloopAnnualReport2021

S. No Key Audit Matter(s) How the Matter was addressed in audit
3. Inventory existence and valuation (Refer notes 12 and 13 to the financial statements)
The company has significant levels of inventories Our audit procedures over existence and valuation of
amounting to Rs. 12.475 billion as at the reporting inventory included, but were not limited to:
date, being 21% of the total assets of the Company.
• To test the quantity of inventories at all locations,
There is a risk in estimating the eventual NRV of items we assessed the corresponding inventory
held, as well as assessing which items may be slow- observation instructions and participated in
moving or obsolete. inventory counts on sites. Based on samples,
we performed test counts and compared the
The Company’s principal accounting policy on stores quantities counted by us with the results of the
and spares and stock in trade are disclosed in notes – counts of the management;
6.6 and 6.7 to the financial statements.
• For a sample of inventory items, re-performed the
The significance of the balance coupled with the weighted average cost calculation and compared
judgments and estimates involved on their valuation the weighted average cost appearing on valuation
has resulted in the inventories being considered as a sheets;
key audit matter.
• We tested that the ageing report used by
management correctly aged inventory items by
agreeing a sample of aged inventory items to the
last recorded invoice;
• On a sample basis, we tested the net realizable
value of inventory items to recent selling prices
and reperformed the calculation of the inventory
write down, if any;
• We also made enquires of management, including
those outside of the finance function, and
considered the results of our testing above to
determine whether any specific write downs were
required.
4. Revenue recognition (Refer note 32 to the financial statements)
We identified recognition of revenue of the Company We performed a range of audit procedures in relation
as a key audit matter because revenue is one of the key to revenue including the following:
performance indicators and gives rise to an inherent
risk that revenue could be subject to misstatement to • We obtained an understanding of the process
meet expectations or targets. relating to recognition of revenue and testing
the design, implementation and operating
The Company earns revenue from multiple business effectiveness of key internal controls over
lines which operate as distinct business units with recording of revenue;
significant volume of revenue transactions.
• We compared a sample of revenue transactions
Revenue is recorded in accordance with the recorded during the year with sales orders, sales
requirements of IFRS-15 which provides a invoices, delivery documents and other relevant
comprehensive model of revenue recognition and underlying documents;
requires the Company to exercise judgement,
taking into consideration all of the relevant facts and • We performed analytical review procedures and
circumstances when applying the model to contracts other test of details over various revenue streams
with customers. including the cut-off procedures to check that
revenue has been recognized in the appropriate
For further information, refer to the summary of accounting period;
significant accounting policies, Revenue from contracts
with customers’ note 6.18 to the financial statements. • We assessed the adequacy of the disclosures
as per the guidelines set out in the applicable
financial reporting requirements.

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