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Infosys

BSE: 500209|NSE: INFY|ISIN: INE009A01021|SECTOR: Computers - Software
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Mar 16
Auditor's Report (Infosys) Year End : Mar '17

We have audited the accompanying standalone Ind AS financial statements of Infosys Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as ‘standalone Ind AS financial statements’).

Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (‘the Act’) with respect to the preparation of these standalone Ind AS 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 accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued there under.

This responsibility also includes the 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 judgments 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 the preparation and presentation of the standalone Ind AS 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 standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the Auditors’ judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at 31 March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors’ Report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that :

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. 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;

c. the Balance Sheet, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rule issued there under;

e. on the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a director in terms of Section 164 (2) of the Act;

f. with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in ‘Annexure B’; and

g. with respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us :

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements. Refer to Note 2.24 to the standalone Ind AS financial statements;

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts. Refer to Note 2.16 to the standalone Ind AS financial statements;

iii there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of accounts maintained by the Company Refer to Note 2.27 to the standalone Ind AS financial statements.

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the standalone Ind AS financial statements for the year ended 31 March 2017, we report that :

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) The Company is a service company, primarily rendering software services. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable to the Company.

(iii) The Company has granted loans to two bodies corporate covered in the register maintained under Section 189 of the Companies Act, 2013 (‘the Act’).

(a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under Section 189 of the Act were not, prima facie, prejudicial to the interest of the Company.

(b) In the case of the loans granted to the bodies corporate listed in the register maintained under Section 189 of the Act, the borrowers have been regular in the payment of the principal and interest as stipulated.

(c) There are no overdue amounts in respect of the loan granted to a body corporate listed in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act, with respect to the loans and investments made.

(v) The Company has not accepted any deposits from the public.

(vi) The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act, for any of the services rendered by the Company

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees’ state insurance and duty of excise.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at 31 March 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of duty of customs which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, duty of excise, service tax and value added tax have not been deposited by the Company on account of disputes :

Name of the statute

Nature of dues

Amount (in '')

Period to which the amount relates

Forum where dispute is pending

Service tax

Service tax and penalty

(5) 5,75,63,973

July 2004 to October 2005

CESTAT, Bengaluru

Service tax

Service tax

(5) 2,57,84,864

January 2005 to March 2009

CESTAT, Bengaluru

Service tax

Service tax and penalty

(5) 23,15,21,178

February 2007 to March 2009

CESTAT, Bengaluru

Service tax

Service tax

(5) 4,19,72,658

April 2009 to March 2010

CESTAT, Bengaluru

Service tax

Service tax

(5) 6,46,54,051

April 2010 to March 2011

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 11,94,51,864

April 2009 to March 2012

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 64,93,657

April 2009 to September 2011

Commissioner

(Appeals)

Service tax

Service tax and penalty

(1) 4,87,030

October 2008 to September 2013

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 4,75,80,094

April 2012 to March 2013

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 98,194

October 2011 to December 2011

Commissioner (Appeals), Bengaluru

Service tax

Service tax and penalty

4,21,06,232

October 2014 to June 2015

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1)(5) 63,63,914

Assessment year 2007-08

Commissioner

(Appeals)

Service tax

Service tax and penalty

(1) 61,03,641

July 2012 to March 2014

Commissioner,

Bengaluru

Service tax

Service tax and penalty

1,35,21,166

April 2013 to September 2014

(2)

Service tax

Service tax and penalty

(1) 1,31,07,821

April 2014 to March 2015

Commissioner

(Appeals)

APVAT Act, 2005

Sales tax

(1)(5) 31,12,450

April 2007 to March 2008

High Court of Andhra Pradesh

MVAT Act, 2005

Sales tax

(1)(5) 9,35,455

April 2006 to December 2007

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax

4,52,50,506

September 2008 to October 2011

Specified Officer of SEZ

KVAT Act, 2003

Sales tax, interest and penalty

(1)(5) 48,10,45,876

April 2005 to March 2009

Supreme Court

Name of the statute

Nature of dues

Amount (in '')

Period to which the amount relates

Forum where dispute is pending

MVAT Act, 2005

Sales tax, interest and penalty

(5) 6,99,250

January 2008 to March 2008

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest

(1)(5) 22,01,534

April 2008 to March 2009

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest

(5) 31,32,547

April 2009 to March 2010

Joint Commissioner (Appeals)

KVAT

Sales tax, interest and penalty

(1)(5) 3,57,79,253

Assessment year 2009-10

Joint Commissioner (Appeals)

KVAT

Sales tax and penalty

(1) 6,32,81,133

Assessment year 2010-11

Joint Commissioner (Appeals)

KVAT

Sales tax and penalty

(1) 10,25,39,169

Assessment year 2012-13

(3)

TNVAT

Sales tax and penalty

63,16,338

Assessment year 2015-16

(4)

MVAT Act, 2005

Sales tax, interest

(1)(5) 98,01,056

April 2010 to March 2011

Joint Commissioner (Appeals)

Central Excise Act, 1944

Excise duty and penalty

(5) 38,61,48,018

March 2006 to December 2009

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 2,67,46,497

January 2010 to December 2010

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

4,51,32,885

January 2011 to June 2011

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 3,23,44,749

July 2011 to December 2011

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 4,20,03,700

January 2012 to November 2012

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 4,81,39,052

December 2012 to September 2013

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

5,64,00,395

October 2013 to September 2014

CESTAT, Bengaluru

Income-tax Act, 1961

Interest

3,81,54,376

Assessment year 2009-10

CIT (Appeals)

Income-tax Act, 1961

TDS and interest

(1)(5) 26,65,123

Assessment year 2010-11

CIT (Appeals)

Income-tax Act, 1961

Interest

2,08,88,269

Assessment year 2011-12

ITAT, Bengaluru

Income-tax Act, 1961

Income tax and interest

(1)

13,29,20,96,950

Assessment Year 2012-13

ITAT

Income-tax Act, 1961

Income tax and interest

(1) 3,58,99,73,710

Assessment Year 2013-14

CIT (Appeals)

(1) Net of amounts paid under protest.

(2) The Company is in the process of filing an appeal before Commissioner (Appeals).

(3) The Company is in the process of filing an appeal before Joint Commissioner (Appeals).

(4) The Company is in the process of filing an appeal before Deputy Commissioner.

(5) A stay order has been obtained against the amount disputed and not been deposited.

(viii) The Company does not have any loans or borrowings from any financial institution, banks, government or debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not applicable.

(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197, read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of Infosys Limited (‘the Company’) as of 31 March 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (‘the Guidance Note’) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial 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 financial 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 the 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.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

for B S R & Co. LLP

Chartered Accountants

Firms registration number : 101248W/W-100022

Supreet Sachdev

Bengaluru Partner

13 April, 2017 Membership number : 205385

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