Moneycontrol
SENSEX NIFTY
Jammu and Kashmir Bank | Auditor's Report > Banks - Private Sector > Auditor's Report from Jammu and Kashmir Bank - BSE: 532209, NSE: J&KBANK
YOU ARE HERE > MONEYCONTROL > MARKETS > BANKS - PRIVATE SECTOR > AUDITORS REPORT - Jammu and Kashmir Bank

Jammu and Kashmir Bank

BSE: 532209|NSE: J&KBANK|ISIN: INE168A01041|SECTOR: Banks - Private Sector
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Jul 21, 16:00
83.75
-0.7 (-0.83%)
VOLUME 49,280
LIVE
NSE
Jul 21, 15:56
83.50
-1.1 (-1.3%)
VOLUME 344,802
Array
Mar 16
Auditor's Report (Jammu and Kashmir Bank) Year End : Mar '17

To

The Members of

The Jammu & Kashmir Bank Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of The Jammu and Kashmir Bank Limited (‘the Bank''), which comprise the Balance Sheet as at 31st March 2017, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information incorporated in these financial statements are the returns of 52 Branches/offices audited by us, 848 branches/offices audited by statutory branch Auditors. The branches/offices audited by us and those audited by other Auditors have been selected by the Comptroller and Auditor General of India in accordance with the Guidelines issued to the bank by the Reserve Bank of India.

Management''s Responsibility for the Standalone Financial

Statements

2. The Bank''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 financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (‘RBI'') from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. 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.

5. We conducted our audit of the Bank including its branches in accordance with Standards on Auditing (‘the Standards'') 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 financial statements are free of material misstatements.

6. 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 financial control relevant to the Bank''s preparation of the 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 accounting policies used and the reasonableness of the accounting estimates made by the Bank''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India of the state of affairs of the Bank as at 31st March, 2017, and its loss and its cash flows for the year then ended.

Emphasis of Matter

9. We draw the attention to the following matters in the notes to the financial statements:

i. Note No.43 (b) on account of relaxation in asset classification, allowed by RBI for all borrowal accounts of J & K State except those which are ‘overdue'' as on July 07, 2016, in term of RBI master directions issued for Relief measures by banks in areas affected by natural calamities. Accordingly the bank has rehabilitated/ restructured borrowal accounts including the accounts overdue as on July 07, 2016 after recovering the overdue amount as of July 07, 2016. A total amount of ?3265.83 crore represents the rehabilitated amount for which a provision of Rs. 163.29 crore and Rs. 134.98 crore on account of DIFV has been kept as on 31.03.2017.

Our opinion is not qualified on the matter

Report on Other Legal and Regulatory Requirements

10. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

11. The Comptroller and Auditor General of India has issued directions indicating the areas to be examined in terms of sub- section (5) of section 143 of the Companies Act 2013, the compliance of which is set out in Annexure-A to this Report.

12. As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, we report that:

i. 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 and have found them to be satisfactory;

ii. the transactions of the Bank, which have come to our notice, have been within the powers of the Bank.

iii. the returns received from the offices; and branches of the Bank have been found adequate for the purposes of our audit.

13. Further, as required by section 143(3) of the Act, we further report that:

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

ii. in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books .

iii. the reports on the accounts of the branch offices audited by branch auditors of the Bank under section 143(8) of the Companies Act 2013 have been sent to us and have been properly dealt with by us in preparing this report.

iv. the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

v. in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by RBI;

vi. on the basis of 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;

vii. with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in Annexure B to this report.

viii. with respect to the other matters to be included in the Auditor''s 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:

a) the Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Schedule 12 - Note 23.12 to the financial statements;

b) the Bank did not have any, on long term contracts including derivative contracts for which there were any material forseeable losses;

c) there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.

Annexure-A to para 10 of Independent Auditors Report of even date on the Standalone Financial Statements of the Jammu and Kashmir Bank Limited.

Directions/sub-directions of Comptroller and Auditor General of India under Section 143(5) of the Companies Act, 2013 for F.Y. 2016-17

Sl. No.

Directions/Sub directions

Auditor''s comments including action taken wherever required

Impact on accounts and financial statements

1

Whether the company has

clear title/lease deeds for

free-hold and leasehold land

respectively? If not please

state the area of freehold

and leasehold land for which

title/lease deeds are not available.

As per information and explanations given to us,

the company does not have clear title/lease deeds

for freehold and leasehold lands for the following properties:-

S. No. Land Area

1) Vashi, Mumbai

(1st Floor) 5400 Sq.ft

2) Budgam 4 Kanals

3) Ansal Plaza, Khelgaon,

Delhi 17787 Sq.Ft.

4) Ram Kishore Road,

Delhi 3411.28 sq.mt

5) Kargil 1 Kanal 4 Marla

6) Currency Chest

Kulgam 2 Kanals

It is advised to complete the documentation for clear

title at the earliest.

The acquisition value of the said lands/ properties has been capitalized and the value as on 31-03-2017 is Rs. 137.33 crores.

2

Please report whether there are any cases of waiver/write off of debts/ loans/interest etc., if yes, the reasons there for and the amount involved

There are cases of waiver/write off of debts/ loans/ interest etc. amounting to Rs. 30.54 crores in addition to the waiver of unapplied interest of Rs. 96.11 crores on account of negotiated settlement with the borrowers defaulting in payment due to the circumstances beyond their control such as death/disappearance of the borrower, recession in economy, no enforceable security, natural calamities such as earthquake, flood, drought, change in Govt. policy, genuine business failure inspite of sincere efforts made by borrower etc. and where the recovery chances through normal business operations are bleak.

Profit for the current year is reduced by Rs. 30.54 crores and unrealized income of Rs. 96.11 crores has been forgone.

3

Whether proper records are maintained for inventories lying with third parties & assets received as gift/ grant(s) from Govt. or other authorities.

As per explanations given to us, the company has not received any assets as gift/grant(s) from government or other authorities. The company has no inventories lying with third parties.

NIL

4

Whether the restructuring of loan was done as per the provisions of the Reserve Bank of India and Bank''s own Restructuring of loan Policy.

As per information and explanations given to us, the restructuring of loans done during the year was as per the provisions of the Reserve Bank of India and Bank''s own Restructuring of loan Policy.

Profit of the current year is reduced by Rs. 188.06 crores on account of provision made on the fresh restructured accounts.

5

Whether the Bank is maintaining/developing various assets of the State Govt. The treatment of the assets and expenditure incurred and revenue earned may be examined and comment may be offered.

As per information and explanations given to us, the bank is maintaining/developing various assets of the State Govt. which are not on the charge of the company. The expenditure amounting to Rs. 16.62 crores has been incurred & revenue of Rs. 0.69 crore has been earned for maintaining/developing of those assets and amounts have been debited/credited to the Profit & Loss Account.

Profit of the current year is reduced by net Rs. 15.93 crores.

6

Whether the branches were doing window dressing and its impact/materiality on the overall deposit portfolio.

As per the reports of the Branch Auditors, some branches were involved in doing window dressing by which there is an impact of Rs. 0.17 crore increase on the overall deposit portfolio.

There is an impact of Rs. 0.17 crore increase in the deposits by similar increase in the advances which has now been reversed.

7

Whether the Bank has been able to achieve the targets under Priority sector lending, if not, impact on the financial health of the Bank by lending the shortfall amount in Rural Infrastructure Development Fund, Small Industrial Development Bank of India, etc. may please be brought out.

As per information and explanations given to us, the bank has not been able to achieve the targets under priority sector lending. As a result of shortfall, the bank has made deposits of low yield interest with the following designated agencies as on 31-03-17 : PARTICULARS (Rs. In Crores) NABARD 446.53 RIDF (NABARD) 923.52 SIDBI 134.90 NHB (RHDF) 260.29 TOTAL 1765.24

The impact on the financial health of the bank is lower rate of return of interest ranging from 3.75% p.a. to 6.50% p.a. received from the agencies with which deposits were made for shortfall.

8

Whether there were cases of greening of advances, upgradation of loan account at the fag end of the Financial Year or delay/ non-declaration of Nonperforming Assets as per RBI guidelines. Its impact on the profitability and Asset Classification.

Advances amounting to Rs. 936.56 crores were not declared by the bank as NPAs as per RBI guidelines which were downgraded after those were identified by the statutory auditors.

Had the Auditors not identified the said NPAs, the advances of Rs. 936.56 crores would have been shown as standard assets. The impact thereof on increase of loss is as follows:

1. Interest Reversal : Rs. 72.34 Crores

2. Increase in NPA Provision : Rs. 145.78 Crores

Annexure-B to the Independent Auditors Report of even date on the Standalone Financial Statements of

The Jammu and Kashmir Bank Limited

Report on the Internal Financial Controls under Clause (i) of

Subsection 3 of Section 143 of the Companies Act, 2013.

1. We have audited the internal financial controls over financial reporting of The Jammu & Kashmir Bank Limited (‘the Bank'') as at 31 March 2017 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

2. The Bank''s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in Assessment of Adequacy of Internal Financial controls over Financial Reporting in line with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(‘the Guidance Note) issued by the Institute of Chartered Accountants of India (‘the 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 Bank''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 (‘the Act'').

Auditor''s Responsibility

3. Our responsibility is to express an opinion on the Bank''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 (‘the Standards''), issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. 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.

4. 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 auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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

Meaning of Internal Financial Controls Over Financial Reporting

6. A bank''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 bank''s internal financial control over financial reporting includes those policies and procedures that :

a. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the bank;

b. 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 bank are being made only in accordance with authorizations of management and directors of the bank; and

c. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the bank''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial

Reporting

7. 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

8. In our opinion, the Bank 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 Bank considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

For Dhar Tiku & Co. For Arora Vohra & Co. For Dharam Raj & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

FRN 003423N FRN 009487N FRN 014461N

CA. Madhusudan Meher CA. Hardeep Aggarwal CA. Dharam Raj

Partner Partner Partner

(M. No. 097409) (M. No. 088243) (M. No. 094108)

Source :
Quick Links for jammukashmirbank
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.