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Lakshmi Vilas Bank
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« Mar 13
Auditor's Report (Lakshmi Vilas Bank) Year End : Mar '14
1.  We have audited the accompanying financial statements of THE
 LAKSHMI VILAS BANK LTD, KARUR as at 31st March, 2014, which comprise
 the Balance Sheet as at March 31, 2014, and the Statement of Profit and
 Loss and 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 17
 Branches, 8 Regional Offices and other support service units audited by
 us as well as the remaining 344 Branches and 6 Service Branches audited
 by other branch auditors. The branches audited by us and those audited
 by other auditors have been selected by Bank in accordance with the
 guidelines issued by the Reserve Bank of India.
 
 Management''s Responsibility for the Financial Statements
 
 2.  Management of the Bank is responsible for the preparation of these
 financial statements that give true and fair view of the financial
 position and financial performance of the Bank in accordance with
 Banking Regulation Act, 1949 and complying with Reserve Bank of India
 Guidelines issued from time to time. This responsibility includes the
 design, implementation and maintenance of internal control relevant to
 the preparation and presentation of the financial statements that are
 free from material misstatement, whether due to fraud or error.
 
 Auditor''s Responsibility
 
 3.  Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with the Standards on Auditing issued by the Institute of Chartered
 Accountants of India. 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
 from material misstatement.
 
 4.  An audit involves performing procedures to obtain audit evidence
 about the amounts and 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 control relevant to the
 Bank''s preparation and fair presentation of the financial statements 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 management, as well as evaluating the overall
 presentation of the financial statements.
 
 5.  The financial information as at and for the year ended 31st March
 2014 of 344 Branches and 6 Service Branches have been audited by other
 auditors whose reports have been furnished to us and our opinion is
 based solely on the reports of such other auditors.
 
 6.  We believe that the audit evidence we have obtained is sufficient
 and appropriate to provide a basis for our audit opinion.
 
 Opinion
 
 7.  Without qualifying our opinion, we draw attention to
 
 (a) Note No. 3.10 of the Schedule 18 to the financial statements,
 regarding deferment of pension liability and gratuity liability of the
 Bank, pursuant to the exemption granted by the Reserve Bank of India to
 the Lakshmi Vilas Bank from application of the provisions of Accounting
 Standard (AS) 15, Employees Benefits vide circular no.
 DBOD.BP.BC/80/21.04.018/2010-11, dated 09-02-2011 on Re-opening of
 Pension Option to the employees and Enhancement in Gratuity Limits-
 Prudential Regulatory Treatment. Accordingly, out of the unamortized
 amount of Rs. 37.24 crore as on 01/04/20l3, the Bank has amortized Rs.
 15.56 crore for Pension and Rs. 3.06 crore for Gratuity being
 proportionate amount for the year ended March 31, 2014 and balance
 amount to be amortized in future periods for Pension is Rs. 15.56 crore
 and for Gratuity is Rs. 3.06 crore.
 
 (b) Note No. 3.10 of the Schedule 18 to the financial statements, which
 states that, pending receipt of opinion from the Expert Advisory
 Committee of the Institute of Chartered Accountants of India, the
 provision for pension liability as on 31st March 2014 has been made
 based on the actuarial valuation.
 
 (c) Note No. 7 of the Schedule 18 to the financial statements, which
 describes creation of Deferred Tax Liability (DTL) on Special Reserve
 under section 36 (1) (viii) of the Income Tax Act, 1961 pursuant to
 RBI''s Circular No.  DBOD. No. BP.BC. 77 / 21.04.018 / 2013-14 dated
 December 20, 2013, whereby the DTL of f 7.87 crore pertaining to
 periods upto March 31, 2013 has been adjusted to the general reserve of
 the Bank and DTL of f 3.11 crore on the Special reserve created during
 the financial year ended March 31, 2014 has been charged to the profit
 and loss account in accordance with the accounting treatment prescribed
 by the Reserve Bank of India.
 
 8.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon give the information required by the Banking Regulation Act,
 1949 as well as the Companies Act, 1956 in the manner so required for
 the banking companies and give a true and fair view in conformity with
 the accounting principles generally accepted in India:
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 Bank as at 31st March, 2014;
 
 ii.  in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 iii.  in the case of the Cash Flow Statement, of cash flows for the
 year ended on that date.
 
 Report on Other Legal and Regulatory Matters
 
 9.  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 211 of the Companies Act, 1956.
 
 10.  Subject to the limitations of the audit indicated in paragraphs 1
 to 6 above and as required by the Banking Companies (Acquisition &
 Transfer of Undertakings) Act, 1970 and subject also to the limitations
 of disclosure required therein, we report that;
 
 (a) 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.
 
 (b) The transactions of the Bank, which have come to our notice, have
 been within the powers of the Bank.
 
 (c) The returns received from the Offices and Branches of the Bank, as
 supplemented with the information furnished by the Management, have
 been found adequate for the purposes of our audit.
 
 11.  In our opinion, the Balance Sheet, Profit and Loss Account and
 Cash Flow Statement comply with the applicable Accounting Standards
 referred to in sub-section (3C) of Section 211 of the Companies Act,
 1956.
 
 12. We further report that:
 
 i. The Balance Sheet and Profit and Loss Account dealt with by this
 report, are in agreement with the books of account and the returns.
 
 ii. In our opinion, proper books of account as required by law have
 been kept by the Bank so far as appears from our examination of those
 books.
 
 iii. The reports on the accounts of the branches have been dealt with
 in preparing our report in the manner considered necessary by us.
 
 iv. As per information and explanation given to us, the Central
 Government has, till date, not prescribed any cess payable under
 section 441A of the Companies Act, 1956,
 
 v. On the basis of the written representation received from the
 directors and taken on record by the Board of Directors, none of the
 directors is disqualified as on 31st March 2014 from being appointed as
 a director in terms of clause (g) of sub-section (1) of section 274 of
 the Companies Act, 1956.
 
                                                For SAGAR & ASSOCIATES
                                                 Chartered Accountants 
                                                        FR No. 003510S
 
                                                   (V. VIDYASAGAR BABU)
 Place : Bangalore                                             Partner
 Date : 14th May 2014                            Membership No. 027357
 
Source : Dion Global Solutions Limited
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