CA Adhya, a partner at TAK & Associates, Chartered Accountants, is conducting the statutory audit of NextGen Appliances Pvt. Ltd., a company…

CA Adhya, a partner at TAK & Associates, Chartered Accountants, is conducting the statutory audit of NextGen Appliances Pvt. Ltd., a company engaged in the manufacturing and sale of consumer durables, for the year 2024-25. During the audit, the following observations were made: The company conducted its year-end physical inventory count on 30th March 2025. Inventory at one of its warehouses valued at 95 lakhs was excluded from the count as the location was not visited by him due to flood in that area.A large debtor balance of 68 lakhs is outstanding for over 9 months. The customer has partially shut down operations and has not responded to balance confirmation requests.Revenue recognition is done at the point of despatch. However, CA Adhya noticed that certain despatches made on 30th March, 2025 were billed but the goods actually left the premises on 2nd April, 2025.The company capitalised an amount of 25 lakhs as part of machinery installation expenses which included 5 lakhs incurred on employee training and inauguration ceremony.A creditor balance of 20 lakhs remains not confirmed despite repeated external confirmation requests. The management contends that the amount is payable and valid.