RK & Associates, a Chartered Accountant firm, has been appointed, for the 7th consecutive year, as the statutory auditor of Perfact Industries…

RK & Associates, a Chartered Accountant firm, has been appointed, for the 7th consecutive year, as the statutory auditor of Perfact Industries Ltd., an unlisted public company, for the financial year 2024-25. Mr. Rajat is the engagement partner for the audit assignment of Perfact Industries Ltd. The engagement team, before starting the assignment, was required to read the policies and procedures designed to achieve desired quality control, with respect to the type of assignment being undertaken. Mr. Rajat referred to the engagement letter signed with the management initially and was considering whether there was a requirement to send a new engagement letter, in light of the following circumstances in the company during F.Y. 2024–25: Two senior whole-time directors of the company have retired out of a total of five directors.40% stake in the company was held by promoters, which was reduced by 5% by selling shares to the general public.Management has requested the auditor to cover 90% of the transactions with respect to each revenue line item, instead of 60% of the transactions as set out in the audit plan, considering materiality and other factors. The following data is presented from the audited financial statements of Perfact Industries Ltd. for the financial year 2023–24: (i) Paid-up Share Capital – 9 crore (ii) Turnover -65 crore (iii) Outstanding Borrowings – 16 crore (iv) Outstanding Public Deposits – 29 crore Mr. Rajat requested the management of Perfact Industries Ltd. to provide the internal audit report. However, the management responded that since the company's paid-up share capital and turnover are very low, internal audit is not applicable. While preparing a report under Section 143 of the Companies Act, 2013, Mr. Rajat made a statement with respect to the remuneration paid by Perfact Industries Ltd. to one of its directors, Mr. Amit, stating that it was in excess of the limit laid down under Section 197, and also gave such other details as prescribed. For additional reporting purposes, while auditing with respect to compliance with CARO, 2020, Mr. Rajat observed the following with respect to statutory dues: Statutory Dues Undisputed Amount (in lakh) Date Payable Date Paid Income Tax Demand for A.Y. 2023-24 1.80 23 September 2024 27 March 2025 GST 1.40 4 October 2024 5 April 2025 Customs Duty 0.90 21 September 2024 10 April 2025 Provident Fund 0.40 11 October 2024 Not paid till date Apart from receiving his remuneration as a partner in RK & Associates, Mr. Rajat also received a sum of 90,000 as renewal commission on the Life Insurance Agency License held by him for the said purpose. Based on the above facts, answer the following: