Bhism & Co., Chartered Accountants, were appointed as statutory auditors of Sinwar Ltd., a listed public company whose equity shares are listed…

Bhism & Co., Chartered Accountants, were appointed as statutory auditors of Sinwar Ltd., a listed public company whose equity shares are listed on the recognised stock exchange in India, for the financial year ending 31st March 2025. The company prepares its financial statements in accordance with Ind AS. As a top 1000 listed entity by market capitalisation, the company is required to prepare Business Responsibility and Sustainability Reporting (BRSR) in accordance with SEBI requirements; however, the audit of BRSR was not part of the audit engagement undertaken by the Statutory Auditor. During the year, on 30th December 2024, the company revalued its class of "Plant and Machinery”, which included a leased CNC plant recognised as a Right-of-Use asset under Ind AS 116. The revaluation was carried out by a Registered Valuer using the Depreciated Replacement Cost method. Consequently, the aggregate net carrying value of the class increased from 4.00 crore to 4.45 crore, representing an increase of 11.25%. The surplus of 0.45 crore was recognised in Other Comprehensive Income. DMC Bank sanctioned a working capital cash credit facility of 5.5 crore in June 2024, secured by the hypothecation of current assets, which was later reduced to 4.5 crore. The outstanding balance as at 31st March 2025 was - 3.9 crore, and the sanction limit was reduced to 4.8 crore. Quarterly stock statements and drawing power calculations submitted to the bank were found to be in quantitative agreement with the books of account. Management appropriately disclosed this position in their financial statement. On 1st January 2025, Sinwar Ltd. granted an unsecured loan of 2 crore to its joint venture, Mekong Infra Pvt. Ltd., carrying an interest rate of 10% per annum and repayable in quarterly instalments commencing on 31st January 2025. As at year-end, since the first instalment became due, no amount had been repaid, and - 2.05 crore, including accrued interest, was outstanding. No impairment provision was recognised, though the joint venture reported marginal profits but negative operating cash flows. During the audit, the firm utilised Microsoft Power BI to analyse the complete sales ledger extracted from the ERP system. The data was converted into interactive dashboards to identify unusual trends, time-wise sales patterns and high-value outliers. It was observed that certain significant sales transactions were recorded during non-business hours and on public holidays. Management stated that these represented system-generated export dispatch entries. However, supporting shipping documentation and user access logs required further verification. Further, in alignment with Principle 2 – Safe and Sustainable Goods and Services under the National Guidelines on Responsible Business Conduct (NGRBC), the company introduced eco-efficient production techniques to reduce energy consumption and raw material wastage by 15%. It redesigned certain industrial components to enhance durability and recyclability and initiated consumer awareness programmes on safe use and recycling practices. These disclosures were included in the Business Responsibility and Sustainability Reporting (BRSR) section of the annual report. The Audit Manager was of the opinion that the Auditors are not required to report either on plant revaluation or working capital facility in their audit report, as management has already disclosed it in the financial statements and it's not a key audit matter. The Audit Manager accepted management's impairment assessment of the unsecured loan and decided not to report it in the audit report, as there is no misstatement. Based on the above facts, answer the following MCQs: