We have audited the accompanying financial statements of City Online
Services Limited (“the Company”) which comprise the Balance Sheet as at
31March2024, the Statement of Profit & Loss(including Other
Comprehensive Income), the Statement of Changes in Equity and the
Statement of Cash Flows for the year ended on that date, and a summary of
the significant accounting policies and other explanatory information
(hereinafter referred to as “the financial statements”).
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of matter described in the
“Basis for Qualified Opinion” section of our report, the aforesaid financial
statements give the information required by the Companies Act, 2013 (“the
Act”) in the manner so required and give a true and fair view in conformity with
the Indian Accounting Standards prescribed under Section 133 of the Act
read with Companies (Indian Accounting Standards) Rules 2015, as
amended, (“Ind AS”) and other accounting principles generally accepted in
India, of the state of affairs of the Company as at 31 March,2024, the profit
and total comprehensive income, changes in equity and its cash flows for the
year ended on that date.
Basis for Qualified Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Companies Act, 2013 (the Act). Our
responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the financial statements section of our report.
We are independent of the Company in accordance with the Code of Ethics
issued by the Institute of Chartered Accountants of India (“ICAI”) together with
the independence requirements that are relevant to our audit of the financial
statements under the provisions of the Companies Act, 2013 and the Rules
made thereunder, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the ICAI's Code of Ethics. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
We draw attention to the following matter:
1. The Company's “Loans & Advances” are carried in the Balance Sheet at
Rs.12.68 Lakhs given to a related party having negative net worth and
recovery of the same is unascertainable. Further, no provision has been
made in the books of accounts.
2. Further, Noted a difference in the revenue reported as per books of
accounts versus the revenue in line with the GST Returns filed with the
GST Authorities. Thereby Resulting in under reporting of Revenue to the
Authorities by Rs. 507.54 Lakhs.
3. The Company has “Trade Receivables” amounting to Rs. 122.41 Lakhs
as on the balance sheet date out of which Rs. 30.07 Lakhs is outstanding
for more than 2 years and the recovery of the same is unascertainable.
However, provision has been made in the books of accounts only to the
extent of Rs. 14.01 Lakhs and no provision is made for the balance
amount of Rs. 16.06 Lakhs.
4. Had the above-said provision of Rs.28.74 Lakhs (Rs.12.68 Lakhs
towards related party and provision for an amount of Rs.16.06 Lakhs
towards Trade receivables aging more than two years been created, the
results of the operations of the company for the current financial year
would have resulted in losses before taxes of Rs. 17.4 Lakhs, against the
original profits of Rs. 11.34 lakhs.
5. Based on our examination which included test checks, the Company has
used accounting software for maintaining its books of account which
does not have a feature of recording audit trail (edit log) facility for the
transactions.
Emphasis of Matter
We draw attention to the following matter:
1. Note 12 to the financial statements represents the balance amounting to
Rs. 122.41 Lakhs under the head “Financial Assets- Trade Receivables”
regarding amount receivable from sundry debtors as on balance sheet
date is subject to confirmations and reconciliations and consequential
adjustments, if any.
2. Note 23 to the financial statements represents the balance amounting to
Rs. 266.03 Lakhs under the head “Financial Liabilities - Trade Payables”
regarding amount payable to sundry creditors as on balance sheet date
is subject to confirmations and reconciliations and consequential
adjustments, if any.
3. Note 28 to the financial statements represents the write back of Trade
payables of more than two years amounting toRs. 44.54 Lakhs under the
head “Other Income” as on balance sheet date is subject to confirmations
and reconciliations and consequential adjustments, if any.
4. Note 25 to the financial statements represents the balance amounting to
Rs.230.01 Lakhs under the head “Other Current Liabilities” regarding
“Statutory Liabilities” in the nature of TDS, GST, PF, ESI & PT are
remaining unpaid as on the balance sheet date.
Material Uncertainty Relating to Going Concern
The company is having a negative net-worth of Rs.34.48 Lakhs as on 31st
March 2024. The Management of the company has represented that in case
of need, the promoters shall infuse the required capital/loan for furtherance of
operations. Hence, the financial statements are prepared on going concern
basis.
Our opinion on the financial statements is not modified in respect of above
matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period. We have determined that there are no Key audit matters to
communicate in our report.
Information other than the financial statements and auditor’s report
thereon:
The Company's management and Board of Directors is responsible for the
other information. The other information comprises the information included
in the Directors' Report, Management Discussion & Analysis and Corporate
Governance Report, but does not include the financial statements and our
auditor's report thereon.
Our opinion on the financial statements does not cover the other information
and we will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained during the course of our audit, or otherwise appears to
be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information; we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of Management for the Financial Statements
The Company's management and Board of Directors are responsible for the
matters stated in section 134(5) of the Act with respect to the preparation and
presentation of these financial statements that give a true and fair view of the
financial position, financial performance, total comprehensive income,
changes in equity and cash flows of the company in accordance with the
accounting principles generally accepted in India, including the Indian
Accounting Standards (“IND AS”) specified under section 133 of the Act.
The responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the
assets of the company 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.
In preparing the financial statements, the management and Board of
Directors of the company are responsible for assessing the company's ability
to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless
management either intends to liquidate the company or to cease operations,
or has no realistic alternative but to do so.
The management and Board of Directors of the company are responsible for
overseeing the financial reporting process of the company.
Auditor’s Responsibilities for the Audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with SAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal financial controls relevant to the
audit in order to design audit procedures that are appropriate in the
circumstances. Under section 143(3)(i) of the Act, we are also
responsible for expressing our opinion on whether the Company has
adequate internal financial controls system in place and the operating
effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by management.
• Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company's ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related
disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report. However,
future events or conditions may cause the Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that,
individually or in aggregate, makes it probable that the economic decisions of
a reasonably knowledgeable user of the financial statements may be
influenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our
work; and
(ii) To evaluate the effect of any identified misstatements in the financial
statements.
We communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we
have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 (“the
Order”), issued by the Central Government of India in terms of sub¬
section (11) of section 143 of the Companies Act, 2013, we give in the
“Annexure A”, a statement on the matters specified in paragraphs 3 and
4 of the Order.
As required by Section 143 (3) of the Act, based on our audit we report
that:
a) We have sought and obtained all the information and explanations which
to the best of our knowledge and belief were necessary for the purposes
of our audit;
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books;
c) ihe Balance Sheet, the Statement of Profit and Loss (including other
comprehensive income), Cash Flow Statement and the Statement of
Changes in Equity dealt with by this report are in agreement with the
books of account;
d) In our opinion, the aforesaid financial statements comply with the IND AS
specified under Section 133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015 as amended.
e) On the basis of the written representations received from the directors as
on 31 March ,2024,taken on record by the Board of Directors, none of the
directors is disqualified as on31 March, 2024 from being appointed as a
director in terms of Section 164 (2) of the Act;
f) With respect to the adequacy of the internal financial controls over
financial reporting of the company and the operating effectiveness of
such controls, refer to our separate Report in “Annexure B”. Our report
expresses an unmodified opinion on the adequacy and operating
effectiveness of the company's internal financial controls over financial
reporting.
g) With respect to the other matters to be included in the Auditor's report in
accordance with the requirements of Section 197(16) of the act, as
amended:
In our opinion and to the best of our information and according to the
explanations given to us, the remuneration paid by the company to its
directors during the year is in accordance with the provisions of section
197 of the act.
h) 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 as amended, in our opinion and to the best of our information and
according to the explanations given to us:
(i) The Company does not have any pending litigations in its financial
position in its financial statements;
(ii) The Company does nothave any long-term contracts including derivative
contracts for which there were any material foreseeable losses;
(iii) There were no such amounts which were required to be transferred to the
Investor Education and Protection Fund during the year ended 31st
March 2024.
(iv)
(a) The management has represented that, to the best of its knowledge and
belief, no funds have been advanced or loaned or invested (either from
borrowed funds or share premium or any other sources or kind of funds)
by the company to or in any other person or entity, including foreign
entities (“Intermediaries”), with the understanding, whether recorded in
writing or otherwise, that the Intermediaries shall, whether, directly or
indirectly lend or invest in other person or entity identified in any manner
whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Company or
provide any guarantee, security or the like on behalf of the Ultimate
Beneficiaries;
(b) The management has represented that, to the best of its knowledge and
belief, no funds have been received by the company from any person or
entity, including foreign entities (“Funding Parties”), with the
understanding, whether recorded in writing or otherwise, that the
company shall, whether, directly or indirectly, lend or invest in other
person or entity identified in any manner whatsoever (“Ultimate
Beneficiaries”) by or on behalf of the Funding Parties or provide any
guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on the audit procedures that were considered reasonable and
appropriate in the circumstances, nothing has come to our notice that
has caused us to believe that the representations under sub-clause (a)
and (b) contain any material misstatement.
(v) There is no dividend declared or paid during the year by the Company as
per the provisions of Section 123 of the Act.
For Laxminiwas& Co.
Chartered accountants
Firm’s Registration Number:011168S
Sd/-
Guha Roy Ashish Kumar
Partner
Membership Number:018659
UDIN:24018659BKBOVT4370
Place: Hyderabad
Date: 30th May, 2024.
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