Restatement of published results in terms of SEBI circular and directions for restatement to give effect to audit qualifications:
Compilers’ Note
SEBI had issued a circular No CFD/DIL/7/2012 dated 13th August 2012, whereby in its continuous endeavor to enhance quality of financial reporting had put in place a system to monitor audit qualifications contained in the audit report accompanying the audited financial statements submitted by listed companies. Given below is an instance where pursuant to the above circular and the due procedure followed by SEBI, the company has restated its published results to give effect to the audit qualifications.
Shreyas Shipping & Logistics Ltd
Proforma restated results as filed with stock exchange for the year ended 31st March 2014 (similar restated results were also filed for the year ended 31st March 2013)
Notes:
1) T his represents the restated results of the Company in terms of Securities and Exchange Board of India (SEBI) letter CFD/DIL/HB/OW/35709/2014 dated 12th December, 2014 whereby SEBI has directed the financial results for the year ended 31st March, 2013 to be restated giving effect to the impact of audit qualifications in terms of SEBI Circular No.CIR/CFD/ DIL/7/2012 dated 13th August, 2012 read with SEBI Circular CIR/CFD/DIL/9/2013 dated 5th June, 2013.
2) T he restatement for the year ended 31st March, 2013 and consequent restatement for the year ended 31st March, 2014 have been reviewed by the Audit Committee & approved by the Board in the meeting held on 11th February, 2015.
3) The restatement gives effect to the two qualifications in the audit report for the year ended 31st March, 2014:
a) T he Company has a policy of amortising Dry dock Expenses over 30 months. Accordingly Rs. 256.32 lakh out of unamortised amount at the beginning of the quarter have been charged to statement of profit and loss and balance amount of Rs. 469.09 lakh have been deferred to be amortised over the balance period. The Auditors have qualified their Review Report stating that this treatment is not in accordance with Accounting Standard and dry dock expenses are overstated to the extent of Rs. 256.32 lakh for the quarter and overstated by Rs.128.67 lakh for the previous quarter. Cumulatively the profit is overstated by Rs. 469.09 lakh as on 31st March, 2014 (to the extent carried forward), and the entire expenses should have been charged off to statement of Profit and Loss in the respective quarter itself.
b) T he Company has exercised the option provided by the Government notification dated 29th December, 2011, in furtherance to the earlier Government Notification dated 31st March, 2009, under Accounting Standard 11 to capitalise/adjust the foreign exchange differences arising on reporting of long term foreign currency monetary items in so far as they relate to acquisition of depreciable capital assets. Ministry of Corporate Affairs has clarified that borrowing costs as defined in Para 4(e) of Accounting Standard 16 (borrowing costs) need not be excluded for such capitalisation under Accounting Standard 11 notification w.e.f. 1st April, 2011. This has vindicated the Company’s stand on the issue but only from 1st April, 2011. If the capitalisation had been done after adjusting the borrowing cost, depreciation for the quarter would have been less to the extent of Rs. 2.94 lakh, Rs. 3.01 lakh for previous quarter, Rs.11.94 lakh for the year ended 31st March, 2014, Rs. 11.94 lakh for the year ended 31st March, 2013 & cumulative depreciation overstated by Rs. 59.88 lakh, Rs. 212.28 lakh would have been charged to statement of profit and loss as a prior year expenses & the Fixed assets and Reserves would have been less by Rs. 152.30 lakh. The Auditors had qualified this due to non-adoption of FA Q issued by ICAI (till 31st March, 2011).
c) Cumulative Impact of the above two qualifications is given effect to as follows:
4) The above restatement:
a) has not been given effect to the books of accounts and as per SEBI Circular CIR/CFD/DIL/9/2013 dated 5th June, 2013 will be given effect to in the books of accounts for year ended 31st March, 2015 as a ‘prior period item’ in accordance with Accounting Standard-6 ‘Net profit or loss for the period, prior period items & change in the accounting policies’.
b) is without giving effect to other Accounting Standards such as AS-4 – ‘Contingencies & events occurring after the balance sheet date’.
c) does not require any provision for income tax as the Company is covered by Tonnage Tax.
