Auditor Report of Karnataka Bank Ltd.
Mar 31, 2023
The Karnataka Bank Limited
Report on Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying Standalone Financial Statements of The Karnataka Bank Limited ("the Bank"), which comprise the Balance sheet as at March 31, 2023, the Profit and Loss Account, the Cash Flow Statement, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013, as amended ("the Act") in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at March 31,2023, its profit, its cash flows for the year ended on that date.
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (''ICAI'') together with ethical requirements that are relevant to our audit of the Standalone Financial Statements in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021, provisions of section 29 of the Banking Regulation Act, 1949, circulars and guidelines issued by the Reserve Bank of India ("RBI") from time to time, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the Standalone Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Financial Statements.
A. Identification of Non-Performing Assets (''NPA'') and Provisions thereon
Key Audit Matter
Significant estimates and judgment involved
Identification of Non-Performing Assets ("NPA") and provisions in respect of NPAs are made based on management''s assessment in accordance with the prudential norms issued by the Reserve Bank of India on Income Recognition, Asset Classification and Provisioning ("IRACP") pertaining to Advances from time to time.
The provision on NPAs is based on the valuation of the security available and also involves management estimates and judgements. In case of restructured accounts, provision is made in accordance with the RBI guidelines.
Accordingly, our audit focused on identification of NPAs and provision on advances as a key audit matter because of the level of management estimates and judgment involved. Further, in the event of any improper application of the prudential norms or consideration of the incorrect value of the security, the carrying value of the assets could be materially misstated either individually or collectively, and in view of the significance of amount of advances and investments in the financial statements and given its significance to the overall audit due to stakeholder and regulatory focus, the classification of the advances and investments and provisioning thereon has been considered as Key Audit Matter.
Auditors'' Response
Our key audit approach included assessing the adequacy of design, implementation and operating effectiveness of key internal controls and substantive audit procedures over approval, recording and monitoring of loans, assessing the reliability of documentation, measurement of provisions, identification of NPA accounts and valuation of security for NPA accounts along with basis and rationale for various other management information.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements for the financial year ended March 31,2023. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
⢠As a process, we have read the Bank''s policies for NPA identification and provisioning and assessing compliance with the IRACP norms.
⢠We have evaluated details on a test check basis of exposures for identification of NPA and calculation of provisions including valuation of primary and collateral securities which involves certain degree of management estimation.
⢠We have evaluated and understood the Bank''s internal control systems to ensure completeness, accuracy, and relevance of data and to ensure that the same is in compliance with the RBI guidelines, circulars and directions on the Prudential Norms on Income Recognition, Asset Classification and Provisioning issued from time to time.
⢠We tested on a samples basis to ensure completeness of documentation, adherence of the approval process to the Bank''s Policy and board minutes, credit review of customers, review of Special Mention Accounts (''SMA'') reports in the RBI''s Central Repository of Information on Large Credits (CRILC) and other related documents and reports including evaluation of the past trends of management judgement, governance, and review of internal control. Held discussion with the management of the Bank on various accounts wherein there has been stress and steps taken to mitigate such risks.
⢠We have also assessed disclosure requirements for classification and provisioning of NPAs in accordance with the RBI circulars including those specifically issued for Covid 19 related matters.
B. Information Technology (IT) Systems and Controls
Key Audit Matter
The IT environment of the Bank is complex. The Bank''s operations utilise many independent and inter-dependent information technology systems for processing and recording large volume of transactions in numerous locations on a daily basis. As a result, there is a high degree of reliance and dependency on such IT systems for financial reporting process of the Bank. Controls over access and changes to IT systems are critical to the recording of financial information and the preparation of Standalone Financial Statements. Appropriate automated general and application controls are required to ensure that such IT systems and applications are able to process the data, as required, completely, accurately and consistently, which directly impact the completeness and accuracy of financial reporting.
The IT systems and controls is identified as a key audit matter because of high level of automation, significant number of systems being used and complexity of the IT infrastructure and its impact on the financial reporting system since our audit approach could significantly differ depending on the effective operation of the Bank''s IT controls.
We tested the technology control environment for key IT applications (systems) used in processing significant transactions and recording balances in the general ledger. We also tested key automated controls embedded within these systems which link the technology-enabled business processes. Our further audit procedures included:
⢠Assessing the governance and higher-level controls across the IT Environment and performing review of IT general controls.
⢠Evaluation and understanding the key IT systems being used by the Bank for its Core Banking and other operations.
⢠Assessing operative effectiveness of key controls within various business processes. It included testing of integrity of system interfaces, completeness and accuracy of the data, system reconciliation controls and automated calculations.
⢠Design and operating effectiveness testing of controls across the User Access Management, Change Management, backup, other IT operational controls as well as effectiveness testing of automated business process controls.
⢠Data integrity of critical system reports used by us in our audit to select samples and analyse data used by management to generate financial reports.
C. Direct and Indirect Taxes Key Audit Matter
This matter has been identified as a Key Audit Matter due to the significant level of management judgment required in the estimation of provision for taxes including any write back of provisions, due to factors like uncertain tax positions and provision for tax involves interpretation of various rules and law. It also involves consideration of on-going disputes and disclosures.
⢠Our audit procedures to test uncertain tax positions included understanding processes, evaluation of adequacy of design and implementation of controls and testing of operating effectiveness of controls over provision for taxation, assessment of uncertain tax positions and disclosure of contingencies.
⢠We have obtained details of completed tax assessments and demands from the management of the Bank.
⢠We discussed with appropriate senior management personnel, independently assessed management''s estimate of the possible outcome of disputed cases; and evaluated the management''s underlying key assumptions in estimating the tax provisions.
⢠We considered legal precedence and other rulings in evaluating management''s position on these uncertain tax positions, the provisions made, and/or write back of the provisions.
⢠We have also relied upon the opinion given by tax specialist in evaluating management''s assessment for the uncertain tax positions. For those matters where management concluded that no provision should be recorded, we also considered the adequacy and completeness of disclosures.
D. Centralised Audit of the Bank Key Audit Matter
Till year 2020-21, the audit of Branches (other than top 20 branches and certain other locations) was carried out by the Branch Statutory Auditors appointed by the Bank. However, since previous year, the Joint Statutory Auditors have performed the audit of the Bank centrally. Considering this fact, it has been considered as a key audit matter.
⢠We have assessed the Bank''s systems and procedures for carrying out centralized operations under various areas including process of consolidation at the central level.
⢠Visited certain branches to understand the operations carried out at Branches and potential issues.
⢠Performed analysis of information provided at central level.
⢠Reviewed the reports in respect of various audits including concurrent audit, internal inspections carried out at branches on a sample basis.
Information Other than the Standalone Financial Statements and Auditors'' Report thereon
The Bank''s Board of Directors are responsible for the other information. The other information comprises the Corporate Overview, Directors'' Report including annexures to Directors'' Report, Management Discussion and Analysis, Basel III - Pillar 3 disclosures and Corporate Governance report included in the Annual Report, but does not include the Standalone and Consolidated Financial Statements and our auditors'' report thereon. The other information is expected to be made available to us after the date of this auditor''s report.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether such other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Bank''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021 in so far as they apply to the Bank and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the RBI from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act and the Banking Regulations Act, 1949 for safeguarding of the assets of the Bank 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 the 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 Standalone Financial Statements that give a true and fair view and
estimates and related disclosures in the Standalone Financial Statements 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 Bank''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 Standalone 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 Bank to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of the misstatements in the Standalone Financial Statements that, individually or aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning of the scope of our audit work and evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatement in the Standalone 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 Standalone 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
are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Financial Statements, the Management and the Board of Directors is responsible for assessing the Bank''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 the Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Bank''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone 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 Standalone 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 Standalone 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 control 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 Bank has adequate internal financial controls system with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
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. The Standalone Balance Sheet and the Standalone Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949 and Accounting Standards as per section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021.
2. As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, 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 purpose of our audit and have found them to be satisfactory;
b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and
c) The financial accounting systems of the Bank are centralized and therefore, accounting returns for the purpose of preparing financial statements are not required to be submitted by its branches. However, during the course of our audit, we have visited 99 branches and offices for the purpose of understanding the processes, perform necessary walkthroughs and test of controls and examine the records maintained at such branches and offices.
3. With respect to the matter to be included in the auditor''s report under section 197(16) of the Act, we report that since the Bank is a banking company, as defined under the Banking Regulation Act, 1949; the reporting under section 197(16) in relation to whether the remuneration paid by the Bank is in accordance with the provisions of section 197 of the Act and whether any excess remuneration has been paid in accordance with the aforesaid section, is not applicable.
4. Further, as required by Section 143(3) of the Act, based on our audit, we further report to the extent applicable 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 purpose of our audit.
(b) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books.
(c) the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) in our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021 to the extent they are not inconsistent with the policies prescribed by the RBI.
(e) on the basis of the written representations received from directors as on March 31, 2023 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of section 164(2) of the Act.
(f) with respect to the adequacy of internal financial controls with reference to the Standalone Financial Statements of the Bank and the operating effectiveness of such controls, our separate report in Annexure A is attached.
(g) the entity being a banking company as defined under Banking Regulation Act, 1949, the remuneration to its directors during the year ended 31 March 2023 has been paid / provided by the Bank in accordance with the provisions of Section 35B (1) of the Banking Regulation Act, 1949.
(h) with respect to the other matters to be included in the Auditors 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 knowledge and belief and according to the information and explanation given to us:
i. The Bank has disclosed the impact of pending litigations on its financial position in Note 17 of Schedule 18 to the Standalone Financial Statements.
ii. There are no material foreseeable losses in respect of long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund during the year ended 31 March 2023.
iv. (a) The management has represented that, to the best of its knowledge and belief, as disclosed in the note 21 (a) of Schedule 18
to the Standalone Financial Statements, 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 Bank to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank ("Ultimate Beneficiaries") 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, as disclosed in the note 21 (b) of Schedule 18 to the Standalone Financial Statements, no funds have been received by the Bank from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
Based on the audit procedures that have been 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 (iv) (a) and (iv) (b) contain any material misstatement.
v. (a) The final dividend proposed for the previous year, declared, and paid by the Bank during the year is in accordance with Section 123 of the Act, as applicable.
(b) As stated in the note 19 of Schedule 18 to the Standalone Financial Statements, the Board of Directors of the Bank have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with section 123 of the Act, to the extent it applies to declaration of dividend, as applicable until the date of this report.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Bank only with effect from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, is not applicable.
Chartered Accountants
Firm Registration No. 104607W/W100166
Partner
M. No. 047576
UDIN: 23047576BGUVEF4662
Place: Mangaluru
Date: May 26, 2023
Chartered Accountants
Firm Registration No. 004207S
Partner
M. No. 217914
UDIN: 23217914BGWPDL1030
Place: Mangaluru
Date: May 26, 2023
Mar 31, 2022
The Karnataka Bank Limited
Report on Audit of the Standalone Financial Statements Opinion
We have audited the accompanying Standalone Financial Statements of The Karnataka Bank Limited ("the Bankâ), which comprise the Balance sheet as at March 31, 2022, the Profit and Loss Account, the Cash Flow Statement, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013, as amended ("the Actâ) in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Bank as at March 31, 2022, its profit, its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the âAuditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with ethical requirements that are relevant to our audit of the Standalone Financial Statements in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act read with Companies (Accounting Standards) Rules, 2021, provisions of section 29 of the Banking Regulation Act, 1949, circulars and guidelines issued by RBI from time to time, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of the Matter
We draw attention to Note No. (A) (4) (h) (i) of Schedule 18 to the Standalone Financial Statements, which describes the extent to which the COVID-19 pandemic may continue to
impact the Bank''s operations and asset quality is dependent on the ongoing as well as future developments which are highly uncertain.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the Standalone Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Financial Statements.
A. Identification of Non-Performing Assets (''NPA'') and Provisions on Advances
Key Audit Matter
Significant estimates and judgment involved
Identification of Non-Performing Assets ("NPAâ) and provisions in respect of NPAs are made based on management''s assessment in accordance with the prudential norms issued by the Reserve Bank of India on Income Recognition, Asset Classification and Provisioning ("IRACPâ) pertaining to Advances from time to time.
The provision on NPAs is based on the valuation of the security available and also involves management estimates and judgements. In case of restructured accounts, provision is made for diminution in fair value of restructured loans, in accordance with the RBI guidelines.
Accordingly, our audit focused on identification of NPAs and provision on advances as a key audit matter because of the level of management estimates and judgment involved. Further, in the event of any
improper application of the prudential norms or consideration of the incorrect value of the security, the carrying value of the assets could be materially misstated either individually or collectively, and in view of the significance of amount of advances and investments in the financial statements, the classification of the advances and investments and provisioning thereon has been considered as Key Audit Matter.
Auditor''s Response
Our key audit approach included assessing the adequacy of design, implementation and operating effectiveness of key internal controls and substantive audit procedures over approval, recording and monitoring of loans, assessing the reliability of documentation, measurement of provisions, identification of NPA accounts and valuation of security for NPA accounts along with basis and rationale for various other management information.
⢠As a process, we have read the Bank''s policies for NPA identification and provisioning and assessing compliance with the IRACP norms.
⢠We have evaluated details on a test check basis of exposures for identification of NPA and calculation of provisions including valuation of primary and collateral securities which involves certain degree of management estimation.
⢠We have evaluated and understood the Bank''s internal control systems to ensure completeness, accuracy, and relevance of data and to ensure that the same is in compliance with the RBI guidelines, circulars and directions on the Prudential Norms on Income Recognition, Asset Classification and Provisioning issued from time to time.
⢠We tested on a sample basis to ensure completeness of documentation, adherence of the approval process to the Bank''s Policy and board minutes, credit review of customers, review of Special Mention Accounts (SMA) reports in the RBI''s Central Repository of Information on Large Credits (CRILC) and other related documents and reports including evaluation of the past trends of management judgement, governance, and review of internal control. Held discussion with the management of the Bank on various accounts wherein there has been stress and steps taken to mitigate such risks.
Since the identification of NPAs and provisioning for advances require significant level of estimation/ judgement and given its significance to the overall audit due to stakeholder and regulatory focus, we have ascertained identification and provisioning for NPAs and advances as a key audit matter.
We have also assessed disclosure requirements for classification and provisioning of NPAs in accordance with the RBI circulars including those specifically issued for Covid 19 related matters.
B. Information Technology (IT) Systems and Controls Key Audit Matter
The IT environment of the Bank is complex. The Bank''s operations utilise many independent and inter-dependent information technology systems for processing and recording large volume of transactions in numerous locations on a daily basis. As a result, there is a high degree of reliance and dependency on such IT systems for financial reporting process of the Bank. Controls over access and changes to IT systems are critical to the recording of financial information and the preparation of a Standalone Financial Statements. Appropriate automated general and application controls are required to ensure that such IT systems and applications are able to process the data, as required, completely, accurately and consistently, which directly impact the completeness and accuracy of financial reporting.
The IT systems and controls is identified as a key audit matter because of high level of automation, significant number of systems being used and complexity of the IT infrastructure and its impact on the financial reporting system since our audit approach could significantly differ depending on the effective operation of the Bank''s IT controls.
Auditor''s Response
We tested the technology control environment for key IT applications (systems) used in processing significant transactions and recording balances in the general ledger. We also tested automated controls embedded within these systems which link the technology-enabled business processes. Our further audit procedures included:
⢠Assessing the governance and higher-level controls across the IT Environment and performing review of IT general controls.
⢠Evaluation and understanding the IT systems being used by the Bank for its Core Banking and other operations.
⢠Assessing operative effectiveness of key controls within various business processes. It
included testing of integrity of system interfaces, completeness and accuracy of the data, system reconciliation controls and automated calculations.
⢠Design and operating effectiveness testing of controls across the User Access Management, Change Management as well as effectiveness testing of automated business process controls including segregation of duties.
⢠Reviewing effectiveness of mappings and flagging of financial transactions, and automated reconciliation controls (both between systems and intra-system); and
⢠Data integrity of critical system reports used by us in our audit to select samples and analyse data used by management to generate financial reports.
C. Direct and Indirect Taxes Key Audit Matter
This matter has been identified as a Key Audit Matter due to the significant level of management judgment required in the estimation of provision for taxes including any write back of provisions, due to factors like uncertain tax positions and provision for tax involves interpretation of various rules and law. It also involves consideration of on-going disputes and disclosures.
Auditor''s Response
⢠Our audit procedures to test uncertain tax
positions included understanding processes, evaluation of adequacy of design and implementation of controls and testing of operating effectiveness of controls over provision for taxation, assessment of uncertain tax positions and disclosure of contingencies.
⢠We have obtained details of completed
tax assessments and demands from the management of the bank.
⢠We discussed with appropriate senior
management personnel, independently assessed management''s estimate of the possible outcome of the disputed cases; and evaluated the management''s underlying key assumptions in estimating the tax provisions.
⢠We considered legal precedence and other
rulings in evaluating management''s position on these uncertain tax positions, the provisions made, and/or write back of the provisions.
¦ We have also relied upon the opinion given by tax specialist in evaluating management''s assessment for the uncertain tax positions. For those matters where management concluded that no provision should be recorded, we also considered the adequacy and completeness of the disclosures.
D. Centralised Audit of the Bank Key Audit Matter
Till previous year, the audit of Branches (other than top 20 branches and certain other locations) was carried out by the Branch Statutory Auditors appointed by the Bank. However, in the current year, the Joint Statutory Auditors have performed the audit of the Bank centrally. Considering this fact, it has been considered as a key audit matter.
Auditor''s Response
⢠We have assessed the Bank''s systems and procedures for carrying out centralized operations under various areas including process of consolidation at the central level.
⢠Visited certain branches to understand the operations carried out at Branches and potential issues.
⢠Performed analysis of information provided at central level.
⢠Reviewed the reports in respect of various audits including concurrent audit, internal inspections carried out at branches on a sample basis.
Information Other than the Standalone Financial Statements and Auditors'' Report thereon
The Bank''s Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report including Pillar 3 disclosures, but does not include the Standalone Financial Statements and our auditor''s report thereon. The other information is expected to be made available to us after the date of this auditor''s report.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether such other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Bank''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act read with Companies (Accounting Standards) Rules, 2021 in so far as they apply to the Bank and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the RBI from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act and the Banking Regulations Act, 1949 for safeguarding of the assets of the Bank 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 the 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 Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Financial Statements, the Management and the Board of Directors is responsible for assessing the Bank''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 the Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Bank''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone 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 Standalone 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 Standalone 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)® of the Act, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system with reference to Standalone Financial Statements 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 in the Standalone Financial Statements 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 Bank''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 Standalone 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 Bank to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of the misstatements in the Standalone Financial Statements that, individually or aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning
of the scope of our audit work and evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatement in the Standalone 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 Standalone 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.
Other Matters
The comparative standalone financial statements of the Bank for the year ended on March 31, 2021, included in these standalone financial statements were audited by Predecessor Statutory Central Auditors of the Bank and they have expressed their unmodified opinion on the Standalone Financial Statements vide their report dated May 26, 2021.
Report on Other Legal and Regulatory Requirements
1. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with Section 29 of the Banking Regulation Act, 1949 and Accounting Standards as per section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021.
2. As required by sub-section (3) of section 30 of the Banking Regulation Act, 1949, 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 purpose of our audit and have found them to be satisfactory;
b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and
c) since, the Bank''s key operations are carried out on Core Banking System, which is integrated with key applications, we have carried out the audit centrally as all the necessary records and
data required for the purpose of our audit was available centrally. However, during the course of our audit, we have visited 88 branches for the purpose of understanding the processes, perform necessary walkthroughs and test of controls and examine the records maintained at such branches.
3. With respect to the matter to be included in the auditor''s report under section 197(16) of the Act, we report that since the Bank is a banking company, as defined under the Banking Regulation Act, 1949; the reporting under section 197(16) in relation to whether the remuneration paid by the Bank is in accordance with the provisions of section 197 of the Act and whether any excess remuneration has been paid in accordance with the aforesaid section, is not applicable.
4. Further, as required by Section 143(3) of the Act, based on our audit, we further report to the extent applicable 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 purpose of our audit.
(b) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books.
(c) the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) in our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021 to the extent they are not inconsistent with the policies prescribed by the RBI.
(e) on the basis of the written representations received from directors as on March 31, 2022 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 from being appointed as a director in terms of section 164(2) of the Act.
(f) with respect to the adequacy of internal financial controls with reference to the Standalone Financial Statements of the Bank and the operating effectiveness of such controls, our separate report in Annexure A is attached.
(g) the entity being a banking company as defined under Banking Regulation Act, 1949, the remuneration to its directors during the year ended 31 March 2022 has been paid / provided by the Bank in accordance with the provisions of Section
35B (1) of the Banking Regulation Act, 1949.
(h) with respect to the other matters to be included in the Auditors 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 knowledge and belief and according to the information and explanation given to us:
i. The Bank has disclosed the impact of pending litigations on its financial position in Note 18 of Schedule 18 to the Standalone Financial Statements.
ii. There are no material foreseeable losses in respect of long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund during the year ended 31 March 2022.
iv. (a) The management has represented
that, to the best of its knowledge and belief, as disclosed in the note 22 (a) of Schedule 18 to the Standalone Financial Statements, 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 Bank to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank ("Ultimate Beneficiariesâ) 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, as disclosed in the note 22 (b) of Schedule 18 to the Standalone Financial Statements, no funds have been received by the Bank from any person(s) or entity(ies), including foreign entities ("Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and Based on the audit procedures that have been 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 (iv) (a) and (iv) (b) contain any material misstatement.
v. (a) The final dividend proposed in the previous year, declared, and paid by the Bank during the year is in accordance with Section 123 of the Act, as applicable.
(b) As stated in the note 20 of Schedule 18 to the Standalone Financial Statements, the Board of Directors of the Bank have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with section 123 of the Act, to the extent it applies to declaration of dividend, as applicable until the date of this report.
Mar 31, 2019
Report on audit of the Standalone Financial Statements Opinion
1.01 We have audited the standalone financial statements of The Karnataka Bank Limited (âthe Bankâ), which comprise the Balance Sheet as at 31st March 2019, the Profit and Loss Account and Statement of Cash Flows for the year then ended, and notes to the financial statements including a summary of the significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns for the year ended on that date of 33 Branches/Offices audited by us and 835 Branches/Offices audited by the Statutory Branch Auditors.
1.02 In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 in the manner so required for the Banking Companies and are in conformity with the accounting principles generally accepted in India and give a true and fair view of the state of affairs of the Bank as at 31st March 2019, and its Profit and Cash Flows for the year ended on that date.
Basis for Opinion
2.01 We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditorâs Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
3.01 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. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Key Audit Matter |
Auditorsâ Response/Procedures |
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Identification of Non Performing Assets and Adequacy of Provisions Loans and Advances and Investments are classified as performing and non performing assets in accordance with the prudential norms issued by the Reserve Bank of India. The identification of non performing assets and creation of provision on such assets involves key management judgments relating to performance, determination of realizable securities available to the Bank and their valuation. |
We have assessed the Bankâs systems in place for classification of the assets, identification and provision for the non performing assets including assessment of realizable securities and their valuation. Our audit approach consisted of testing the design of the systems for identification of the non performing assets to ensure conformity with the guidelines of the RBI in the matter and test checking identification and valuation of the non performing assets. We have reviewed the Branch audit reports and ensured that changes suggested by the Branch Auditorsâ were duly carried out wherever necessary. |
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Recognition of Deferred Tax Asset Deferred Income Tax reflects the impact of timing difference between taxable income and accounting income. Deferred Tax Asset is not recognized unless there is a virtual certainty that sufficient future taxable income will be available against which such asset will be realized. |
We have relied upon the management estimates and expert opinions taken by the Bank regarding eligibility of carried forward tax losses for setoff against future taxable income and used our own internal expertise in evaluating the claims, assumptions and profitability forecasts and assertions of the management provided to us, that sufficient future taxable income will be available for set off against the tax losses carried forward. |
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Contingent Liabilities and Claims Contingent liability is a possible obligation, outcome of which is contingent upon occurrence or non occurrence of one or more uncertain future events. In the judgment of the management, such claims and litigations including tax demands against the Bank would not eventually lead to a liability. However, should there be an adverse outcome, the Bank will be liable to pay the disputed amounts with interest/penalty as may be decided by the competent authorities, the impact of which is uncertain/unascertainable at this stage |
We have reviewed the management note and the expert/legal opinions obtained by the Bank regarding the claims and tax litigations and involved our internal team to review the nature of such litigations and claims, their sustainability and likelihood of claims/litigations materializing into eventual liability upon final resolution, from the available records and developments to date. |
Responsibilities of the Management and those charged with governance for the Standalone Financial Statements
4.01 The Bankâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (âRBIâ) from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank 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.
4.02 In preparing the financial statements, management is responsible for assessing the Bankâs 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 Bank or to cease operations, or has no realistic alternative but to do so.
Auditorâs Responsibilities for the audit of the Financial Statements
5.01 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 Auditorâs 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 the Standards on Auditing(SA) 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 usersâ taken on the basis of these financial statements.
5.02 As part of an audit in accordance with the 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Bank has adequate internal financial controls system in place and the operating effectiveness of such controls;
- Evaluate the appropriateness of the accounting policies used and the reasonableness of the accounting estimates and related disclosures made by management;
- Conclude on the appropriateness of managementâs 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 Bankâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditorâs 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 Audit report. However, future events or conditions may cause the Bank to cease to continue as a going concern; and
- 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.
5.03 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.
5.04 We also provide those charged with governance with a statement that we have complied with the 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.
5.05 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 Audit 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.
Other Matter
6.01 We did not audit the financial statements/information of 835 Branches/Offices included in the standalone financial statements of the Bank whose financial statements/financial information reflect total assets of Rs. 28727 crore as at 31st March 2019 and total revenue of Rs.3597 crore for the year ended on that date, as considered in the standalone financial statements. The financial statements/information of these Branches have been audited by the Branch Auditorsâ whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures pertaining to such Branches, is based solely on the report of the Branch Auditorsâ.
6.02 Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
7.01 The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
8.01 As required by sub section (3) of section 30 of the Banking Regulation Act, 1949, we report that:
(a) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory;
(b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank;
(c) the returns received from the offices; and Branches of the Bank have been found adequate for the purposes of our audit.
9.01 Further, as required by section 143(3) of the Act, 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 purpose of our audit;
(b) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the Branches/offices not visited by us;
(c) the reports on the accounts of the Branch/Offices of the Bank audited under section 143(8) of the Act by the Statutory Branch Auditorsâ of the Bank have been sent to us and have been properly dealt with by us in preparing this report ;
(d) the Balance Sheet, the Profit and Loss Account and the Statement of Cash Flows dealt with by this report are in agreement with the books of account [and with the returns received from the Branches/Offices not visited by us] ;
(e) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by the Reserve Bank of India;
(f) on the basis of written representations received from the directors as on 31 March 2019 and taken on record by the Board of Directorsâ, none of the Director is disqualified as on 31 March 2019 from being appointed as a Director in terms of Section 164(2) of the Act;
(g) with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, separate Report in âAnnexure Aâ may please be referred;
(h) with respect to other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
(i) the Bank has disclosed the impact of pending litigations on its financial position in its financial statements -Refer Schedule 18 Note No. 5 to the financial statements;
(ii) the Bank does not have any long term contracts including derivative contracts - Refer Schedule 18 Note No 1.3.3 (ii) to the financial statements and
(iii) there has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund, by the Bank.
Annexure A to the Independent Auditorsâ Report of even date on the standalone financial statements of The Karnataka Bank Limited
Report on the Internal Financial Controls over Financial Reporting under Clause (i) of sub section 3 of Section 143 of the Companies Act, 2013
1.01 We have audited the internal financial controls over financial reporting of The Karnataka Bank Limited (âthe Bankâ) as at 31 March 2019 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls over Financial Reporting
2.01 The Bankâs Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (âthe Guidance Noteâ) issued by the Institute of Chartered Accountants of India (âthe ICAIâ).
2.02 These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Bankâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (âthe Actâ).
Auditorsâ Responsibility
3.01 Our responsibility is to express an opinion on the Bankâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (âthe Guidance Noteâ) and the Standards on Auditing (âthe Standardsâ), issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
4.01 Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the Auditorsâ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
5.01 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Bankâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
6.01 A Bankâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Bankâs internal financial control over financial reporting includes those policies and procedures that:
a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the bank;
b) provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with the generally accepted accounting principles, and that receipts and expenditure of the Bank are being made only in accordance with authorizations of the management and Directorsâ of the bank; and
c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Bankâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7.01 Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8.01 In our opinion, the Bank has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2019, based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
For MANOHAR CHOWDHRY & ASSOCIATES For BADARI, MADHUSUDHAN & SRINIVASAN
Chartered Accountants Chartered Accountants
Firm Regn. No. 001997S Firm Regn. No. 005389S
Sd/- Sd/-
(Murali Mohan Bhat) (N. Srinivasan)
Partner Partner
M. No. 203592 M. No. 027887
Place : Mangaluru
Date : 13.05.2019
Mar 31, 2018
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of The Karnataka Bank Limited (âthe Bankâ), which comprise the Balance Sheet as at 31 March 2018, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns for the year ended on that date of 11 branches/offices audited by us and 818 branches/offices audited by statutory branch auditors.
Managementâs Responsibility for the Standalone Financial Statements
2. The Bankâs Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (âRBIâ) from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank 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 mis-statement, whether due to fraud or error.
Auditorâs Responsibility
3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.
4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
5. We conducted our audit of the Bank including its branches in accordance with Standards on Auditing (âthe Standardsâ) specified under section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statements.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material mis-statement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Bankâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Bankâs Directors, as well as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013 in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India of the state of affairs of the Bank, as at 31st March 2018 and its profit and its cash flows for the year then ended.
Report on Other Legal and Regulatory Requirements
9. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 and Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
10. As required by sub section (3) of section 30 of the Banking Regulation Act, 1949, we report that:
(a) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory;
(b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank.
(c) the returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.
11. Further, as required by section 143(3) of the Act, we report that:
(i) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
(ii) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us;
(iii) the reports on the accounts of the branches audited by branch auditors of the Bank under section 143(8) of the Companies Act 2013 have been sent to us and have been properly dealt with by us in preparing this report;
(iv) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us;
(v) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(vi) on the basis of written representations received from the directors as on 31st March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch 2018 from being appointed as a director in terms of Section 164 (2) of the Act;
(vii) with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ; and
(viii) with respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
a. the Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Schedule 18 - Note No. 5. to the financial statements;
b. the Bank does not have any long term contracts including derivative contracts - Refer Schedule 18 -Note No. 1.3.3(ii) to the financial statements; and
c. there has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Bank;
Annexure A to the independent auditorsâ report of even date on the standalone financial statements of The Karnataka Bank Limited Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013
1. We have audited the internal financial controls over financial reporting of The Karnataka Bank Limited (âthe Bankâ) as at 31st March 2018 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls over Financial Reporting
2. The Bankâs Board of Directors is responsible for establishing and maintaining internal financial controls based on âthe internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (âthe Guidance Noteâ) issued by the Institute of Chartered Accountants of India (âthe ICAIâ)â.
These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Bankâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (âthe Actâ).
Auditorâs Responsibility
3. Our responsibility is to express an opinion on the Bankâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (âthe Guidance Noteâ) and the Standards on Auditing (âthe Standardsâ), both issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material mis-statement of the financial statements, whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Bankâs internal financial controls with reference to financial Statements.
Meaning of Internal Financial Controls Over Financial Reporting
6. A bankâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A bankâs internal financial control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the bank;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditure of the bank are being made only in accordance with authorizations of management and directors of the bank; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the bankâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material mis-statements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Bank has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at 31st March 2018, based on the internal controls criteria established by the Bank considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
For R. K. KUMAR & CO For ABARNA & ANANTHAN
Chartered Accountants Chartered Accountants
Firm Regn. No. 001595S Firm Regn. No. 000003S
Sd/- Sd/-
B. R. Ashok Abarna Bhaskar
(Partner) (Partner)
M. No. 023313 M. No. 025145
Place : Mangaluru
Date : 15th May 2018
Mar 31, 2017
The Members of The Karnataka Bank Limited Report on the Financial Statements
1. We have audited the accompanying financial statements of The Karnataka Bank Limited (''the Bank''), which comprise the Balance Sheet as at 31st March 2017, the Profit and Loss Account, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Incorporated in these Financial Statements are the returns of 34 branches audited by us, 757 branches/offices audited by Branch Auditors.
Management''s Responsibility for the Financial Statements
2. The Bank''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act,2013 (''the Act'') with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars and guidelines issued by the Reserve Bank of India (''RBI'') from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank 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.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
5. We conducted our audit of the Bank including its branches in accordance with Standards on Auditing (''the Standards'') specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Bank''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Bank''s Directors, as well as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Opinion
8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013, in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India:
a. In case of the Balance Sheet, of the state of affairs of the Bank as at 31st March 2017;
b. In case of the Profit and Loss Account, of the profit for the year ended on that date; and
c. In case of the Cash Flow Statement, of cash flows for the year ended on that date.
Emphasis of Matter
9. We draw attention to Note of the Financial Statements, regarding deferment of loss of Rs.78.51 crore on sale of advances to Asset Reconstruction Companies.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, read with Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.
11. As required by sub section (3) of section 30 of the Banking Regulation Act, 1949, we report that:
(a) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory;
(b) the transactions of the Bank, which have come to our notice, have been within the powers of the Bank;
(c) the returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.
12. Further, as required by section 143(3) of the Act, we further report that:
i. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
ii. in our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us;
iii. the reports on the accounts of the branch offices audited by branch auditors of the Bank under section 143(8) of the Companies Act, 2013, have been sent to us and have been properly dealt with by us in preparing this report;
iv. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us;
v. in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
vi. on the basis of written representations received from the directors as on 31st March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2017 from being appointed as a director in terms of Section 164 (2) of the Act; and
vii. with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ;
viii. 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, in our opinion and to the best of our information and according to the explanations given to us:
a. the Bank has provided for pending litigations having an impact on its financial statements - Refer schedule 18 - Note 6;
b. the Bank does not have any long-term contracts including derivative contracts - Refer Schedule 18 - Note 1.3.3(ii) to the financial statements; and
c. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.
For Kamath & Rau For Abarna & Ananthan
Chartered Accountants Chartered Accountants
Firm Regn. No. 001689S Firm Regn. No. 000003S
Sd/- Sd/-
Srinivas S Kamath Abarna Bhaskar
Partner Partner
M.No. 201716 M.No. 025145
Place : Mangaluru
Date : 13th May 2017
Mar 31, 2016
1. We have audited the accompanying financial statements of The
Karnataka Bank Limited (''the Bank''), which comprise the Balance Sheet
as at 31st March 2016, the Profit and Loss Account, the Cash Flow
Statement for the year then ended and a summary of significant
accounting policies and other explanatory information. Incorporated in
these Financial Statements are the returns of 29 branches audited by
us, 722 branches/offices audited by Branch Auditors.
Management''s Responsibility for the Financial Statements
2. The Bank''s Board of Directors is responsible for the matters stated
in section 134(5) of the Companies Act,2013 (''the Act'') with respect to
the preparation of these financial statements that give a true and fair
view of the financial position, financial performance and cash flows of
the Bank in accordance with the accounting principles generally
accepted in India, including the Accounting Standards specified under
Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014 and provisions of Section 29 of the Banking Regulation Act,
1949 and circulars and guidelines issued by the Reserve Bank of India
(''RBI'') from time to time. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Bank 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.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the
Rules made there under.
5. We conducted our audit of the Bank including its branches in
accordance with Standards on Auditing (''the Standards'') specified under
Section 143(10) of the Act. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatements.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Bank''s preparation of the financial statements that give a true
and fair view in order to design audit procedures that are appropriate
in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by the Bank''s Directors, as well as
evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
financial statements.
Opinion
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements give
the information required by the Banking Regulation Act, 1949 as well as
the Companies Act, 2013, in the manner so required for banking
companies and give a true and fair view in conformity with accounting
principles generally accepted in India:
a. In case of the Balance Sheet, of the state of affairs of the Bank
as at 31st March, 2016;
b. In case of the Profit and Loss Account, of the profit for the year
ended on that date; and
c. In case of the Cash Flow Statement, of cash flows for the year
ended on that date.
Emphasis of Matter
9. We draw attention to Note of the Financial Statements, regarding
deferment of loss of Rs.58.72 crore on sale of advances to Asset
Reconstruction Companies.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. The Balance Sheet and the Profit and Loss Account have been drawn
up in accordance with the provisions of Section 29 of the Banking
Regulation Act, 1949, read with Section 133 of the Companies Act, 2013,
read with Rule 7 of the Companies (Accounts) Rules, 2014.
11. As required by sub section (3) of section 30 of the Banking
Regulation Act, 1949, we report that:
(a) we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purpose of our
audit and have found them to be satisfactory;
(b) the transactions of the Bank, which have come to our notice, have
been within the powers of the Bank; and
(c) the returns received from the offices and branches of the Bank have
been found adequate for the purposes of our audit.
12. Further, as required by section 143(3) of the Act, we further
report that:
i. we have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
ii. in our opinion, proper books of account as required by law have
been kept by the Bank so far as it appears from our examination of
those books and proper returns adequate for the purposes of our audit
have been received from branches not visited by us;
iii. the reports on the accounts of the branch offices audited by
branch auditors of the Bank under section 143(8) of the Companies Act,
2013, have been sent to us and have been properly dealt with by us in
preparing this report;
iv. The Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account and with the returns received from the branches not visited by
us;
v. in our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014, to the extent they are
not inconsistent with the accounting policies prescribed by RBI;
vi. on the basis of written representations received from the directors
as on 31st March 2016 taken on record by the Board of Directors, none
of the directors is disqualified as on 31st March 2016 from being
appointed as a director in terms of Section 164 (2) of the Act; and
vii. with respect to the adequacy of the internal financial controls
over financial reporting of the Bank and the operating effectiveness of
such controls, refer to our separate Report in "Annexure A";
viii. 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, in our opinion and to the best of our information and
according to the explanations given to us:
a. the Bank has disclosed the impact of pending litigations on its
financial position in its financial statements
b. the Bank has made provision, as required under the applicable law
or accounting standards, for material foreseeable losses, if any, on
long-term contracts including derivative contracts and
c. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the Bank.
For Kamath & Rau For Abarna & Ananthan
Chartered Accountants Chartered Accountants
Firm Regn. No. 001689S Firm Regn. No. 000003S
Sd/- Sd/-
Srinivas S Kamath C.S. Gopalakrishna
Partner Partner
M.No. 201716 M.No. 014706
Place : Mangaluru
Date : 20-05-2016
Mar 31, 2015
Report on the Financial Statements
1. We have audited the accompanying financial statements of The
Karnataka Bank Limited, which comprise the Balance Sheet as at 31st
March 2015 and the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended and a summary of significant
accounting policies and other explanatory information. Incorporated in
these financial statements are the returns of 20 branches/ offices
audited by us and 679 branches/offices audited by branch auditors.
Management''s Responsibility for the Financial
Statements
2. Management is responsible for the preparation of these financial
statements in accordance with the Banking Regulation Act, 1949 and
Accounting Standards notified under the Companies Act, 1956 ("this
Act") read with General Circular 15/2013 dated 13th September 2013 of
the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor''s judgement, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
bank''s preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity''s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the
accounting policies and notes thereon give the information required by
the Banking Regulation Act, 1949 as well as the Companies Act, 2013, in
the manner so required for the banking companies and give a true and
fair view in conformity with the accounting principles generally
accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Bank as at 31st March, 2015;
(ii) in the case of the Profit and Loss Account of the profit for the
year ended on that date; and
(iii) in the case of the Cash Flow Statement, of cash flows for the
year ended on that date.
Emphasis of Matter
7. Without qualifying our opinion, we draw attention to:
(a) Note no. 2.1 of the financial statements, which describes the
change in accounting policy of charging depreciation on fixed asset
having regard to change in the estimated useful life of the assets from
written down value method to straight line method as per the
requirement of Schedule II of the Companies Act 2013; and
(b) Note no. 3.13 of the financial statements, regarding absorption of
unamortized pension and gratuity liabilities of the bank to the extent
of Rs. 31.41 crore pursuant to the exemption granted by the Reserve
Bank of India from the application of the provisions of Accounting
Standard (AS) 1 5, Employee Benefits vide Circular
No.DBOD.BO.BC/80/21.04.01 8/ 2010-11 dated February 9th, 2011.
Report on Other Legal and Regulatory Matters
8. The Balance Sheet and the Profit and Loss Account have been drawn
up in accordance with the provisions of Section 29 of the Banking
Regulation Act, 1949 read with Section 133 of the Companies Act, 2013.
9. Subject to the limitations of the audit indicated in paragraph 1 to
5 above, We report that:
(a) we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purpose of our
audit and have found them to be satisfactory.
(b) the transactions of the Bank, which have come to our notice, have
been within the powers of the Bank.
(c) the returns received from the offices and branches of the Bank have
been found adequate for the purposes of our audit.
10. In our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement comply with the Accounting Standards notified under
the Companies Act, 1956 read with General Circular 15/2013 dated 13th
September 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013.
11. We further report that:
(i) the Balance Sheet and Profit and Loss Account dealt with by this
report, are in agreement with the books of account and the returns;
(ii) in our opinion, proper books of account as required by law have
been kept by the Bank so far as appears from our examination of those
books;
(iii) the reports on the accounts of the branches audited by branch
auditors have been dealt with in preparing our report in the manner
considered necessary by us.
(iv) on the basis of the written representation received from the
directors and taken on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2015 from being appointed
as a director in terms of sub-section (2) of section 164 of the
Companies Act, 2013.
For Kamath & Rau For Abarna & Ananthan
Chartered Accountants Chartered Accountants
Firm Regn. No. 001689S Firm Regn. No. 000003S
Sd/- Sd/-
Parineeth Rau C.S. Gopalakrishna
Partner Partner
M.No. 222039 M.No. 014706
Place: Mangaluru
Date : May 22nd, 2015
Mar 31, 2014
1. We have audited the accompanying financial statements of The
Karnataka Bank Limited, which comprise the Balance Sheet as at 31st
March, 2014 and the Statement of Profit and Loss and the cash flow
statement for the year then ended and a summary of significant
accounting policies and other explanatory information. Incorporated in
these financial statements are the returns of 18 branches / offices
audited by us and 606 branches/offices audited by branch auditors.
Management''s Responsibility for the Financial Statements
2. Management is responsible for the preparation of these financial
statements in accordance with the Banking Regulation Act, 1949 and
Accounting Standards notified under the Companies Act, 1956 ("this
Act") read with General Circular 15/2013 dated 131 st September 2013 of
the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor''s judgement, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
bank''s preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity''s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the
accounting policies and notes thereon give the information required by
the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in
the manner so required for the banking companies and give a true and
fair view in conformity with the accounting principles generally
accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Bank as at 31st March, 2014;
(ii) in the case of the Profit and Loss Account of the profit for the
year ended on that date; and
(ifl) in the case of the Cash Flow Statement, of cash flows for the
year ended on that date.
Emphasis of Matter
7. Without qualifying our opinion, we draw attention to:
(a) Note No, 3.13 of the financial statements, regarding deferment of
pension and gratuity liability of the bank to the extent of Rs.31.41
crore to be amortized in the next year pursuant to the exemption
granted by the Reserve Bank of India from the application of the
provisions of Accounting Standard (AS) 15, Employee Benefits vide
circular No. DBOD. BP. BC/807 21.04.018/2010-11 dated Feb.9Tl:2011;and
|b) Note 8 of the financial statements, which describes the accounting
treatment of the expenditure on creation of Deferred Tax Liability of Rs.
27,01 crore on Special Reserve under section 36(1 )(viii) of the Income
Tax Act, 1961 as at 31 st March 2013, pursuant to RBI''s Circular No. DBOD
No.BP.BC.77/ 21.04.018 / 2013-14 dated 20th December 2013.
Report on Other Legal and Regulatory Matters
8. The Balance Sheet and the Profit and Loss Account have been drawn
up in accordance with the provisions of Section 29 of the Banking
Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.
9. Subject to the limitations of the audit indicated in paragraph 1 to
5 above, We reportthat:
(a) we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purpose of our
audit and have found them to be satisfactory.
(b) the transactions of the Bank, which have come to our notice, have
been within the powers of the Bank.
(c) the returns received from the offices and branches of the Bank have
been found adequate for the purposes of our audit.
10. In our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement comply with the Accounting Standards notified under
the Companies Act, 1956 read with General Circular 15/2013 dated 13''"
September 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013.
11. We further report that:
(i) the Balance Sheet and Profit and Loss Account dealt with by this
report, are in agreement with the books of account and the returns;
(ii) in our opinion, proper books of account as required by law have
been kept by the Bank so far as appears from our examination of those
books;
(iii) the reports on the accounts of the branches audited by branch
auditors have been dealt with in preparing our report in the manner
considered necessary by us.
(iv) as per information and explanation given to us the Central
Government has, till date, not prescribed any cess payable under
section 441A of the Companies Act, 1956,
(v) on the basis of the written representation received from the
directors and taken on record by the Board of Directors, none of the
directors is disqualified as on 31 st March, 2014 from being appointed as
a director in terms of clause (g) of sub-section (1) of section 274 of
the Companies Act, 1956.
For R, K. Kumar & Co. For Kamath & Rau
Chartered Accountants Chartered Accountants
Firm Regn No. 0D1595S Firm Regn No. 00TB89S
Sd/- Sd/-
C R SUNDARARAJAN SRINIVAS S KAMATH
Partner Partner
M. No. 025400 M. No.201716
Place: Mangalore
Date: May 15, 2014
Mar 31, 2013
1 We have audited the accompanying financial statements of The Karnataka
Bank Limited as 31st March 2013. which comprises the Balance Sheet
as at 2013; the Profit and Loss Account and the Cash Flow
Statement for the year then ended; arid a summary of significant
Accounting Policies and other explanatory information, Incorporated in
these financial statements are the returns opt SB branches audited by us
and balance 522 branches / 25 offices audited by & Auditors. The
Marches audited by us and I hose audited by ether auditor have been
selected by the Bank in accordance with the guidelines issued by the
Reserve Barn of India,
Management''s responsibility ior the Financial Statements:
2 Management is responsible for the preparation of these financial
statements in accordance with the Banking Regulation Act, 1949 This
responsibility includes lye design, implementation and maintenance of
internal control relevant to the preparation of the financial
statements that a re free from material misstatements, whether due to
fraud or error.
Auditor''s Responsibility:
3. Our responsibility is express an opinion on these Financial
Statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the institute of Chartered
Accountants of India r txjse Standards require that we comply with the
ethical requirement and plan and perform the audit to obtain reason
able assurance about whether the financial statements are free of
material misstatement,
4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors Judgment, including the
assessment of the asks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control
6. In our pin fen and to the best of our information and according to
he explanations given to us, the said accounts read together with the
accounting policies and notes thereon, give the information required by
the Banking Regulation Act. 1949 as well as the Companies Act. 1966, In
the so required for the banking companies and give a true and
fair view in conformity with the accounting p/inquiries generally ace
opted In Indy:
(i) I n the ease of the Bane Sheet, of He state of affaire opt the
bankas at31st March, 2013;
ii) fn the case of the Profile and Loss Account, of the profits for
the year ended on that date, and
[iii) fn the case of the cosh Flow Statement, of cash f tows forties
year ended o n that date.
Report on other legal and Regulatory requirements:
7. The Balance Sheet and the Profile and Loss Account have been
drawn up In accordance with the provisions of section 29 of the Banking
Refutation Act, 1nead with section 21 of the Companies Act, 1050:
B Subject (tone [imitations of the audit indicated in paragraph 1 to5
above, we rapport dhal.
a We have obtained all the information and explanations, which to the
best of Our knowledge and belief were necessary lor the purposes of our
audit and have found them to be satisfactory.
b. The transactions of the Bank, which have come to our notice have
been within the powers of I he Bank. and
e. The resumes received from the Offices and Branches of the Bank have
been found adequate for the purposes of our audit. relevant ( He
bank''s preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances An audit also includes evaluating the appropriateness
accounting policies used and the reasonableness of the accounting tail
mates made by the management, as well as evaluating the overall
presentation of the financial statements.
5 We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a bastes for our 9 edit opinion:
6. In our opinion, (he Balance Sheel, Profit and Loss Account and Cash
Flow Statement com ply with the Accounting Slander us referred to in
sub-section (3C) of Section2l 1 of (he Companies Act. 1956.
10. We further re port (hat
(i) The Balance Sheet anal Profit and Loss account dealt with by this
report are in agreement with the books of accounts and returns;
(li) In our opinion, props hooks of accounts as required by law have
been kept by the bank so far as appears from our examination of those
book;
(ill) The repos on the accounts of the branches audited by branch
auditors have been dealt with in preps ring our report in the manner
considered necessary by us;
(M) As per information and explain nation glen to us the Central
Government has, till date, not proscribed any cuss payable under
section 441A of the Co manias Act., 1056.
(v) On the basis of the written representation received from the
directors arid taken on record by the Board of Directors, none of the
directors disqualified as on March 312013 from being appointed age s
director in terms of clause (g) of sub-section (1) of section 2/4 of
the Companies Act. 1956.
far Vishnu Daya & Co. for R,K. Kumar & Co.
Charlsred Accountants Chartered Accountants
M.R.No.008456S M.R.No.001595S
Sd/- Sd/-
Guruprasad B.R. Ashok
Partner Partner
M. No.29250 M, No, 023313
Place Mangalore
Dale : May 15th 2013
Mar 31, 2012
1. We have audited the accompanying financial statements of The
Karnataka Bank Limited as at 31st March 2012, which comprises the
Balance Sheet as at 31st March 2012; the statement of Profit and Loss
Account and the Cash Flow Statement for the year then ended; and a
summary of significant Accounting Policies and other explanatory
information. Incorporated in these financial statements are the
returns of 23 branches / 5 offices audited by us and 480 branches / 20
offices audited by Branch Auditors. The Branches audited by us and
those audited by other auditors have been selected by the Bank in
accordance with the guidelines issued by the Reserve Bank of India.
Management's responsibility for the Financial Statements:
2. Management is responsible for the preparation of these financial
statements in accordance with the Banking Regulation Act, 1949. This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation of the financial
statements that are free from material misstatements, whether due to
fraud or error.
Auditor's Responsibility:
3. Our responsibility is to express an opinion on these Financial
Statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with the
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatements.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal
control relevant to the bank's preparation and fair presentation of the
financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by the management, as well as evaluating
the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion:
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
accounting policies and notes thereon, give the information required by
the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in
the manner so required for the banking companies and give a true and
fair view in conformity with the accounting principles generally
accepted in India: (i) in the case of the Balance Sheet, of the state
of affairs of the bank as at 31st March, 2012; (ii) in the case of the
Profit and Loss Account, of the profits for the year ended on that
date; and (iii) in the case of the Cash Flow Statement, of cash flows
for the year ended on that date.
Report on other legal and Regulatory requirements:
7. The Balance Sheet and the Profit and Loss Account have been drawn
up in accordance with the provisions of section 29 of the Banking
Regulation Act, 1949 read with section 211 of the Companies Act, 1956;
8. Subject to the limitations of the audit indicated in paragraph 1 to
5 above, we report that: a. we have obtained all the information and
explanations, which to the best of our knowledge and belief were
necessary for the purposes of our audit and have found them to be
satisfactory, b. the transactions of the Bank, which have come to our
notice, have been within the powers of the Bank; and c. the returns
received from the Offices and Branches of the Bank have been found
adequate for the purposes of our audit.
9. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement comply with the Accounting Standards referred to in
sub-section (3C) ofSection211 of the Companies Act, 1956.
10. We further report that: (i) the Balance Sheet and Profit and Loss
account dealt with by this report are in agreement with the books of
accounts and returns; (ii) in our opinion, proper books of accounts as
required by law have been kept by the bank so far as appears from our
examination of those books; and (iii) the reports on the accounts of
the branches audited by branch auditors have been dealt with in
preparing our report in the manner considered necessary by us; (iv) on
the basis of the written representation received from the directors and
taken on record by the Board of Directors, none of the directors is
disqualified as on March 31, 2012 from being appointed as a director in
terms of clause (g) of sub-section (1) of section 274 of
the Companies Act, 1956.
for Vishnu Daya & Co. for R.K. Kumar & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No.: 008456S Firm Reg. No.: 001595S
Sd/- Sd/-
Guruprasad B.R. Ashok
Partner Partner
M. No. 219250 M. No. 023313
Place: Mangalore
Date: May 18, 2012
Mar 31, 2011
1. We have audited the accompanying financial statements of The
Karnataka Bank Limited as at 31st March 2011, which comprises the
Balance sheet as at 31st March 2011; the statement of Profit and Loss
Account and the Cash Flow Statement for the year then ended; and a
summary of significant Accounting Policies and other explanatory
information. Incorporated in these financial statements are the returns
of 13 branches and 3 offices audited by us and 465 branches and 21
offices audited by Branch Auditors. The Branches audited by us and
those audited by other auditors have been selected by the Bank in
accordance with the guidelines issued by the Reserve Bank of India.
Managements responsibility for the Financial Statements:
2. Management is responsible for the preparation of these financial
statements in accordance with the Banking Regulation Act, 1949. This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation of the financial
statements that are free from material misstatements, whether due to
fraud or error.
Auditors Responsibility:
3. Our responsibility is to express an opinion on these Financial
Statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with the
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatements.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
banks preparation and fair presentation of the financial statements in
order to design audit procedures
that are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by the management, as
well as evaluating the overall presentation of the financial statements
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Emphasis of Matter:
6. Without qualifying our opinion, we draw attention to Note 2.3.2 of
Schedule 18 to the financial statements, which describes deferment of
peinsion and gratuity liability of the Bank to the extent of Rs. 125.63
crore pursuant to the exemption granted by the Reserve Bank of India to
the Bank from the application of the provisions of Accounting Standard
(AS) 15, Employee Benefits, vide its circular No. DBOD. B P.
BC/15896/21.04.018/2010-11 dated 8th April, 2011 on prudential
regulatory treatment relating to re-opening of pension option to
employees of the Bank and enhancement in gratuity limits.
Opinion:
7. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the notes
thereon, give the information required by the Banking Regulation Act,
1949 as well as the Companies Act, 1956, in the manner so required for
the Banking Companies and give a true and fair view in conformity with
the accounting principles generally accepted in India: (i) in the case
of the Balance Sheet, of the state of affairs of the Bank as at 31st
March, 2011; (ii) in the case of the Profit and Loss Account, of the
profit for the year ended on that date; and (iii) in the case of the
Cash Flow Statement, of cash flows for the year ended on that date.
Report on other legal and Regulatory requirements:
8. The Balance Sheet and the Profit and Loss Account have been drawn
up in accordance with the provisions of section 29 of the Banking
Regulation Act, 1949 read with section 211 of the Companies Act, 1956;
9. Subject to the limitations of the audit indicated in paragraph 1 to
5 above, we report that: a. we
have obtained all the information and explanations, which to the best
of our knowledge and belief were necessary for the purposes of our
audit and have found them to be satisfactory; b. the transactions of
the Bank, which have come to our notice, have been within the powers of
the Bank; and c. the returns received from the Offices and Branches of
the Bank have been found adequate for the purposes of our audit.
10. In our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement comply with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act, 1956.
11. We further report that: (i) the Balance Sheet and Profit and Loss
account dealt with by this report are in agreement with the books of
accounts and returns; (ii) in our opinion, proper books of account as
required by law have been kept by the bank so far as appears from our
examination of those books; (iii) the reports on the accounts of the
branches audited by branch auditors have been dealt with in preparing
our report in the manner considered necessary by us; (iv) as per the
information and explanations given to us the Central Government has,
till date, not prescribed any cess payable under section 441A of the
Companies Act, 1956; and (v) on the basis of the written representation
received from the directors and taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2011
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
For Vishnu Daya & Co For R.K. Kumar & Co
Chartered Accountants Chartered Accountants
Firm Reg. No. 008456S Firm Reg. No. 001595S
Sd/- Sd/-
Venkatesh Kamath S.V. B.R. Ashok
Partner Partner
M.No. 202626 M.No. 023313
Place : Mangalore
Date : 23rd May, 2011
Mar 31, 2010
1. We have audited the attached Balance Sheet of The Karnataka Bank
Ltd.,(The Bank) as on 31st March, 2010 and also the Profit & Loss
Account of the Bank and the Cash Flow Statement annexed thereto for the
year ended on that date in which are incorporated the returns of 9
branches and 1 Regional Office audited by us, 455 branches, 7 Regional
Offices, 1 International Division, 5 Service Branches, 2 Currency
chests, 3 Asset Recovery Branches, 1 Data centre,2 Central Processing
Centers and 1 Customer Care Centre audited by branch auditors. These
financial statements are the responsibility of the Banks management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable
basis for our opinion.
3. The Balance Sheet and the Profit and Loss Account have been
drawn-up in accordance with the provisions of Section 29 of the Banking
Regulation Act, 1949, read with section 211 of the Companies Act, 1956.
4. We report that- a. We have obtained all the information and
explanations, which to the best of our knowledge and belief, were
necessary for the purpose of our audit and have found them to be
satisfactory.
b. The transactions of the Bank, which have come to our notice, have
been within the powers of the Bank.
c. The returns received from the offices and branches of the Bank have
been found adequate for the purpose of our audit.
5. In our Opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement comply with the Accounting Standards referred
to in sub sec (3C) of section 211 of the Companies Act, 1956.
6. We further report that:
(i) the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by the report, are in agreement with the books of account
and the branch returns.
(ii) in Our opinion, proper books of account as required by law have
been kept by the Bank so far as appears from our examination of those
books.
(iii) the reports on the accounts of the Branches audited by Branch
Auditors have been dealt with in preparing our report in the manner
considered necessary by us.
(iv) as per information and explanation given to us the Central
Government has till date, not prescribed any cess payable under section
441A of the Companies Act1956,
(v) on the basis of the written representations received from the
Directors, and taken on record by the Board of Directors, we report
that none of the Directors is disqualified as on 31st March 2010 from
being appointed as a director in terms of clause(g) of Sub-section(1)
of Section 274 of the Companies Act,1956.
7. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
Significant Accounting
Policies and the Notes thereon and in particular note no 2 of schedule
18, give the information required by the Banking Regulation Act,1949 as
well as the Companies Act,1956, in the manner so required for banking
companies and give a true and fair view in conformity with the
accounting principles generally accepted in India :
(i) In the case of the Balance Sheet, of the state of affairs of the
Bank as at 31st March 2010;
(ii) In the case of the Profit & Loss Account, of the Profit of the
Bank for the year ended on that date and
iii) In the case of the Cash Flow Statement, of the cash flows for the
year then ended on that date.
For KAMATH &RAU For ViSHNU DAyA & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No. 001689S Firm Reg.No. 008456S
Sd/- Sd/-
(CA. SRiNiVAS S.KAMATH) (CA. VeNKATeSH KAMATH S.V.)
(M No.201716 ) (M No.202626)
Partner Partner
Place : Mangalore
Date : 17th May 2010
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