Mar 31, 2023
To the Members of YES BANK Limited
Report on the Audit of the Standalone Financial
Statements
Opinion
We have audited the standalone financial statements of YES BANK Limited (''the Bank''), which comprise the Balance Sheet as at March 31, 2023, the Profit and Loss Account and the Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of the 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 section 29 of the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (the ''Act'') and circulars and guidelines issued by the Reserve Bank of India, 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, including the Accounting Standards prescribed under section 133 of the Act, read with Companies (Accounting Standards) Rules, 2021 as amended to the extent applicable, of the state of affairs of the Bank as at March 31, 2023, and its profit, and its cash flows for the year ended on that date.
We conducted our audit in accordance with the Standards on Auditing (''SAs'') specified under Section 143 (10) of the Act. Our responsibilities under those SAs 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 (''the ICAI'') together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act, 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 on the standalone financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the standalone financial statements of the current year. 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:
Key Audit Matters |
Auditor''s Response |
Income Recognition and Asset Classification of Advances and Investments (IRAC) and Provisioning as per regulatory norms |
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Please refer to schedule 8 and schedule 9, read with relevant Notes relating to provisions and contingencies, disclosures with regard to Non Performing Investments (NPI) and Asset Quality in respect of movement of Non-Performing Assets (NPAs) and related provisions respectively. As required under prudential norms issued by the Reserve Bank of India (RBI) in respect of income recognition, asset classification and provisioning pertaining to investments as well as those pertaining to advances, "Resolution framework for Covid-19 related Stress" (the "Resolution Framework") issued by the RBI on August 06, 2020 and May 05, 2021 and relevant other circulars, notifications and directives issued by the RBI which were collectively considered by the Bank till March 31, 2023, classifies advances into performing and non-performing advances (NPA) which consists of Standard, Sub-standard, Doubtful and Loss and makes appropriate provisions. |
Our audit approach included testing the design, operating effectiveness of internal controls and substantive audit procedures in respect of income recognition, asset classification and provisioning pertaining to investments and advances. In particular: ⢠We have evaluated the Bank''s internal control system in adhering to the relevant RBI guidelines regarding income recognition, asset classification and provisioning pertaining to investments and advances; ⢠We have tested key IT systems/ applications used and their design and implementation as well as operational effectiveness of relevant controls, including involvement of manual process and manual controls in relation to income recognition, asset classification viz., standard, sub-standard, doubtful and loss with reference to their days-past-due (DPD) status (including consideration of non-financial parameters of NPA, including sufficiency of credits in working capital loans, restructuring guidelines, the Regulatory Package and Resolution framework) and provisioning pertaining to investments and advances; |
Key Audit Matters |
Auditor''s Response |
Income Recognition and Asset Classification of Advances and Investments (IRAC) and Provisioning as per regulatory norms |
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The Bank, as per its governing framework, made the performing and non-performing advances provisions based on Management''s assessment of the degree of impairment of the advances subject to and guided by minimum provisioning levels prescribed under RBI guidelines. The Classification, Provisioning and Write off of Advances including Investments is a Key Audit Matter as the Bank has significant credit risk exposure to a large number of borrowers across various sectors, products, industries and geographies and there is a high degree of complexity, uncertainty and judgment involved in recoverability of advances, nature of transactions and estimation of provisions thereon and identification of accounts to be written off. |
⢠We have test checked advances to examine the validity of the recorded amounts, loan documentation, examined the statement of accounts, indicators of impairment, impairment provision for non-performing assets, and compliance with income recognition, asset classification and provisioning pertaining to advances in terms of applicable RBI guidelines; ⢠We have selected restructured accounts on sample basis and tested their compliance with relevant RBI guidelines; ⢠For the selected non-performing advances, we assessed Management''s forecast and inputs of recoverable cash flows, borrower''s audited financial statements, valuation of underlying security and collaterals, estimation of recoverable amounts on default and other sources of repayment; ⢠Reviewed Bank''s policy including Standard Operating Procedures with respect to implementation of Regulatory package and Resolution framework (''guidelines'') and tested samples to ascertain the implementation of those guidelines by the Bank. Provisions for advances: ⢠Tested the Bank''s processes for making provision on advances for compliance with RBI regulations and internally laid down policies for provisioning; ⢠Tested the completeness and accuracy of data transferred from underlying source systems used for computing collective provision; ⢠We had undertaken the walkthrough for the automated E-NPA system and tested the core functionality for selected samples considering the audit universe. ⢠Validatedtheparametersused tocalculatecollectiveprovisions with reference to IRAC norms, and Regulatory Package; ⢠Tested provision created for fraud accounts as at March 31, 2023 as per the RBI circular; ⢠Re-performed, for a sample of retail and corporate portfolios, as part of our substantive audit procedures the calculation of provisions, to determine the accuracy of the same; (Collective for standard portfolio and case specific for non performing portfolio) ⢠Assessed the adequacy of disclosures against the RBI Guidelines |
Key Audit Matter on Sale of Stressed Loans to Asset Reconstruction Company |
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Please refer to Note No. 17.5.12 relating to Sale of Stressed |
Our Audit procedures with respect to this matter inter-alia |
Loans. As mentioned therein pursuant to the conclusion |
involved an understanding of sale of stressed loan portfolio |
of the Swiss Challenge process, the Board of Directors of |
by the Bank to JCF ARC keeping in view the requirements as |
the Bank, at their meeting held on September 20, 2022, |
per Master Direction - Reserve Bank of India (Transfer of Loan |
approved JC Flowers Asset Reconstruction Private Ltd. |
Exposures) Directions, 2021 dated September 24, 2021 (''Master |
(JCF ARC'') for sale of identified stressed loans of the Bank |
Directions''), as amended on December 05, 2022. Our substantive |
aggregating up to '' 480,000 million as at March 31,2022. |
audit procedures includes: |
The gross value of exposures transferred to JCF ARC |
⢠Inquiry with the senior management to understand the |
was '' 437,158 million, which included exposures worth |
structure of the transaction |
'' 151,981 million earlier written-off by the Bank. The net |
⢠Perusal of various documents viz. term sheet, agreements, |
book value (''NBV'') of exposures in the Bank''s books as on the date of assignment was '' 49,818 million and the final |
trust deeds, confirmations received / executed by the Bank |
consideration received was '' 80,459 million under 15:85 |
⢠Review of relevant internal/external documents / |
cash and security receipts structure. |
records / reports |
Key Audit Matters |
Auditor''s Response |
Key Audit Matter on Sale of Stressed Loans to Asset Reconstruction Company |
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The Bank has also acquired 9.9% equity shareholding in |
⢠Perusal of noting made in minutes of Board & its Committees |
JCF ARC and applied to RBI for increase of stake in JCF |
with respect to sale of loan portfolio to JCF ARC |
ARC from 9.9% to up to 19.9%. |
⢠Reviews of compliance with the aforesaid Master Directions |
We have identified this transaction as a Key Audit Matter |
with respect to transfer of loan exposure inter-alia basis |
considering it''s materiality with reference to gross book |
check-list prepared by the Bank |
value of the stressed assets transferred and complexity. |
⢠List of Corporate Loans identified by the Bank for sale to ARC vis-a-vis allocation of these accounts amongst various trusts of JCF ARC |
⢠Procedure for pool identification in case of the retail loan portfolio sold to ARC |
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⢠Accounting for the transfer of loan exposure, its provisioning and receipt of Cash and Security Receipts |
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⢠Valuation of Security Receipts at reporting dates, keeping in view the clarification sought by the Bank from RBI |
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⢠Assessed the adequacy of disclosures as per RBI Guidelines |
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IT Systems and Controls over financial reporting |
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The Bank''s key financial accounting and reporting |
⢠We have planned, designed and carried out the desired audit |
processes are highly dependent on Core Banking and |
procedures and sample checks, taking into consideration |
Treasury Solutions and other supporting software and |
the IT systems of the Bank. As part of our IT controls testing, |
hardware controls. The volume of transactions processed |
we have tested ITGC as well as ITAC for selected critical |
and recorded is huge. Moreover, a transaction may be |
applications. The focus of testing of ITGCs was based on |
required to be recorded across multiple applications |
the various parameters such as Completeness, Validity, |
depending upon the process and each application has |
Identification/ Authentication, Authorization, Integrity and |
different rules and a different set of user access and |
Accountability. On the other hand, focus of testing automated |
authority matrix. These applications are interlinked using |
controls from applications was whether the controls prevent |
different technologies so that data transfer happens in real |
or detect unauthorized transactions and support financial |
time or at a particular time of the day; in batches or at a |
objectives including completeness, accuracy, authorization |
transaction level and in an automated manner or manually. |
and validity of transactions. The procedures adopted by |
The Core Banking Solution (CBS) itself has many interfaces, |
us are, in our opinion, adequate to provide reasonable |
such that there exists a risk that gaps in the IT control |
assurance on the adequacy of IT controls in place. The areas |
environment could result in the financial accounting and |
for improvement as and when noticed are communicated for |
reporting records being materially misstated. The Bank |
suitable actions to the Bank as part of our audit. The corrective |
has a process for identifying the applications where the |
steps / alternate controls deployed by the Bank are tested |
controls are embedded. It also has a process to ensure |
on sample basis. |
that systems, processes and controls remain relevant |
⢠In ITGC testing, on sample basis, we reviewed control areas |
and updated. The Bank''s IT control framework includes |
such as User Management, Change Management, Systems |
automated, semi-automated and manual controls |
Security, Cyber Security, Interface Testing, deployment of new |
designed to address identified risks. IT controls are stated |
applications, Incident Management, Physical & Environmental |
in Entity Level Controls (ELC), IT General Controls (ITGC) |
Security, Backup and Restoration, Business Continuity and |
and IT Application Controls (ITAC). Such controls contribute |
Disaster Recovery, Service Level Agreement. |
to risk mitigation of erroneous output data. |
⢠For ITAC, we carried out on sample basis, compliance tests of system functionality in order to assess the accuracy of system calculations. We also carried out procedures such as validations and limit checks on data entered into applications, approvals, process dependencies, restriction on time period in which transactions may be recorded and GL mapping for financial accounting. ⢠We tested the control environment using various techniques such as inquiry, walkthroughs in live environment, testing in UAT environment, review of documentation / record / reports, observation and re-performance. We had taken adequate samples of instances for our tests considering the audit universe. |
Key Audit Matters |
Auditor''s Response |
IT Systems and Controls over financial reporting |
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We have identified IT Controls Framework as a Key Audit |
⢠Wherever deviations were noted either the same were |
Matter as the Bank''s business is highly dependent on |
explained to our satisfaction or we tested compensating |
technology, the IT environment is complex and the design |
controls and performed alternate procedures, where |
and operating effectiveness of IT controls have a direct |
necessary, to draw comfort. |
impact on its financial reporting process. Review of these controls allows us to provide assurance on the integrity and completeness of data processed through various IT applications which are used for the preparation of financial reports. |
⢠In addition, we have also relied on IS audit conducted by internal audit department, and also the testing of Internal Financial Control conducted by the Operational Risk Management department of the Bank. |
Recognition and Measurement of Deferred Tax Asset |
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The Bank has recognized a net deferred tax asset of |
Our audit procedures involved gaining an understanding of the |
'' 89,412 million as at March 31, 2023, including net |
applicable tax laws and relevant regulations applicable to the |
decrease of '' 2,431 million during the year. |
Bank. We performed the following audit procedures as part of |
Besides objective estimation, recognition and |
our controls testing: |
measurement of deferred tax asset is based on the |
⢠Evaluation of the policies used for recognition and |
judgment and numerous estimates regarding the |
measurement of deferred tax assets in accordance with |
availability and visibility of profits in the future and also |
AS 22 Accounting for Taxes on Income; |
considering probable impact of Covid-19 pandemic. |
⢠Assessed the probability of the availability of future taxable |
The amount of deferred tax assets recognized |
profits based on assumptions and other parameters used by |
presumes availability and forecasting of profits over an |
the Management including the probable impact of Covid-19 |
extended period of time thus increasing uncertainty |
pandemic against which the Bank will be able to use this |
and the inherent risk of inappropriate recognition of |
deferred tax asset in the future with reference to forecast |
the said asset. |
as noted by the Board of Directors while adopting the standalone financial statements. |
⢠Assessed the method for determining the Deferred Tax Asset with reference to applicable tax rates and tested the arithmetical accuracy. |
Information other than the standalone financial statements and Auditor''s Report thereon
The Bank''s management and Board of Directors are responsible for the Other Information. The other information comprises the Management Discussion and Analysis, Directors'' Report, including Annexures to Directors'' Report and the Pillar 3 Disclosures under the New Capital Adequacy Framework (Basel III disclosures) (collectively called as "Other Information") but does not include the standalone financial statements and our auditor''s report thereon. The Annual Report 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 the 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 management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation of these 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 Companies (Accounting Standards) Rules, 2021 as amended to the extent applicable, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines
issued by Reserve Bank of India (''RBI'') from time to time, as applicable to the Bank. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act and the RBI Guidelines 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 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 Board of Directors are 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.
Those Board of Directors are 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 with reference to 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 the Management and Board of Directors.
⢠Conclude on the appropriateness of the Management and Board of Director''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.
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 year and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
1) 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 Act and relevant rules issued thereunder.
2) 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) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. Nevertheless, during the course of our audit we have visited 56 branches to examine the records maintained at such branches for the purpose of our audit.
3) 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 purposes 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 standalone balance sheet, the standalone profit and loss account, and the standalone 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 ofthe Act, read with Companies (Accounting Standard) Rules, 2021, as amended, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(e) on the basis of the written representations
received from the directors as at
March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as at March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act; and
(f) with respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in ''Annexure A''.
4) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
(a) the Bank has disclosed the impact of pending litigations as at March 31, 2023 on its financial position in its standalone financial statements
- Refer Note No. 17.5.11 and 17.5.78 to the standalone 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 - Refer Note No. 17.5.75 read with Note No. 17.5.19 to the standalone financial statements;
(c) there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank during the year ended March 31, 2023
- Refer Note No. 17.5.64 to the standalone financial statements.
(d) (i) The management of the Bank has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to accounts (Refer Note No. 17.5.36), 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;
(ii) The management of the Bank has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to accounts (Refer Note No. 17.5.36) 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, 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
(iii) Based on such audit procedures that were considered reasonable and appropriate
in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) above contain any material misstatement.
(e) No dividend has been declared or paid during the year by the Bank.
(f) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of accounts using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 01,2023; and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rule, 2014 is not applicable for the financial year ended March 31, 2023.
5) With respect to the matter to be included in the Auditors'' Report under section 197(16) of the Act; the Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 (the ''act'') do not apply by virtue of Section 35B(2A) of the Banking Regulation Act, 1949.
For M P Chitale & Co. For Chokshi & Chokshi LLP
Chartered Accountants Chartered Accountants
(Firm Regn. No. 101851W) (Firm Regn. No. 101872W / W100045)
Anagha Thatte Vineet Saxena
Partner Partner
(Membership No. 105525) (Membership No. 100770)
UDIN: 23105525BGVABA7826 UDIN: 23100770BGXLGO1368
Place: Mumbai Place: Mumbai
Date: April 22, 2023 Date: April 22, 2023
Mar 31, 2022
YES BANK LimitedREPORT ON THE AUDIT OF THE STANDALONEFINANCIAL STATEMENTSOpinion
We have audited the standalone financial statements of YES BANK Limited (''the Bank''), which comprise the Balance Sheet as at March 31, 2022, the Profit and Loss Account and the Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of the 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 Section 29 of the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (the ''Act'') and circulars and guidelines issued by the Reserve Bank of India, 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, including the Accounting Standards prescribed under Section 133 of the Act, read with rules made thereunder, of the state of affairs of the Bank as at March 31, 2022, and its profit, and its cash flows for the year ended on that date.
We conducted our audit in accordance with the Standards on Auditing (''SAs'') specified under Section 143 (10) of the Act. Our responsibilities under those SAs 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 (''the ICAI'') together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act, 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 on the standalone financial statements.
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the standalone financial statements of the current year. 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:
Key Audit Matters |
Auditor''s Response |
Recognition and Measurement of Deferred Tax Asset |
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The Bank has recognised a net deferred tax asset of '' 918,420 lakh as on March 31,2022, including net decrease of '' 36,964 lakh during the year. Besides objective estimation, recognition and measurement of deferred tax asset is based on the judgement and numerous estimates regarding the availability and visibility of profits in the future and also considering probable impact of COVID-19 pandemic. The amount of deferred tax assets recognised presumes availability and forecasting of profits over an extended period of time thus increasing uncertainty and the inherent risk of inappropriate recognition of the said asset. |
Our audit procedures involved gaining an understanding of the applicable tax laws and relevant regulations applicable to the Bank. We performed the following audit procedures as part of our controls testing: ⢠evaluation of the policies used for recognition and measurement of deferred tax assets in accordance with AS 22 Accounting for Taxes on Income. ⢠assessed the probability of the availability of future taxable profits based on assumptions and other parameters used by the Management including the probable impact of COVID-19 pandemic against which the Bank will be able to use this deferred tax asset in the future with reference to forecast as noted by the Board of Directors while adopting the standalone financial statements. ⢠assessed the method for determining the Deferred Tax Asset with reference to applicable tax rates and tested the arithmetical accuracy. |
Key Audit Matters |
Auditor''s Response |
Income Recognition and Asset Classification of Advances and Investments (IRAC) and Provisioning as per regulatory norms |
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Please refer to schedule 5, schedule 8, schedule 9, read with Our audit approach included testing the design, operating effectiveness Note nos. 17.5.11, 17.5.19 and 17.5.13(ii) relating to provisions of internal controls and substantive audit procedures in respect of income and contingencies, Asset Quality in respect of movement of recognition, asset classification and provisioning pertaining to advances Non-Performing Assets (NPAs) and related provisions and and investments. In particular: disclosures with regard to Non Performing Investments (NPI) ⢠we have evaluated the Bank''s internal control system in adhering to the respectively relevant RBI guidelines regarding income recognition, asset classification As required under prudential norms issued by the Reserve and provisioning pertaining to advances and investments; Bank of India (RBI) in respect of income recognition, asset ⢠we have tested key IT systems/applications used and their design classification and provisioning pertaining to advances as well and implementation as well as operational effectiveness of relevant as those pertaining to investments, "Resolution framework for controls, including involvement of manual process and manual controls COVID-19 related Stress" (the "Resolution Framework") issued in relation to income recognition, asset classification viz. standard, by the RBI on August 06, 2020 and May 05, 2021 and relevant sub-standard, doubtful and loss with reference to their days-past-due other circulars, notifications and directives issued by the RBI (DPD) status (including consideration of non-financial parameters of which were collectively considered by the Bank till March 31, NPA, restructuring guidelines, the Regulatory Package and Resolution 2022, classifies advances into performing and non-performing framework) and provisioning pertaining to advances and investments; advances (NPA) which consists of Standard, Sub-standard, Doubtful and Loss and makes appropriate provisions. ⢠we have test checked advances to examine the validity of the recorded amounts, loan documentation, examined the statement of accounts, The Bank, as per its governing framework, made the indicators of impairment, impairment provision for non-performing performing and non-performing advances provisions based assets, and compliance with income recognition, asset classification on Management''s assessment of the degree of impairment of and provisioning pertaining to advances in terms of applicable RBI the advances subject to and guided by minimum provisioning . levels prescribed under RBI guidelines. gui eines; ⢠we have selected restructured accounts on sample basis and tested The Classification, Provisioning and Write off of Advances their compliance with relevant RBI guidelines; including Investments is a Key Audit Matter as the Bank has significant credit risk exposure to a large number of borrowers ⢠For the selected non-performing advances, we assessed Management''s across various sectors, products, industries and geographies forecast and inputs of recoverable cash flows, borrower''s audited and there is a high degree of complexity, uncertainty and financial statements, valuation of underlying security and collaterals, judgment involved in recoverability of advances, nature estimation of recoverable amounts on default and other sources of of transactions and estimation of provisions thereon and repayment; identification of accounts to be written off and the current ⢠Reviewed Bank''s policy including Standard Operating Procedures pr°cesses at the Bank are not fully automated, with respect to implementation of Regulatory package and Resolution management estimates and Judgement. framework (''guidelines'') and tested sample to ascertain the implementation of those guidelines by the Bank. |
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Provisions for advances: ⢠Tested the Bank''s processes for making provision on advances for compliance with RBI regulations and internally laid down policies for provisioning; |
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⢠Tested the completeness and accuracy of data transferred from underlying source systems used for computing collective provision; |
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⢠We had undertaken the walk-through for the new automated E-NPA deployed in the current financial year and tested the core functionality for selected sample considering the audit universe; |
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⢠Validated the parameters used to calculate collective provisions with reference to IRAC norms, and Regulatory Package; |
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⢠Tested provision created for fraud accounts as at March 31,2022 as per the RBI circular; |
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⢠Re-performed, for a sample of retail and corporate portfolios, the calculation of provisions, to determine the accuracy of the same; (Collective for standard portfolio and case specific for non- performing portfolio) |
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⢠Reviewed the Bank''s process for granting moratorium to borrowers as per the Regulatory Package announced by the RBI. We tested the completeness and accuracy of the data used for computing general provision in line with Regulatory package updates issued by RBI. ⢠Assessed the adequacy of disclosures against the RBI Guidelines. |
Key Audit Matters |
Auditor''s Response |
IT Systems and Controls over financial reporting |
|
The Bank''s key financial accounting and reporting processes |
⢠We have planned, designed and carried out the desired audit |
are highly dependent on Core Banking and Treasury Solutions |
procedures and sample checks, taking into consideration the |
and other supporting software and hardware controls. The |
IT systems of the Bank. As part of our IT controls testing, we |
volume of transactions processed and recorded is huge. |
have tested ITGC as well as ITAC. The focus of testing of ITGCs |
Moreover, a transaction may be required to be recorded |
was based on the various parameters such as Completeness, |
across multiple applications depending upon the process |
Validity, Identification/Authentication, Authorisation, Integrity and |
and each application has different rules and a different set |
Accountability. On the other hand, focus of testing automated |
of user access and authority matrix. These applications are |
controls from applications was whether the controls prevent or |
interlinked using different technologies so that data transfer |
detect unauthorised transactions and support financial objectives |
happens in real time or at a particular time of the day; in |
including completeness, accuracy, authorisation and validity of |
batches or at a transaction level and in an automated manner |
transactions. The procedures adopted by us are, in our opinion, |
or manually. The Core Banking Solution (CBS) itself has many |
adequate to provide reasonable assurance on the adequacy of IT |
interfaces, such that there exists a risk that gaps in the IT |
controls in place. Towards this end, we obtained an understanding |
control environment could result in the financial accounting |
of Bank''s IT environment. |
and reporting records being materially misstated. The Bank |
⢠In ITGC testing, on sample basis, we reviewed control areas such |
has a process for identifying the applications where the controls are embedded. It also has a process to ensure that systems, processes and controls remain relevant. The Bank''s IT control framework includes automated, semi-automated |
as User Management, Change Management, Systems Security, cyber security, interface testing, deployment of new applications, Incident Management, Physical & Environmental Security, Backup and Restoration, Business Continuity and Disaster Recovery, |
and manual controls designed to address identified risks. IT controls are stated in Entity Level Controls (ELC), IT General |
Service Level Agreement. |
Controls (ITGC) and IT Application Controls (ITAC). Such |
⢠For ITAC, we carried out on sample basis, compliance tests of |
controls contribute to risk mitigation of erroneous output |
system functionality in order to assess the accuracy of system |
data. |
calculations. We also carried out procedures such as validations |
We have identified IT Controls Framework as a Key Audit |
and limit checks on data entered into applications, approvals, |
Matter as the Bank''s business is highly dependent on technology, the IT environment is complex and the design |
process dependencies and restriction on time period in which transactions may be recorded. |
and operating effectiveness of IT controls have a direct |
⢠We tested the control environment using various techniques |
impact on its financial reporting process. Review of these |
such as inquiry, walk-throughs in live environment, review of |
controls allows us to provide assurance on the integrity |
documentation/ record/ reports, observation and re-performance. |
and completeness of data processed through various IT |
We had taken adequate samples of instances for our tests |
applications which are used for the preparation of financial |
considering the audit universe. |
reports. |
⢠Wherever deviations were noted either the same were explained to our satisfaction or we tested compensating controls and performed alternate procedures, where necessary, to draw comfort. |
⢠In addition, we have also relied on IS audit conducted by internal audit department, and also the audit of Internal Financial Control over Financial Reporting conducted by the Operational Risk Management department of the Bank. |
Information other than the standalone financial statements and Auditor''s Report thereon
The Bank''s management and Board of Directors are responsible for the Other Information. The other information comprises the Management Discussion and Analysis, Directors'' Report, including Annexures to Directors'' Report and the Pillar III Disclosures under the New Capital Adequacy Framework (Basel III disclosures) (collectively called as "Other Information") 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
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 as above when it becomes available and, in doing so, consider whether the 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.
Management''s and Board of Director''s Responsibility for the Standalone Financial Statements
The Bank''s management and Board of Directors are 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 specified under Section 133 of the Act, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines issued by Reserve Bank of India (''RBI'') from time to time, as applicable to the Bank. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act and the RBI Guidelines 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 judgements 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 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 Board of Directors are 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.
Those Board of Directors are 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 judgement 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 with reference to 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 the Management and Board of Directors.
⢠Conclude on the appropriateness of the Management and Board of Directors 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 a 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.
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 year 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.
One of the current Joint Statutory Auditors has carried out audit of the standalone financial statements of the Bank for the year ended March 31, 2021 and issued an unmodified opinion vide their report dated April 30, 2021.
Our opinion on the standalone financial statements is not modified in respect of this matter.
Report on other legal and regulatory requirements
1. 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 Act and relevant rules issued thereunder.
2. 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) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. Nevertheless, during the course of our audit we have visited 30 branches to examine the records maintained at such branches for the purpose of our audit.
3. 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 purposes 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 standalone balance sheet, the standalone profit and loss account, and the standalone 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, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(e) on the basis of the written representations
received from the directors as on
March 31, 2022 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; and
(f) with respect to the adequacy of the internal financial controls with reference to standalone
financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in ''Annexure A''.
4. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
(a) the Bank has disclosed the impact of pending litigations as at March 31, 2022 on its financial position in its standalone financial statements - Refer Note 17.5.78 to the standalone 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 - Refer Note 17.5.76 to the standalone financial statements;
(c) there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank - Refer Note 17.5.65 to the standalone financial statements.
(d) (i) The management of the Bank has
represented that, to the best of its knowledge and belief, other than as disclosed in the notes to accounts (Refer note no.17.5.37), 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;
(ii) The management of the Bank has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to accounts (Refer note no. 17.5.37) 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, 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
(iii) Based on such audit procedures that were considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) contain any material misstatement.
(e) No dividend has been declared or paid during the year by the Bank.
5. With respect to the matter to be included in the Auditors'' Report under Section 197(16) of the Act:
The Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply by virtue of Section 35B(2A) of the Banking Regulation Act, 1949.
For M P Chitale & Co. For Chokshi & Chokshi LLP
Chartered Accountants Chartered Accountants
(Firm Regn. No. 101851W) (Firm Regn. No. 101872W/W100045)
Anagha Thatte Vineet Saxena
Partner Partner
(Membership No. 105525) (Membership No. 100770)
UDIN: 22105525AIJUYD4233 UDIN: 22100770AILAIH9870
Place: Mumbai Place: Mumbai
Date: April 30, 2022 Date: April 30, 2022
Mar 31, 2021
To the Members of YES BANK Limited
Report on the audit of the standalone financial statements
We have audited the standalone financial statements of YES BANK Limited (the ''Bank''), which comprise the Balance Sheet as at March 31, 2021, the Profit and Loss Account and the Cash Flow Statement for the year then ended, and a summary of the 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 section 29 of the Banking Regulation Act, 1949 as well as the Companies Act, 2013 (the ''Act'') and circulars and guidelines issued by the Reserve Bank of India, 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, including the Accounting Standards prescribed under section 133 of the Act, read with rules made thereunder, of the state of affairs of the Bank as at March 31,2021 and its loss and its cash flows for the year ended on that date.
We conducted our audit in accordance with the Standards on Auditing (''SAs'') specified under
Section 143 (10) of the Act. Our responsibilities under those SAs 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act, 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 on the standalone financial statements.
a) We draw attention to Note 18.6.69 which describes the state of affairs pertaining to the whistle blower complaints received in prior years and the subsequent actions including the corrective steps initiated by the Bank. The Management has made provisions in accordance with the
relevant prudential norms issued by the Reserve Bank of India in respect of income recognition, asset classification and provisioning and does not expect any further substantial impact on the financial position of the Bank. Our opinion is not modified of this matter.
b) We draw attention to Note 18.5.1 and 18.6.24 which describes the business uncertainties due to the outbreak of SARS-CoV-2 virus (COVID-19). In view of these uncertainties, the impact on the Bank''s financial statements is significantly dependent on future developments. Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Standalone Financial Statements of the current period. 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:
Key Audit Matters |
Auditor''s Response |
Recognition and Measurement of Deferred Tax Asset |
|
The Bank has recognised a net deferred |
Our audit procedures involved gaining an understanding of |
tax asset of ?95,538,433 (in ''000) as on |
the applicable tax laws and relevant regulations applicable |
March 31,2021, including net increase of |
to the Bank. We performed the following audit procedures |
12,728,473 (in ''000) during the year. |
as part of our controls testing including: |
Besides objective estimation, recognition |
» evaluation of the policies used for recognition and |
and measurement of deferred tax asset |
measurement of deferred tax assets in accordance with |
is based on the judgment and numerous |
AS 22 Accounting for Taxes on Income; |
estimates regarding the availability and visibility of profits in the future and also |
» assessed the probability of the availability of future |
considering probable impact of Covid-19 pandemic. |
taxable profits based on assumptions and other parameters used by the Management including the probable impact of Covid-19 pandemic against which |
The amount of deferred tax assets |
the Bank will be able to use this deferred tax asset in the |
recognised presumes availability and |
future with reference to forecast as noted by the Board |
forecasting of profits over an extended |
of Directors while adopting the standalone financial |
period of time thus increasing uncertainty |
statements. |
and the inherent risk of inappropriate |
» assessed the method for determining the Deferred Tax |
recognition of the said asset. |
Asset with reference to applicable tax rates and tested the arithmetical accuracy. |
Key Audit Matters |
Auditor''s Response |
Income Recognition and Asset Classification of Advances |
|
(IRAC) and Provisioning as per regulatory norms |
|
Please refer to Note nos. 18.6.16 and |
Our audit approach included testing the design, operating |
18.6.10(ii) relating to Asset Quality |
effectiveness of internal controls and substantive audit |
in respect of movement of Non- |
procedures in respect of income recognition, asset |
Performing Assets (NPAs) and related |
classification and provisioning pertaining to advances and |
provisions and disclosures with regard |
investments. In particular: |
to Non Performing Investments (NPI) respectively. |
» we have evaluated and understood the Bank''s internal |
control system in adhering to the relevant RBI guidelines |
|
Compliance of relevant prudential norms |
regarding income recognition, asset classification and |
issued by the Reserve Bank of India (RBI) |
provisioning pertaining to advances and investments; |
in respect of income recognition, asset classification and provisioning pertaining to advances as well as those pertaining to investments is a key audit matter due to materiality involved and the current processes at the Bank which are not fully automated, management estimates and |
» we have tested key IT systems/ applications used and their design and implementation as well as operational effectiveness of relevant controls, including involvement |
of manual process and manual controls in relation to income recognition, asset classification and provisioning pertaining to advances and investments; |
|
judgement. |
» we have test checked advances to examine the validity of |
the recorded amounts, loan documentation, examined the statement of accounts, indicators of impairment, impairment provision for non-performing assets and compliance with income recognition, asset classification and provisioning pertaining to advances in terms of applicable RBI guidelines; |
|
» we have evaluated the past trends of management |
|
judgement, governance process and review controls over impairment provision calculations and discussed the provisions made with the top and senior management of |
IT Systems and Controls over financial reporting |
|
The Bank''s key financial accounting |
» We have planned, designed and carried out the desired |
and reporting processes are highly |
audit procedures and sample checks, taking into |
dependent on Core Banking and Treasury |
consideration the IT systems of the Bank. The procedure |
Solutions and other supporting software |
adopted by us are, in our opinion, adequate to provide |
and hardware controls such that there |
reasonable assurance on the adequacy of IT controls in |
exists a risk that gaps in the IT control |
place. Towards this end, we obtained an understanding |
environment could result in the financial accounting and reporting records being |
of Bank''s IT environment. |
Key Audit Matters |
Auditor''s Response |
materially misstated. Appropriate IT controls are required to ensure that the IT applications perform as planned and the changes made are properly controlled. Such controls contribute to risk mitigation of erroneous output data. The audit outcome is dependent on the extent of IT controls and systems. |
» In addition, we have also relied on IS audit conducted by internal audit department, and also the audit of Internal Financial Control over Financial Reporting conducted by the Operational Risk Management department of the Bank. We also tested key automated and manual business cycle controls and logic for system generated reports relevant to the audit; including testing of compensating controls or performed alternate procedures to assess whether there were any unaddressed IT risks that would materially impact the financial statements. |
The Bank''s management and Board of Directors are responsible for the Other Information. The other information comprises the Management Discussion and Analysis, Directors'' Report including Annexures to Directors'' Report (collectively called as "Other Information") but does not include the standalone financial statements and our auditor''s report thereon and the Pillar III Disclosures under the New Capital Adequacy Framework (Basel III disclosures). 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 the 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.
The Bank''s management and Board of Directors are 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 state of affairs, loss 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, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines issued by 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 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 Board of Directors are 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 Management and 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.
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
» 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 with reference to 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 the Management and Board of Directors.
» Conclude on the appropriateness of the Management and Board of Directors 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 a 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 financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.
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.
The Standalone Financial Statements of the Bank for the previous year ended March 31,2020 were audited by the predecessor auditors. The auditors have expressed Qualified opinion vide their report dated May 6, 2020 on such financial statements.
Report on other legal and regulatory requirements
The standalone balance sheet and the standalone 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 Act.
A. 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) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. However, during the course of our audit we have visited 2 branches to examine the records maintained at such branches for the purpose of our audit. Subsequently, due to the ongoing Covid-19 pandemic and the lockdowns the audit processes were conducted remotely without visiting the branches.
B. 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 purposes 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 standalone balance sheet, the standalone profit and loss account, and the standalone 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, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(e) on the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act; and
(f) with respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in ''Annexure A''.
C. 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 as at March 31,2021 on its financial position in its standalone financial statements - Refer Note 18.6.70 to the standalone 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 - Refer Note 18.6.67 to the standalone financial statements;
(c) there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank - Refer Note 18.6.59 to the standalone financial statements.
D. With respect to the matter to be included in the Auditor''s Report under section 197(16) of the Act:
The Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply by virtue of Section 35B(2A) of the Banking Regulation Act, 1949.
For M. P. Chitale & Co.
Chartered Accountants
ICAI Firm Registration. No.: 101851W
Ashutosh Pednekar
Partner
Place : Mumbai ICAI Membership No.: 041037
Date : April 30, 2021 UDIN : 21041037AAAACF7681
Mar 31, 2019
Independent Auditor''s Report
To the Members of YES BANK Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
Opinion
We have audited the standalone financial statements of YES BANK Limited (the ''Bank''), which comprise the standalone balance sheet as at 31 March 2019, the standalone profit and loss account, the standalone cash flow statement for the year then ended, 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 (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 31 March 2019, and profit and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (''SAs'') specified under Section 143 (10) of the Act. Our responsibilities under those SAs 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act 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.
Emphasis of matter
We draw attention to Note 18.7.17 to the standalone financial statements which describes the ongoing enquiry by the Bank into certain anonymous whistle-blower allegations.
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 of the current period. 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.
Key audit matter How the matter was addressed in our audit |
Identification of Non-Performing Assets (''NPAs'') and Provisions on Advances Charge: Rs.20,836 million for year ended 31 March 2019 Provision: Rs.33,977 million at 31 March 2019 |
Refer to the accounting policies in the Financial Statements: Significant Accounting Policies - use of estimates" and "Note 18.4.3 to the Financial Statements: Advances" |
Key audit matter |
How the matter was addressed in our audit |
Our key audit procedures included: |
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Significant estimates and judgment involved |
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Identification of NPAs and provisions in respect of NPAs and restructured advances are made based on management''s assessment of the degree of impairment of the advances subject to and guided by the minimum provisioning levels prescribed under the RBI guidelines with regard to the Prudential Norms on Income Recognition, Asset Classification & Provisioning, prescribed from time to time. |
Design/controls Assessing the design, implementation and operating effectiveness of key internal controls over approval, recording and monitoring of loans, monitoring process of overdue loans (including those which became overdue subsequent to the reporting date), measurement of provisions, identification of NPA accounts and assessing the reliability of management information |
The provision on NPA are also based on the valuation of the security available. In case of restructured accounts, provision is made for erosion/diminution in fair value of restructured loans, in accordance with the RBI guidelines. In addition, the contingency provision that the Bank has established in the current year on assets currently not classified as NPAs is based on management''s judgment. We identified identification of NPAs and provision on advances as a key audit matter because of the level of management judgment involved in determining the provision (including the provisions on assets which are not classified as NPAs) and the valuation of the security of the NPA loans and on account of the significance to these estimates to the financial statements of the Bank. |
(including overdue reports). In addition, for corporate loans we tested controls over the internal ratings process, monitoring of stressed accounts including credit file review processes and review controls over the approval of significant individual impairment provisions. Evaluated the design, implementation and operating effectiveness of key internal controls over the valuation of security for NPAs and the key controls over determination of the contingency provision including documentation of the relevant approvals along with basis and rationale of the provision. Testing of management review controls over measurement of provisions and disclosures in financial statements. |
Involving our information system specialists in the audit of this area to gain comfort over data integrity and calculations, including system reconciliations. |
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Substantive tests |
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Test of details for a selection of exposures over calculation of NPA provisions including valuation of collaterals for NPAs as at 31 March 2019; the borrower-wise NPA identification and provisioning determined by the Bank and also testing related disclosures by assessing the completeness, accuracy and relevance of data and to ensure that the same is in compliance with the RBI guidelines with regard to the Prudential Norms on Income Recognition, Asset Classification & Provisioning. |
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We also selected a number of loans to test potential cases of loans repaid by a customer during the period by fresh disbursement(s) to these higher risk loans. |
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We selected a sample (based on quantitative and qualitative thresholds) of larger corporate clients where impairment indicators had been identified by management. We obtained management''s assessment of the recoverability of these exposures (including individual provisions calculations) and challenged whether individual impairment provisions, or lack of, were appropriate. |
Key audit matter |
How the matter was addressed in our audit |
This included the following procedures: Reviewing the statement of accounts, approval process, board minutes, credit review of customer, review of Special Mention Accounts reports and other related documents to assess recoverability and the classification of the facility; and For a risk based sample of corporate loans not identified as displaying indicators of impairment by management, challenged this assessment by reviewing the historical performance of the customer and assessing whether any impairment indicators were present. |
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Information technology |
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IT systems and controls The Bank''s key financial accounting and reporting processes are highly dependent on information systems including automated controls in systems, such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being misstated. Amongst, its multiple IT systems, five systems are key for its overall financial reporting. In addition, large transaction volumes and the increasing challenges to protect the integrity of the Bank''s systems and data, cyber security has become a more significant risk in recent periods. We have identified ''IT systems and controls'' as key audit matter because of the high level automation, significant number of systems being used by the management and the complexity of the IT architecture. |
Our key IT audit procedures included: We focused on user access management, change management, segregation of duties, system reconciliation controls and system application controls over key financial accounting and reporting systems. We tested a sample of key controls operating over the information technology in relation to financial accounting and reporting systems, including system access and system change management, program development and computer operations. We tested the design and operating effectiveness of key controls over user access management which includes granting access right, new user creation, removal of user rights and preventive controls designed to enforce segregation of duties. |
For a selected group of key controls over financial and reporting systems, we independently performed procedures to determine that these control remained unchanged during the year or were changed following the standard change management process. |
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Other areas that were assessed included password policies, security configurations, system interface controls, controls over changes to applications and databases and that business users and controls to ensure that developers and production support did not have access to change applications, the operating system or databases in the production environment. |
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Security configuration review and related tests on certain critical aspects of cyber security on network security management mechanism, operational security of key information infrastructure, data and client information management, monitoring and emergency management. |
Key audit matter |
How the matter was addressed in our audit |
Valuation of Financial Instruments (Investments and Derivatives) |
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Refer to the accounting policies in the financial statements: "Significant Accounting Policies - use of estimate", "Note 18.4.2 to the Financial Statements: Investments" and "Note 18.4.6 to the Financial Statements: Accounting for derivative transactions" |
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Subjective estimates and judgment involved |
Our key audit procedures included: |
Investments |
Design/controls |
Investments are classified into ''Held for Trading'' (''HFT''), ''Available for Sale'' (''AFS'') and ''Held to Maturity'' (''HTM'') categories at the time of purchase. Investments, which the Bank intends to hold till maturity are classified as HTM investments. Investments classified as HTM are carried at amortized cost. Where, in the opinion of management, a diminution other than temporary, in the value of investments has taken place, appropriate provisions are required to be made. |
Assessing the design, implementation and operating effectiveness of management''s key internal controls over classification, valuation, and valuation models. Reading investment agreements/term sheets entered into during the current year, on a sample basis, to understand the relevant investment terms and identify any conditions that were relevant to the valuation of financial instruments. |
Investments classified as AFS and HFT are marked-to-market on a periodic basis as per the relevant RBI guidelines. We identified valuation of investments as a key audit matter because of the management judgment involved in determining the value of certain investments (Bonds and Debentures, Commercial papers and Certificate of deposits, security receipts) based on the policy and model developed by the Bank, impairment assessment for HTM book and the overall significant investments to the financial statements of the Bank. |
Engaging our valuation specialists to assist us in evaluating the valuation models used by the Bank to value certain instruments and to perform, on a sample basis, independent valuations of the instruments and comparing these valuations with the Bank''s valuations. Assessed the appropriateness of the valuation methodology and challenging the valuation model by testing the key inputs used such as pricing inputs, measure of volatility and discount factors. Compared the valuation methodology to criteria in the accounting standards/RBI guidelines. |
Derivatives |
Substantive tests |
The Bank has exposure to derivative products which are accounted for on fair value (mark-to-market) in the books of account. The valuation of the Bank''s derivatives, held at fair value, is based on a combination of market data and valuation models which often require a considerable number of inputs. Many of these inputs are obtained from readily available data, the valuation techniques for which use quoted market prices and observable inputs. Where such observable data is not readily available, then estimates are developed which can involve significant management judgment. |
For sample of instruments we re-performed independent valuation where no direct observable inputs were used. We examined and challenged the assumptions used, by considering the alternate valuation method and sensitivity of other key factors Assessing whether the financial statement disclosures appropriately reflect the Bank''s exposure to investments and derivatives valuation risks with reference to the requirements of the prevailing accounting standards and RBI guidelines. |
We identified assessing the fair value of derivatives as a key audit matter because of the degree of complexity involved in valuing certain financial instruments and the degree of judgment exercised by management in identifying the valuation models and determining the inputs used in the valuation models. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR''S REPORT THEREON
The Bank''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Bank''s Annual report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS
The Bank''s management and Board of Directors are 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 state of affairs, profit 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, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines issued by 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 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, management and the Board of Directors are 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 management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are 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:
A 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.
A 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 with refrence to the standalone financial statement in place and the operating effectiveness of such controls.
A Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
A 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 a bank to cease to continue as a going concern.
A 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.
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.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
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 Act.
(A) 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) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. However, during the course of our audit we have visited 22 branches.
(B) 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;
(c) the standalone balance sheet, the standalone profit and loss account, and the standalone 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, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(e) on the basis of the written representations received from the directors as on 31 March 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in ''Annexure A''; and
(g) 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:
i. the Bank has disclosed the impact of pending litigations as at 31 March 2019 on its financial position in its standalone financial statements - Refer Schedule 12 and Note 18.7.18 to the standalone financial statements;
ii. 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 - Refer Note 18.7.15 to the standalone financial statements;
iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.
(h) The disclosures required on holdings as well as dealing in specified bank notes during the period from 8 November 2016 to 30 December 2016 as envisaged in notification G.S.R. 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs is not applicable to the Bank
(C) With respect to the matter to be included in the Auditors'' Report under Section 197(16):
The Bank is a banking company as defined under Banking Regulation Act, 1949. Accordingly, the requirements prescribed under Section 197 of the Companies Act, 2013 do not apply
For B S R & Co. LLP |
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Chartered Accountants |
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Firm''s Registration No: 101248W/W-100022 |
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Venkataramanan Vishwanath |
|
Mumbai |
Partner |
April 26, 2019 |
Membership No: 113156 |
Annexure A
to the Independent Auditor''s Report of even date on the Standalone Financial Statements of YES BANK Limited for the year ended 31 March 2019
Report on the Internal Financial Controls with reference to the aforesaid standalone financial statements under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
(Referred to in paragraph (B)(f) under ''Report on Other Legal and Regulatory Requirements'' Section of our report of even date)
OPINION
We have audited the internal financial controls with reference to financial statements of YES BANK Limited ("the Bank") as of 31 March 2019 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date.
In our opinion, the Bank has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2019, based on the internal financial controls with reference to financial statements 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 issued by the Institute of Chartered Accountants of India (the "Guidance Note").
MANAGEMENT''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Bank''s management and Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial control with reference to financial statement criteria established by the Bank considering the essential components of internal control stated in the Guidance Note. 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 the Bank''s 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 ("the Act").
AUDITOR''S RESPONSIBILITY
Our responsibility is to express an opinion on the Bank''s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.
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 with reference to financial statements included obtaining an understanding of internal financial controls, 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 auditor''s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Bank''s internal financial controls with reference to financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
A company''s internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control with reference to financial
statement 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 company; (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 expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the standalone financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statement become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
For B S R & Co. LLP |
|
Chartered Accountants |
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Firm''s Registration No: 101248W/W-100022 |
|
Venkataramanan Vishwanath |
|
Mumbai |
Partner |
April 26, 2019 |
Membership No: 113156 |
Mar 31, 2018
REPORT ON THE AUDIT OF STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of YES BANK LIMITED (the âBankâ), 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 notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.
MANAGEMENTâS RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Bankâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the âActâ) with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, profit 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, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars, guidelines and directions 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 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, 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 RESPONSIBILITY
Our responsibility is to express an opinion on these standalone financial statements based on our audit.
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.
We conducted our audit of standalone financial statements of the Bank in accordance with the Standards on Auditing (the âStandardsâ) 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 standalone financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bankâs preparation of the standalone 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 the accounting policies used and the reasonableness of the accounting estimates made by the Bankâs Directors, as well as evaluating the overall presentation of the standalone financial statements.
We are also responsible to 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 the auditorâs 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 the auditorâs report. However, future events or conditions may cause an entity to cease to continue as a going concern.
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
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 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 31 March 2018, and its profit and its cash flows for the year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
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 Act.
As required by sub-section (3) of Section 30 of the Banking Regulation Act, 1949, we report that:
(a) Â Â Â 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) Â Â Â The transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and
(c) Â Â Â Since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. However, during the course of our audit we have visited 28 branches.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Further, as required by Section 143 (3) of the Act, we report that:
(a) Â Â Â 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) Â Â Â 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) Â Â Â 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;
(d) Â Â Â I n our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, to the extent they are not inconsistent with the accounting policies prescribed by RBI;
(e) Â Â Â On the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) Â Â Â With respect to the adequacy of the internal financial controls with reference to the standalone financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Aâ and;
(g) Â Â Â 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:
(i) Â Â Â The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 18.7.17 to the standalone financial statements;
(ii) Â Â Â 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 - Refer Note 18.7.15 to the standalone financial statements;
(iii) Â Â Â There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank.
(iv) The disclosures required on holdings as well as dealing in Specified bank notes during the period from 8 November 2016 to 30 December 2016 as envisaged in notification G.S.R. 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs is not applicable to the Bank.
YES BANK Limited Report on the Internal Financial Controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013
We have audited the internal financial controls over financial reporting of YES BANK Limited (the âBankâ) as at 31 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
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 (the âGuidance Noteâ) issued by the Institute of Chartered Accountants of India (the âICAIâ). 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 (the âActâ).
AUDITORâS RESPONSIBILITY
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 and the Standards on Auditing (the âStandardsâ), 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.
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 auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
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
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 expenditures 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
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
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 2018, 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 B S R & Co. LLP
                                     Chartered Accountants
                                      Firmâs Registration No: 101248W/W - 100022
                                     Manoj Kumar Vijai
Mumbai                         Partner
26 April 2018 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Membership No: 046882
Â
Mar 31, 2017
INDEPENDENT AUDITORSâ REPORT
To,
The Members of Yes Bank Limited
REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of YES BANK LIMITED (âthe Bank''), which comprise the Balance Sheet as at March 31, 2017, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
MANAGEMENTâS RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Bank''s Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the 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, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars, guidelines and directions issued by the Reserve Bank of India (âRBI'') 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 the design, implementation and maintenance of 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.
AUDITORâS RESPONSIBILITY
Our responsibility is to express an opinion on these standalone financial statements based on our audit.
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.
We conducted our audit in accordance with the Standards on Auditing (âthe 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 from material misstatement.
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 risk 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 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 the 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.
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
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 relevant requirements of the Companies Act, 2013, 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 31 March 2017, its profit and its cash flows for the year then ended on that date.
OTHER MATTERS
The standalone financial statements of the Bank for the year ended March 31, 2016 were audited by another auditor who expressed an unmodified opinion on those statements on 27 April 2016.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
The Balance Sheet and 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 the Rule 7 of the Companies (Accounts) Rules, 2014.
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) since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. During the course of our audit we have visited 22 branches.
The disclosure required on holdings as well as dealings in Specified Bank Notes during the period from November 08, 2016 to December 30, 2016 as envisaged in notification GSR 308(E) dated March 30, 2017 issued by the Ministry of Corporate Affairs, is not applicable to the Bank. Refer note 18.7.17 to the financial statements.
Further, as required by Section 143 (3) of the Companies Act, 2013, we further 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;
(c) t he 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;
(d) i n 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.
(e) on the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) with respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate Report in "Annexure Aâ;
(g) 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:
(i) The Bank has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 18.7.15 to the financial statements;
(ii) 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 - Refer Note 18.7.16 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.
Report on the Internal Financial Controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013
We have audited the internal financial controls over financial reporting of YES Bank Limited (âthe Bank'') as at March 31, 2017 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
The Bank''s 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 Note'') issued by the Institute of Chartered Accountants of India (âthe ICAI''). 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 Bank''s 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 Act'').
AUDITORâS RESPONSIBILITY
Our responsibility is to express an opinion on the Bank''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing (âthe Standards''), 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.
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 auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Bank''s internal financial controls system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A Bank''s 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 Bank''s 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 expenditures 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 Bank''s assets that could have a material effect on the financial statements.
INHERENT LIMITATION OF INTERNAL FINANCIAL CONTROL OVER FINANCIAL REPORTING
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
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 March 31, 2017, 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 issued by the ICAI.
For B S R & Co. LLP
Chartered Accountants
Firm''s Registration No. 101248W/W - 100022
Manoj Kumar Vijai
Mumbai Partner
April 19, 2017 Membership No. 046882
Mar 31, 2015
1. We have audited the accompanying standalone financial statements of
Yes Bank Limited (hereinafter referred to as "the Bank"), which
comprise the BaLance Sheet as at 31 March, 2015 and the Profit and Loss
Account and the Cash FLow statement for the year then ended and
significant accounting poLicies and notes forming part of the accounts.
Management''s Responsibility for the Standalone 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 preparation of these standalone financial statements
that give a true and fair view of the financial position, financial
performance and cash Rows 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. 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 internaL financial controLs, that
were operating effectively for ensuring the accuracy and completeness
of the accounting records, reLevant to the preparation 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 standaLone
financial statements based on our audit. 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. We conducted our
audit in accordance with the Standards on Auditing 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
from materiaL misstatement.
4. An audit invoLves performing procedures to obtain audit evidence
about the amounts and disclosures in the financiaLstatements.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 of the financial statements that give a true and
fair view in order to design audit procedures that are appropriate in
the circumstances,butnotforthe purpose of expressing an opinion on
whether the Bank has in pLace an adequate internaL financial controLs
system over financial reporting and the operating effectiveness of such
controLs. 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. We beLieve that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
5. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid standaLone financial
statements together with the 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 of the state of affairs of the Bankas at 31 March
2015,and its profit and its cash Rows for the year then ended.
Report on Other Legal and Regulatory Matters
6. 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 readwith Section 133 of the Companies Act, 2013
read with RuLe 7 of the Companies (Accounts) RuLes,2014.
7. As required sub section (3) of section 30 of the Banking Regulation
Act, 1949 and the appointment Letter dated 27 May2014,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 financiaL accounting systems of the Bank are centraLised and
therefore, accounting returns for the purpose of preparing financiaL
statements are not required to be submitted by the branches; we have
visited 20 branches for the purpose of our audit.
8. Further, as required by section 143(3) of the Companies Act, 2013,
we further reportthat:
(a) We have sought and obtained aLL the information and explanation
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 appears from our examination of those
books;
(c) The BaLance Sheet, the Profit and Loss Account and the Cash FLow
Statement deaLt with by us in the 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 RuLe 7 of the Companies (Accounts) RuLes,2014.
(e) On the basis of the written representations received from the
directors as on 31 March, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March, 2015
from being appointed as a director in terms of Section 164 (2) ofthe
Act.
Other Matters
9. 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 standaLone financiaL statements - Refer Note
18.8.13 to the standaLone financiaL statements;
(b) The Bank has made provision, as required under the appLicabLe Law
or accounting standards, for materiaL foreseeable Losses on Long-term
contracts including derivative contracts - Refer Note 18.8.14 to the
financiaL statements.
(c) There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Bank.
For S.R. Batliboi & CO. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E
per Viren H. Mehta
Place of Signature: Mumbai Partner
Date: 22 April 2015 Membership Number: 048749
Mar 31, 2014
1. We have audited the accompanying financial statements of Yes Bank
Limited, which comprise the Balance Sheet as at 31 March 2014, the
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.
Management''s Responsibility for the Financial Statements
2. Management is responsible for 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
accounting principles generally accepted in India, including the
Accounting Standards notified under the Companies Act, 1956 ("the Act")
read with General Circular 8/2014 dated 4 April 2014. Issued by the
Ministry of Corporate Affairs read with guidelines issued by the
Reserve Bank of India Insofar as they are applicable to the Bank and in
conformity with Forms A and B (revised) of the Third Schedule to the
Banking Regulation Act, 1949 as applicable. This responsibility
includes the design, implementation and maintenance of internal control
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. 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 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 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 financial statements 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 31 March, 2014;
(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 Matters
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. As required by section 227(3) of the Act, section 30(3) of the
Banking Regulation Act, 1949 and the appointment letter dated 6 June
2013 issued by the Reserve Bank of India, 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 financial accounting systems of the Bank are centralised and
therefore, accounting returns for the purpose of preparing financial
statements are not required to be submitted by the branches; we have
visited 20 branches for the purpose of our audit;
9. 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 8/2014 dated 4 April
2014, issued by the Ministry of Corporate Affairs.
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 account.
(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) 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 March 2014 from being appointed as a
director in terms of clause (g) of subsection (1) of section 274 of the
Companies Act, 1956.
For S.R. BaTLIBOI & cO. LLp
Chartered Accountants
Firm''s Registration Number: 301003E
per Surekha gracias
Partner
Membership Number: 105488
Place of Signature: Mumbai
Date: 23 April 2014
Mar 31, 2013
1. We have audited the accompanying financial statements of Yes Bank
Limited ("the Bank"), which comprise the Balance Sheet as at 31 March
2013, the 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.
Management''s Responsibility for the Financial Statements
2. Management is responsible for 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
accounting principles generally accepted in India, including the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 ("the Act") read with guidelines issued by the
Reserve Bank of India insofar as they are applicable to the Bank and in
conformity with Forms A and B (revised) of the Third Schedule to the
Banking Regulation Act, 1949 as applicable. This responsibility
includes the design, implementation and maintenance of internal control
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. 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 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 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 financial statements 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 31 March, 2013;
(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 Matters
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. 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 financial accounting systems of the Bank are centralised and
therefore, accounting returns for the purpose of preparing financial
statements are not required to be submitted by the branches; we have
visited 20 branches for the purpose 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) of section 211 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 account.
(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) 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 March 2013 from being appointed as a
director in terms of clause (g) of subsection (1) of section 274 of the
Companies Act, 1956.
For S.R. BATLIBOI & CO. LLP
Chartered Accountants
ICAI Firm''s Registration Number: 301003E
Place of Signature: per Surekha Gracias
Mumbai Partner
Date: 17 April 2013 Membership Number: 105488
Mar 31, 2011
1. We have audited the attached balance sheet of the Yes Bank Limited
(the Bank) as at 31 March, 2011, and the related Profit and loss
account and the cash fow statement of the Bank for the year ended on
that date, annexed thereto. These financial statements are the
responsibility of the Banks management. Our responsibility is to
express our opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with 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 misstatements. 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 that 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 provision of section 29 of the Banking
Regulation act, 1949 read with section 211 of the Companies act, 1956.
4. We report thereon as follows :
i) 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;
ii) The transactions of the Bank which have come to our notice have
been within the powers of the Bank;
iii) In our opinion, proper books of account as required by law have
been kept by the Bank in so far as it appears from our examination of
those books;
iv) The balance sheet, Profit and loss account and cash fow statement
dealt with by this report are in agreement with the books of account of
the Bank;
v) In our opinion, the accompanying balance sheet, Profit and loss
account and cash fow statement dealt with by this report comply with
the accounting standards referred to in sub-section (3C) of section 211
of the Companies act, 1956, to the extent they are not inconsistent
with the accounting policies prescribed by the Reserve Bank of India;
vi) as per 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;
vii) On the basis of written representations received from the
Directors as on 31 March, 2011, and taken on record by the Board of
Directors, we report that none of the Directors are disQualified as on
31 March, 2011 from being appointed as a Director under section
274(1)(g) of the Companies act, 1956; and
viii) 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 banking companies and give a true and fair view in conformity with
the accounting principles generally accepted in India :
a) in the case of the balance sheet, of the state of affairs of the
Bank as at 31 March, 2011;
b) in the case of the Profit and loss account, of the Profit of the Bank
for the year ended on that date; and
c) in case of cash fow statement, of the cash fows for the year ended
on that date.
For B S R & Co.
Chartered Accountants
Firms Registration no.: 101248W
Akeel Master
Mumbai Partner
20 april, 2011 Membership no.: 046768