To the Members of SUPRA PACIFIC FINANCIAL SERVICES LIMITED Report on the Audit of Financial Statements
Opinion
We have audited the accompanying financial statements of Supra Pacific Financial Services Limited (‘the Company’), which comprise the Balance Sheet as at 31st March, 2024, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash flows for the year then ended and the notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards ) Rules, 2015,as amended, ("IND AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2024, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standard of Auditing (SAs) specified under section 143(10) of the Act. Our responsibility under those SAs are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.
Key Audit Matters
Key audit matter is a matter that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of 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 key audit matter to be communicated in our report.
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Key Audit Matter
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Auditor's Response
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Impairment of carrying value of loans and advances:
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Principal audit procedures performed:
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Management estimates impairment provision using Expected
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We examined Board policy approving methodologies for computation of
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Credit Loss Model (ECL) for the loan exposure. Measurement of
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ECL that address policies, procedures and controls for assessing and
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loan impairment involves application of significant judgement by
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measuring credit risk on all lending exposures, commensurate with the
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the management. The most significant judgements are:
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size, complexity and risk profile specific to the Company. The parameters
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* Timely identification and classification of impaired loans
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and assumptions used and their rationale and basis are clearly
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* Determination of probability of defaults (PD) and estimation of
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documented.
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loss given defaults (LGD) based on the value of collaterals and
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We evaluated the design and operating effectiveness of controls across the
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relevant factors
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processes relevant to determination of ECL, including the judgements and
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The Company doesn't have credit loss history and has assigned PD
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estimates.
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to each borrower on the basis of Company's internal rating model
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These controls, among others, included controls over the allocation of
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on various rating agencies database and LGD are based on the
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assets into stages including maangement's monitoring of stage
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value of collaterals and relevant factors.
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effectiveness, model monitoring including the need for post model adjustments, model validation, credit monitoring, individual provisions and production of journal entries and disclosures.
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The estimation of Expected Credit Loss (ECL) on financial
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We tested the completness of loans and advances included in the Expected
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instruments involve significant judgements and estimates.
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Credit Loss calculation as on 31 March 2024 by reconciling it with the
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Following are the points with increased level of audit focus:
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balances as per loan balance register as on the date.
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* Classification of assets to stage 1,2 or 3 using criteria in
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We tested assets in stage 1,2 and 3 on sample basis to verify that they were
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accordance with Ind AS 109
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allocated to the appropriate stage.
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* Accounting interpretations and data used to build and run the
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For samples of exposure, we tested the appropriateness of determining
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models
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Exposure at Default(EAD), PD and LGD.
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The estimation of Expected Credit Loss (ECL) on financial
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For exposure determined to be individually impaired, we tested samples of
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instruments involve significant judgements and estimates.
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loans and advances and examined management's estimate of future cash
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Following are the points with increased level of audit focus:
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flows, assessed their reasonableness and checked the resultant provision
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* Classification of assets to stage 1,2 or 3 using criteria in accordance with Ind AS 109
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calculations
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* The disclosures made in financial statements for ECL especially
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For forward looking assumptions used in ECL calculations, we held
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in relation to judgements and estimates by the management in
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discussions with management, assessed the assumptions used and
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determination of the ECL.
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probaility weighs assigned to the possible outcomes.
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Commission Income from Loan Facilitation:
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Principal audit procedures performed:
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* During the year the Company has received Rs. 639.00 Lakhs as
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We assessed the Company’s process on income computation. Our audit
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Commissions which accounts for 25% of the Company's revenues.
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approach consisted testing of the design and operating effectiveness of the
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These commissions on loans are based on facilitating loans by
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internal controls and substantive testing as follows:
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bringing customers to lenders and managing the end-to-end
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Performed analytical procedures and test of detail procedures
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processes of these loans. The commission is based on agreements with lenders. Given the complexity of the agreements, variability in
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for testing the accuracy of the revenue recorded.
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commission structures, and the significant judgment required in
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Validate Commission Rates: Verified that the Commission rates
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recognizing huge revenue accurately, we have considered the
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applied to loans facilitated align with contractual agreements and market
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recognition of commission income from loan facilitation as a Key Audit Matter.
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benchmarks.
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Other Information
• The Company’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report, but does not include the 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 financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
• In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
• When we read the management report, if we conclude that there is a material misstatement therein, we are required to communicate the matters to those charged with governance as required under SA 720 'The Auditor's responsibilities Relating to Other Information'
Management’s responsibility for the financial statements
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, and cash flows and changes in equity of the Company in accordance with the IND AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the company to expresss an opinion on the financial statements.
Materiality is the magnitude of misstatements in the fianacial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of atmost significance in the audit of financial statements of the current year and are therefore the key audit matter.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
A. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of subsection (11) of section 143 of the Companies Act, 2013, we give in Annexure "A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
B. As required by Section 143 (3) of the Act, based on our audit we report that:
1. 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.
2. In our opinion, proper books of account as required by law have been kept by the company so far as it appears from our examination of those books.
3. The company does not have any branches and so the provisions of section 143(8) are not applicable to the company.
4. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash flows dealt with by this Report are in agreement with the books of account.
5. In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.
6. On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2024 from being appointed as a director in terms of Section 164 (2) of the Act.
7. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure B’. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.
8. With respect to the other matter to be included in the auditor's report in accordance with the requirements of section 197(16) of the Act, as ammended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the company to its directors during the year is in accordance with the provisions of section 197 of the Act.
9. With respect to the 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 explanation given to us:
i. The Company does not have any pending litigations which would impact its financial position in its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable
losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the company;
iv.
(a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“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 Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company 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
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under the sub-clause (a) and (b) contain any material misstatement.
v. Since the Company has not declared or paid any dividend during the year, the question of commenting on whether dividend
declared or paid is in accordance with Section 123 of the Companies Act, 2013 does not arise.
C. Based on our examination carried out in accordance with the Implementation Guidance on Reporting on Audit Trail under Rule 11(g) of the companies (Audit and Auditors) Rules, 2014 (Revised 2024 Edition) issued by the Institute of Chartered Accountants of India, the Company uses two accounting softwares, a core banking system for recording its financing operations and Tally software for its routine accounting tranactions. The core banking system software has a feature of recording audit trail (edit log) which has been operational throughout the year. However, the tally software's audit trail feature (edit log) has not been operational throughout the year.
For G Joseph & Associates
Chartered Accountants Firm Reg. No. 006310S
UDIN: 24228498BKDGLM6194 Allen Thomas Joseph
Partner
Place: Kochi Membership No: 228498
Date : May 29, 2024
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