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Integrated report Statutory reportS Financial StatementS
Consolidated

Description of Key Audit Matter
Revenue recognition (refer notes 2.18 and 27 to the Consolidated Financial Statements)

The Key Audit Matter (KAM) How the matter was addressed in our audit
revenue is recognised when the control of the underlying Our audit procedures included:
products has been transferred to the customer.
• assessing the revenue recognition policies of the group
revenue is measured based on transaction price, which is the including accounting for sales returns and discounts for
consideration, after deduction of estimated accruals for sales compliance with Ind aS;
returns and discounts (including rebates and incentives).
• the group has manual and automated (information
due to the group’s sales under various contractual terms and across technology – It) controls on recording revenue and accruals
geographies, delivery to customers in different regions might take for sales returns and discounts. We tested the design,
different time periods and may result in undelivered goods at the implementation and operating effectiveness of these
period end. We consider there to be a risk of misstatement of the controls. We involved our It specialists for It testing. In respect
Financial Statements related to transactions occurring close to the of cut-off and fraud risk, we focused on controls around
year end, as transactions could be recorded in the wrong financial the timely and accurate recording of sales transactions.
period (cut-off risk).
For auditing assumptions of discounts and estimates of
there is also a risk of revenue being overstated due to fraud sales returns, we focused on controls around the accurate
resulting from pressure on the group to achieve performance recording of accruals for sales returns and discounts.
targets at the reporting period end.
Fraud and cut-off risk
the recognition and measurement of discounts involves
significant assumptions and estimates, particularly the expected • performing testing on selected statistical samples of revenue
level of claims of each customer. transactions recorded during the year. We verified contractual
terms of the invoice, acknowledged delivery receipts and
estimation of sales returns also involves significant judgement and tested the transit time to deliver the goods. our tests of detail
estimates. these factors include, for example, climatic conditions focused on cut-off samples to verify only revenue pertaining
and the length of time between sales and sales returns, some of to current year is recognised based on terms and conditions
which are beyond the control of the group.
set out in sales contracts and delivery documents;
accordingly, fraud and cut-off risks in revenue recognition
including accruals for sales returns and discounts is a key audit • assessing high risk manual journals posted to revenue to
matter. identify unusual items.

Accrual for sales returns and discounts
• Selecting samples of revenue transactions and verifying
accruals for discounts in accordance with the eligibility
criteria mentioned in the marketing circulars;
• evaluating the group’s ability to accurately estimate the
accrual for sales returns and discounts. Comparing historically
recorded accruals to the actual amount of sales returns and
discounts.

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