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Integrated Report Statutory Reports Financial Statements
1-59 60-146 Consolidated
Description of Key Audit Matter
Revenue recognition (refer notes 2.18 and 27 to the Consolidated Financial Statements)
The Key Audit Matter 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 technology – IT) controls on recording revenue and
across geographies, delivery to customers in different regions accruals for sales returns and discounts. We tested the
might take different time periods and may result in undelivered design, implementation and operating effectiveness of
goods at the period end. We consider there to be a risk of these controls. We involved our IT specialists for IT testing.
misstatement of the Financial Statements related to transactions In respect of cut-off and fraud risk, we focussed on controls
occurring close to the year end, as transactions could be recorded around the timely and accurate recording of year end sales
in the wrong financial period (cut-off risk). transactions. For auditing assumptions of discounts and
There is also a risk of revenue being overstated due to fraud estimates of sales returns, we focussed on controls around
resulting from pressure on the Group to achieve performance the accurate recording of accruals for sales returns and
targets at the reporting period end. discounts.
The recognition and measurement of discounts involves Fraud and cut-off risk
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 end.
Estimation of sales returns also involves significant judgement and We verified contractual terms of the invoice and tested the
estimates. These factors include, for example, climatic conditions transit time to deliver the goods;
and the length of time between sales and sales returns, some of Assessing high risk manual journals posted to revenue to
which are beyond the control of the Group. identify unusual items.
Accordingly, fraud and cut-off risks in revenue recognition Accrual for sales returns and discounts
including accruals for sales returns and discounts is a key audit Selecting samples of revenue transactions and verifying
matter.
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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