Page 254 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22

Litigations and claims (refer notes 2.3.5, 2.26, 21 and 47 to the Consolidated Financial Statements)
The Key Audit Matter How the matter was addressed in our audit
The Group operates in various countries exposing it to a variety Our audit procedures included:
of different laws, regulations and interpretations thereof. The • Obtaining an understanding of actual and potential
provisions and contingent liabilities relate to ongoing litigations outstanding litigations and claims against the Group from
and claims with various authorities. Litigations and claims may the respective entity’s in-house Legal Counsel and other
arise from direct and indirect tax proceedings, legal proceedings, senior personnel of the Group and assessing their responses;
including regulatory and other government/department • Assessing status of the litigations and claims based on
proceedings, as well as investigations by authorities and correspondence between the Group and the various tax/
commercial claims.
legal authorities and legal opinions obtained by the Group;
Resolution of litigations and claims proceedings may span over • Testing completeness of litigations and claims recorded by
multiple years beyond March 31, 2022 due to the complexity assessing the Group’s legal expenses and the minutes of the
and magnitude of the legal matters involved and may involve Board meetings;
protracted negotiation or litigation.
• Assessing and challenging the Group’s estimate of the
The computation of a provision or contingent liability requires possible outcome of litigations and claims. This is based on
significant judgement by the Group because of the inherent the applicable tax laws and legal precedence by involving
complexity in estimating future costs. The amount recognised as our tax specialists in taxation related matters and internal/
a provision is the best estimate of the expenditure. The provisions external legal counsel;
and contingent liabilities are subject to changes in the outcomes
of litigations and claims over time as new facts emerge as each • Evaluating the Company’s internal control and judgements
legal case progresses and positions taken by the Group. made by comparing the estimates of prior year to the actual
outcome;
There is inherent complexity and magnitude of potential
exposures is significant across the Group. Significant judgment is • Assessing and testing the adequacy and completeness of
necessary to estimate the likelihood, timing and amount of the the Group’s disclosures in respect of litigations and claims.
cash outflows, interpretations of the legal aspects, legislations and
judgements previously made by the authorities. Accordingly, this
is identified as a key audit matter.

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