Format pack, 7 formats · FV03-C28

Modifications, Emphasis of Matter and Key Audit Matters

Every modified opinion is the answer to two separate questions, what kind of problem is it, and how far does it spread, and the report must quantify it, not gesture at it; emphasis of matter and key audit matters sit alongside the opinion but can never do its job.

Length
7 pages
Blanks to fill
53
Files
Word and PDF
Law stated to
13 September 2026

The 7 formats inside

  1. 1Key audit matter, revenue recognition, contract manufacturerSA 7019 blanksOn its own₹149
  2. 2Key audit matter, expected credit loss allowance, distributorSA 7017 blanksOn its own₹149
  3. 3Qualified opinion, inability to obtain evidence over inventorySA 705(R)10 blanksOn its own₹149
  4. 4Qualified opinion, misstatement in the expected credit loss provisionSA 705(R)7 blanksOn its own₹149
  5. 5Disclaimer of opinionSA 705(R)12 blanksOn its own₹149
  6. 6Material uncertainty related to going concern, report paragraphSA 570(R)9 blanksOn its own₹149
  7. 7Emphasis of matter paragraph, two worked examplesSA 706(R)7 blanksOn its own₹149

Read the opening

The first part of “Key audit matter, revenue recognition, contract manufacturer”, as it downloads. Blanks are highlighted.

Key Audit Matters

Revenue recognition — determination of the point of transfer of control and measurement of variable consideration under long-term supply agreements (Note [Note number for revenue recognition])

Key audit matter

How our audit addressed the key audit matter

[Company name] is a contract manufacturer of [precision-machined components / electronic sub-assemblies] supplied to two original equipment manufacturer customers under long-term supply agreements, and revenue of Rs [amount] crore for the year (previous year: Rs [amount] crore) represents [percentage]% of the Company's turnover. We identified this as a key audit matter because: (a) the two agreements transfer control on different terms — one on delivery to the customer's dock, the other ex-works with a contractual bill-and-hold arrangement under which finished goods are invoiced and held in the Company's own warehouse pending the customer's call-off instruction — which requires management judgement in applying Ind AS 115; (b) both agreements embed retrospective, volume-linked price step-downs recognised as variable consideration, constrained to the amount highly probable not to reverse, which is a significant estimate; (c) [percentage]% of annual revenue by value is invoiced in the last fifteen days of March; and (d) revenue carries the presumed fraud risk under SA 240.

We read both supply agreements and their amendment history and mapped each to the point at which control transfers under Ind AS 115. For the bill-and-hold arrangement, we tested each of the four criteria — a substantive reason for the arrangement, separate identification of the goods as belonging to the customer, the goods being ready for physical transfer, and the Company's inability to use the goods or direct them to another customer — against the customer's call-off correspondence and the physical segregation of goods in the warehouse, for a sample of [n] invoices covering Rs [amount] crore. We independently recomputed the variable consideration constraint from three years of actual price step-down settlement history and compared it with management's constraint. We performed forward and backward cut-off testing on invoices raised in the last and first ten days of the year, agreeing each to despatch documentation, e-way bills and, for the bill-and-hold customer, the call-off instruction. We performed the revenue analytics at C.6 — revenue realised per unit despatched, and the ratio of credit notes issued in April and May to March sales — across both customer accounts. Our procedures did not identify a material misstatement in the revenue recognised under either contract.

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