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| Exchange Disseminated Time | Mahanagar Telephone Nigam Ltd (MTNL) has informed BSE that in the limited review report of the Company for the quarter ended June 30, 2007, the Auditors of the Company have made the following observations:
"The unaudited financial results of Mumbai, Delhi & MS Units of the Company have been reviewed by other Chartered Accountant firms, who were appointed by the management for the purposes of review of the un-audited financial results of respective units to be considered in preparation of results as per clause 41 of the Listing Agreement for the three months ended 30 June 2007. The review reports of the Auditors of Mumbai, Delhi & MS Units on three months financial results have been forwarded to us & the same have been suitably dealt with, in Auditors' Limited Review Report on the un-audited financial results of the company for the three month period ended June 30, 2007.
Observations :
1. The Company, in its un-audited results published for the quarter under review / report, has neither disclosed - How the qualifications made by the auditors in respect of previous accounting years have been addressed nor it has given the impact of these qualifications on the Profit and Loss in the un-audited quarterly results for the quarter under report, as required under the provisions of clause 41 of the Listing Agreement.
2. The Company has not determined liability in terms of revised Accounting Standard - 15 issued by the Institute of Chartered Accountants of India, on "Employees Benefits" effective from accounting period commencing on or after December 07, 2006. Pending actual determination of the above liability in respect of employee's benefits, the impact of the above on the accounts for the quarter under review is not ascertainable.
3. The Company has adopted the following basis for valuing Fixed Assets, Capital Work in Progress & Depreciation, which in our opinion, is not in agreement with Accounting Standard - 10 - "Accounting for Fixed Assets", and Accounting Standard - 6 - "Accounting for Depreciation", issued by the Institute of Chartered Accountants of India:
(a) The overheads are allocated as a percentage of capital expenditure as prescribed by DOT and not on the basis of identification of directly allocable costs.
(b) Expenditure on replacement of cables, apparatus & plants, installation and rehabilitation work is capitalized, as per Significant Accounting Policy of the Company. This, being a technical matter, the Auditors have placed reliance on the opinion of the management.
4. The Company has adopted the basis of valuation of inventories (except for WLL Handsets) as per Significant Accounting Policy of the Company, which is not in accordance with the Accounting Standard - 2 on "Valuation of Inventories" issued by the Institute of Chartered Accountants of India which prescribes for valuation of the same at the lower of Cost or Net Realisable Value. Further, the Company has not done compliance of AS 5 - On Prior Period Items, AS 26 - Intangible assets, and AS 28 - Impairment of Assets.
5. The provision for Bonus / Ex-Gratia has been made on estimated basis. Pending actual determination of the liability in respect of Bonus / Ex-Gratia, the impact of the same on the accounts for the quarter under review is not ascertainable.
6. In respect of Mumbai Unit:
- The control accounts of the unit are subject to adjustment / reconciliation.
7. In respect of Delhi Unit:
- The sundry debtors control account, subscriber deposit account and interest accrued thereon, unlinked receipts from subscribers, subsidiary records and ageing records are subject to reconciliation and consequent adjustments.
8. In case of Mobile Unit:
- Depreciation for the quarter has been provided on adhoc basis. This is not in accordance with AS 6 of Depreciation Accounting issued by the ICAI which requires appropriate amount of depreciation to be charged over the useful life of the assets. As a result, depreciation stated will vary with actuals by amounts, which cannot be ascertained by the management. The past experience shows that the variation is significant.
- The sundry debtors control account and subsidiary records and IUC charges payable and receivable from different operators are subject to reconciliations and consequent adjustments.
9. All receivables and payables including amount due / payable to BSNL / DOT and bank balances are subject to confirmation, reconciliation and consequent adjustments. Also the sundry debtors control accounts and the subsidiary records are subject to reconciliation and consequent adjustments.
10. The overall impact of matters referred to in the foregoing para on the Statements of unaudited financial results is not determined / unascertainable.
11. Corresponding previous period ending June 30, 2006 figures are re-grouped and re arranged, wherever considered necessary." |
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