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• Annual Report 2018-19
Shaping the future of software driven business
Independent Auditor’s Report
To The Members of Persistent Systems Limited
Report on the Audit of Standalone Financial Statements
Opinion
We have audited the accompanying Standalone Financial statements (“the Financial Statements”) of
Persistent Systems
Limited
(“the Company”), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss (including
Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended
on that date, and a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Financial
Statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and
fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India,
of the state of affairs of the Company as at 31 March 2019, profit, total comprehensive income, its cash flows and the changes
in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the Financial Statements in accordance with the Standards on Auditing specified under section
143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor’s Responsibility for the
Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant
to our audit of the Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled
our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit
evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Financial Statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial
Statements of the current year. These matters were addressed in the context of our audit of the Financial Statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined
the matters described below to be the Key Audit Matters to be communicated in our report.
Sr. No. Key Audit Matter
Auditor’s Response
1
Revenue Recognition – Ind AS 115
Appropriateness of recognition, measurement, presentation
and disclosures of revenues and other related balances in
view of adoption of Ind AS 115 “Revenue from Contracts
with Customers” (new revenue accounting standard)
The application of the new revenue accounting standard
involves certain key judgements relating to identification
of distinct performance obligations, determination of
transaction price of the identified performance obligations,
the appropriateness of the basis used to measure revenue
recognized over a period. Revenue share income from one of
the main customers is accrued as a % of total sales made by
the customer during the period. Calculation of total sales for
the period is finalized by the customer post the period end.
Accrual of revenue share income thereon is therefore, based
on the management’s estimate as of the period end date.
Principal Audit Procedures
We assessed the Group’s process to identify the impact of adoption of
the new revenue accounting standard.
Our audit approach consisted testing of the design and operating
effectiveness of the internal controls and substantive testing as follows:
• Evaluated the design of internal controls relating to implementation
of the new revenue accounting standard.
• Selected a sample of continuing and new contracts, and tested
the operating effectiveness of the internal control, relating
to identification of the distinct performance obligations and
determination of transaction price. We carried out a combination of
procedures involving enquiry and observation, re-performance and
inspection of evidence in respect of operation of these controls.
• Selected a sample of continuing and new contracts and performed
the following procedures:
• Read, analysed and identified the distinct performance obligations
in these contracts.
• Considered the terms of the contracts to determine the transaction
price including any variable consideration to verify the transaction
price used to compute revenue and to test the basis of estimation
of the variable consideration.