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Annual Report 2016-17
Annexure “A” to the Independent Auditors’ Report
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of
even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 (“the Act”)
In conjunction with our audit of the consolidated Ind AS onancial statements of the Company as of and for the year
ended March 31, 2017, we have audited the internal onancial controls over onancial reporting of Persistent Systems
/imited (hereinafter referred to as “Parent”), as of that date.
Management’s Responsibility for Internal Financial Controls
The Board of Directors of the Parent, is responsible for establishing and maintaining internal onancial controls based on
the internal control over onancial reporting criteria established by the Company considering the essential components
of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India (“the ICAI)”. These responsibilities include the design, implementation
and maintenance of adequate internal onancial controls that were operating effectively for ensuring the orderly and
efocient conduct of its business, including adherence to the Parent’s policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable onancial information, as required under the Companies Act, 2013.
Auditors’ Responsibility
Our responsibility is to e[press an opinion on the Parent’s internal onancial controls over onancial reporting based on
our audit. :e conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards
on Auditing, prescribed under Section 143(10) of the Companies Act, 2013, to the e[tent applicable to an audit of internal
onancial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether adequate internal onancial controls over onancial
reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal onancial controls
system over onancial reporting and their operating effectiveness. Our audit of internal onancial controls over onancial
reporting included obtaining an understanding of internal onancial controls over onancial reporting, assessing the risk
that a material weakness e[ists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. The procedures selected depend on the auditors’ judgement, including the assessment of
the risks of material misstatement of the onancial statements, whether due to fraud or error.
:e believe that the audit evidence we have obtained, is sufocient and appropriate to provide a basis for our audit
opinion on the Parent’s internal onancial controls system over onancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company’s internal onancial control over onancial reporting is a process designed to provide reasonable assurance
regarding the reliability of onancial reporting and the preparation of onancial statements for e[ternal purposes in
accordance with generally accepted accounting principles. A company’s internal onancial control over onancial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly repect the transactions and dispositions of the assets of the company (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of onancial statements in accordance
with generally accepted accounting principles, and that receipts and e[penditures of the company are being made only
in accordance with authorisations of management and directors of the company and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that
could have a material effect on the onancial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal onancial controls over onancial reporting, including the possibility of
collusion or improper management override of controls, material misstatements due to error or fraud may occur and
not be detected. Also, projections of any evaluation of the internal onancial controls over onancial reporting to future
periods are subject to the risk that the internal onancial control over onancial reporting may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.