Q.1.What is a Directors Report?

The Directors' Report arose out of a general move for greater transparency in corporate
governance. It is useful for shareholders to find out issues such as whether the company has good
finances, whether the market has potential, and whether the business has the structural capacity
to expand into new opportunities. In order for shareholders to make informed decisions when
casting their votes at annual or other meetings, the Directors' Report provides part of that
essential minimum standard of information. It is complemented by the Director's Remuneration
Report and the Company Accounts.
The Directors' Report must be disclosed to the public, and so also serves as an important source
of public information, as a form of social accounting.
A directors report for a financial year must contain a business review that consists of
(a) a fair review of the companys business;
(b) a description of the principal risks and uncertainties facing the company;
(c) particulars of important events affecting the company that have occurred since the end of the
financial year; and
(d) an indication of likely future development in the companys business
To the extent necessary for an understanding of the development, performance or position of the
companys business, a business review must include
(a) an analysis using financial key performance indicators;
(b) a discussion on (i) the companys environmental policies and performance; and (ii) the
companys compliance with the relevant laws and regulations that have a significant impact on
the company; and
(c) an account of the companys key relationships with its employees, customers and suppliers
and others that have a significant impact on the company and on which the companys success
depends

Q, 2. What is an Auditors Report?

The auditor's report is a formal opinion, or disclaimer thereof, issued by either an internal
auditor or an independent external auditor as a result of an internal or
external audit or evaluation performed on a legal entity or subdivision thereof (called an
"auditee"). The report is subsequently provided to a "user" (such as an individual, a group of
persons, a company, a government, or even the general public, among others) as
an assurance service in order for the user to make decisions based on the results of the audit.
An auditor's report is considered an essential tool when reporting financial information to users,
particularly in business. Since many third-party users prefer, or even require financial
information to be certified by an independent external auditor, many auditees rely on auditor
reports to certify their information in order to attract investors, obtain loans, and improve public
appearance. Some have even stated that financial information without an auditor's report is
"essentially worthless" for investing purposes.
There are four common types of auditor's reports, each one presenting a different situation
encountered during the auditor's work. The four reports are as follows:
A. Unqualified Opinion
An opinion is said to be unqualified when the Auditor concludes that the Financial Statements
give a true and fair view in accordance with the financial reporting framework used for the
preparation and presentation of the Financial Statements. An Auditor gives a clean opinion or
Unqualified Opinion when he or she does not have any significant reservation in respect of
matters contained in the Financial Statements. The most frequent type of report is referred to as
the "Unqualified Opinion", and is regarded by many as the equivalent of a "clean bill of health"
to a patient, which has led many to call it the "Clean Opinion", but in reality it is not a clean bill
of health, because the Auditor can only provide reasonable assurance regarding the Financial
Statements, not the health of the company itself, or the integrity of company records not part of
the foundation of the Financial Statements. This type of report is issued by an auditor when the
financial statements presented are free of material misstatements and are represented fairly in
accordance with the Generally Accepted Accounting Principles (GAAP), which in other words
means that the company's financial condition, position, and operations are fairly presented in the
financial statements. It is the best type of report an auditee may receive from an external auditor.
An Unqualified Opinion indicates the following
(1) The Financial Statements have been prepared using the Generally Accepted Accounting
Principles which have been consistently applied;
(2) The Financial Statements comply with relevant statutory requirements and regulations;

(3) There is adequate disclosure of all material matters relevant to the proper presentation of the
financial information subject to statutory requirements, where applicable;
(4) Any changes in the accounting principles or in the method of their application and the effects
thereof have been properly determined and disclosed in the Financial Statements.
B. Qualified Opinion report
Qualified report is given by the auditor in either of these two cases:
1. When the financial statements are materially misstated due to misstatement in one
particular account balance, class of transaction or disclosure that does not have pervasive
effect on the financial statements.
2. When the auditor is unable to obtain audit evidence regarding particular account balance,
class of transaction or disclosure that does not have pervasive effect on the financial
statements.
The report is mostly like a Clear Opinion Report and only includes a paragraph viz. Basis for
Qualification after Scope paragraph and before Opinion paragraph. Opinion paragraph in
addition to its standard wording includes except for the matter described in Basis for
Qualification paragraph the financial statements give true and fair view.
C. Adverse Opinion report
An Adverse Opinion Report is issued on the financial statements of a company when the
financial statements are materially misstated and such misstatements have pervasive effect on the
financial statements.
In Audit Report after Scope paragraph but before Opinion paragraph, Basis for Adverse Opinion
paragraph is added. In Opinion paragraph the wording changes to, "Because of situations
mentioned in Basis for Adverse Opinion paragraph, in our opinion the financial statements of
XYZ Co. Ltd. as mentioned in first paragraph does not give true and fair view/are not free from
material misstatements."
An Adverse Opinion is issued when the auditor determines that the financial statements of an
auditee are materially misstated and, when considered as a whole, do not conform with GAAP. It
is considered the opposite of an unqualified or clean opinion, essentially stating that the
information contained is materially incorrect, unreliable, and inaccurate in order to assess the
auditee's financial position and results of operations. Investors, lending institutions, and
governments very rarely accept an auditee's financial statements if the auditor issued an adverse

opinion, and usually request the auditee to correct the financial statements and obtain another
audit report.
Generally, an adverse opinion is only given if the financial statements pervasively differ from
GAAP. An example of such a situation would be failure of a company to consolidate a material
subsidiary.
The wording of the adverse report is similar to the qualified report. The scope paragraph is
modified accordingly and an explanatory paragraph is added to explain the reason for the adverse
opinion after the scope paragraph but before the opinion paragraph. However, the most
significant change in the adverse report from the qualified report is in the opinion paragraph,
where the auditor clearly states that the financial statements are not in accordance with GAAP,
which means that they, as a whole, are unreliable, inaccurate, and do not present a fair view of
the auditee's position and operations.
"In our opinion, because of the situations mentioned above (in the explanatory
paragraph), the financial statements referred to in the first paragraph do not present fairly,
in all material respects, the financial position of
D. Disclaimer of Opinion report
A Disclaimer of Opinion is issued in either of the following cases:

When the auditor is not independent or when there is conflict of interest.

When the limitation on scope is imposed by client, as a result the auditor is unable to
obtain sufficient appropriate audit evidence.

When the circumstances indicate substantial problem of going concern in client.

When there are significant uncertainties in the business of client.

The audit report changes significantly when there is Disclaimer of opinion. An additional
paragraph "Basis for Disclaimer" is added in audit report which is placed after Scope paragraph
and before Opinion paragraph. In Scope paragraph the wording changes to "We were engaged to
audit the financial statements of XYZ Co. Ltd." from "We have audited the financial statements
of XYZ Co. Ltd." In Opinion paragraph wording changes to "We do not express an opinion on
the financial statements of XYZ Co. Ltd. due to situations explained in Basis for Disclaimer
paragraph"

A Disclaimer of Opinion, commonly referred to simply as a Disclaimer, is issued when the

auditor could not form and consequently refuses to present an opinion on the financial
statements. This type of report is issued when the auditor tried to audit an entity but could not
complete the work due to various reasons and does not issue an opinion.

Q.3.What is an Annual Report?

Definition: A report created annually that provides an analysis and assessment of the trends of
the past year.
An annual report is an annual publication that public corporations must provide to shareholders
to describe their operations and financial conditions. The front part of the report often contains
an impressive combination of graphics, photos and an accompanying narrative, all of which
chronicle the company's activities over the past year. The back part of the report contains detailed
financial and operational information.
An Annual Report often consists of:

A description of the accounting practices seen within the report. For example, a

description of the principles for determining the accounting items in both the income
statement and the balance sheet.
Information on the events that have influenced the company's accounting during the year.
A statement from management showing a true picture of the companys economy and
development.

Note: Not all companies are required to prepare an annual report. It depends on the company's
legal form and size.
Directors' responsibilities for preparing the Annual Report

The Directors are responsible for preparing the Annual Report and the financial statements
including the accounting standards issued by the Accounting Standards Board and published by
The Institute of Chartered Accountants. Indian Company law requires the directors to prepare
financial statements for each financial period which give a true and fair view of the state of
affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently

make judgements and estimates that are reasonable and prudent

prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business

The directors confirm that they have complied with the above requirements in preparing the
financial statements. The directors are responsible for keeping proper books of account that
disclose with reasonable accuracy at any time the financial position of the company and to
enable them to ensure that the financial statements are prepared in accordance with accounting
standards generally accepted by the law in force.

COMPANY STUDY
TATA CONSULTANCY SERVICES (TCS)
Contents of the Annual Report 2014-15 are

Board of Directors
Highlights
Memories of the Year
10 Years since the IPO
Our Leadership Team
Letter from the CEO
Digital Opportunity
Digital Talent Building
Digital Employees
Digital Society
Management Team
Notice
Directors Report
Management Discussion and Analysis
Corporate Governance Report
Business Responsibility Report
Consolidated Financial Statements
Auditors Report
Consolidated Balance Sheet
Consolidated Statement of Profit and Loss
Consolidated Cash Flow Statement
Notes forming part of the Consolidated Financial Statements
Unconsolidated Financial Statements
Auditors Report
Balance Sheet
Statement of Profit and Loss
Cash Flow Statement

Notes forming part of the Financial Statements

Statement under Section 129(3) of the Companies Act, 2013 in Form AOC-1 relating to
subsidiary companies

Annexures to the Directors Report

Annexure I - Details of Contracts or Arrangements or Transactions

Annexure II - Annual Report on CSR Activities
Annexure III - Extract of Annual Return

Contents of the Annual Report 2013-14 are

Board of Directors
Financial Highlights
Our Leadership Team
Letter from CEO
Customers Speak
Associates Speak
Community
Committed to the Future
Management Team
Notice
Directors' Report
Management Discussion and Analysis
Corporate Governance Report
Business Responsibility Report
Consolidated Financial Statements
Auditors Report
Consolidated Balance Sheet
Consolidated Statement of Profit and Loss
Consolidated Cash Flow Statement
Notes forming part of the Consolidated Financial Statements
Consolidated Financial Statements
Auditors Report
Balance Sheet
Statement of Profit and Loss
Cash Flow Statement
Notes forming part of the Financial Statements

Statement under Section 212 of the Companies Act, 1956 relating to subsidiary
companies

Annexure to the Directors Report

Annexure I

Conservation of energy
Technology absorption, adaptation and innovation
Research and development (R&D)
Foreign exchange earnings and outgo

Contents of the Annual Report 2012-13 are

Board of Directors
Financial Highlights
Our Leadership Team
Letter from CEO
Connecting with the Community
Connecting with Associates
Management Team
Notice
Directors Report
Management Discussion and Analysis
Corporate Governance Report
Business Responsibility Report
Consolidated Financial Statements
Auditors Report
Consolidated Balance Sheet
Consolidated Statement of Profit and Loss
Consolidated Cash Flow Statement
Notes forming part of the Consolidated Financial Statements
Unconsolidated Financial Statements
Auditors Report
Balance Sheet
Statement of Profit and Loss
Cash Flow Statement

Notes forming part of the Financial Statements

Statement under Section 212 of the Companies Act, 1956 relating to subsidiary
companies

Annexure to the Directors Report

Annexure I

Conservation of energy
Technology absorption, adaptation and innovation
Research and development (R&D)
Foreign exchange earnings and outgo