Gillette_India_Limited_AR_20

Annual Report 2019-20 68 Gillette India Limited Sr. Key Audit Matter Auditor’s Response (d) We involved our in-house tax experts to evaluate and challenge the appropriateness of Management’s assessment and judgements to estimate the provisions held in respect of uncertain tax positions. To do this, we assessed the provisions recognized in the financial statements using the outcome of prior and ongoing tax assessments conducted on the Company, correspondences between the Company and relevant tax authorities, judgemental positions taken in tax returns and current year estimates, our own experience in these areas and assessing whether the approach applied by the Company is supported by the practice in the industry. (e) We have also assessed the adequacy of the Company’s disclosures in respect of tax and uncertain tax positions. 3 Existence and condition of inventory (note no. 8 to the financial statements) The Company’s inventories include raw materials, packing materials, work-in-progress, finished goods, stock-in-trade and engineering stores and spares which are located at its factories, depots, distribution centres and third party manufacturing locations. The Company’s Management conducts physical verification of inventories throughout the year on a cyclical basis every month by covering 100% of the inventories within a period of one month. However, on account of the COVID-19 related lockdown restrictions on account of health, travel and safety concerns, we were unable to attend the physical verification of inventories lying at various locations as at the balance sheet date. In view of the foregoing, obtaining sufficient appropriate audit evidence regarding existence and condition of inventories as at the balance sheet date is identified as a key audit matter. We performed the following alternate audit procedures to audit the existence and condition of inventories as per the guidance provided in SA 501 “Audit Evidence – Specific Considerations for Selected Items”, as at the year end, since we were not able to observe the physical stock verification conducted by Management: (a) Understood and evaluated the Management’s internal controls process to establish the existence and condition of inventories, such as, the process of periodic physical verification carried out by the Management, the scope and coverage of the periodic verification programme, the results of such verification including analysis of discrepancies, if any and the processes around purchase and sales which eventually impact the inventory balance held at the balance sheet date. (b) Obtained, onasamplebasis, details / documents of results of the cyclical count performed by the Management throughout the year. (c) Performed alternate procedures to audit the existence and condition of inventory as at the year end, which includes inspection, on a sample basis, of supporting documentation relating to purchases, subsequent sales supported by acknowledged lorry receipts, stock transfers, as applicable, and consumption/production details. (d) Employed appropriate cut-off procedures as also verified documentary records for inventories in-transit.