PGHH_AR_2020

Annual Report 2019-20 71 Company Overview Board's Report MD&A CG Report Financial Statement Procter & Gamble Hygiene and Health Care Limited Sr. Key Audit Matter Auditor’s Response 3 Existence and condition of inventory (note no. 9 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 ofperiodic 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, on a sample basis, 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. Information Other than the Ind-AS financial statements and Auditor’s Report Thereon The Company’s Board of Directors is responsible for the other information. The other information comprises the Director’s Report and the Report on Corporate Governance but does not include the Ind- AS financial statements and our auditor’s report thereon which we obtained prior to the date of this auditor’s report. Our opinion on the Ind-AS financial tatements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the Ind-AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Ind-AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in t his regard. Management’s Responsibility for the Ind-AS financial statements The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind-AS financial statements that give a true and fair view of the financial position, financial performance, changes in equity and the cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records inaccordancewiththe provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind-AS