Refer to the extracts from the annual report 2000–2001 of Indo Rama Synthetics (India) Limited regarding qualifications in its auditors’ report, management’s viewpoint and directors’ explanations on these qualifications in board’s report as illustrated in this chapter.
Analyse the case and attempt the following requirements:
1. Is it justified on the part of the company not to make provision for long outstanding dues? Cannot a best judgement estimate be made? Or it is because of losses that they have not made the provision?

2. The company itself admits that the dues are outstanding since long. Should it then not specify the period, for a better assessment of their recoverability and impact on financial results?

3. Are the explanations offered by the management, and accepted by the auditors, regarding the non-ascertainability of the likely impact of these outstandings on the operational results of the company tenable?

4. In view of the details about the continuous losses suffered by the company over the past years, are the auditors justified in expressing their opinion that the accounts represent a true and fair view?

5. In your view, is the disclosure of directors’ explanation in the board report adequate?