SecUR Credentials clarifies audit qualifications for FY24
SecUR Credentials Limited reported a net loss of ₹712.78 lakh for FY24 alongside total income of ₹843.01 lakh. The company addressed 16 audit qualifications, citing documentation gaps and staff shortages as key reasons for non-compliance with accounting standards such as Ind AS 109 and Ind AS 19. The auditor issued Disclaimer and Adverse Opinions on matters including director dues, unbilled revenue, and missing disclosures.
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SecUR Credentials Limited reported a net loss of ₹712.78 lakh for the financial year ended March 31, 2024, on total income of ₹843.01 lakh. The company addressed 16 audit qualifications in its auditor's report, citing documentation gaps, staff shortages, and pending reconciliations as primary reasons for the lapses. The statutory auditor issued multiple opinions, including Disclaimer of Opinion and Adverse Opinion, highlighting significant deviations from accounting standards and disclosure norms.
The auditor issued a Disclaimer of Opinion regarding a debit balance of ₹205.09 lakhs in a director's ledger account. Management stated this amount represents expenses incurred on behalf of the company but acknowledged the absence of supporting invoices or vouchers. The company also failed to provide an actuarial valuation report for its gratuity plan, leading to a Qualified Opinion for non-compliance with Ind AS 19. Additionally, the auditor could not verify unbilled revenue or reconcile statutory dues due to missing records.
An Adverse Opinion was issued regarding the Expected Credit Loss (ECL) provision. The company did not provide ECL provisions on advances, resulting in non-compliance with Ind AS 109. Management argued that all advances are fully recoverable and therefore no provision was necessary. Furthermore, ₹331.26 lakhs due for a property purchase was booked as income, a treatment the company justified by stating the liability was no longer payable.
The report highlighted non-compliance with Schedule III of the Companies Act, 2013, specifically the failure to bifurcate MSME and non-MSME debtors and creditors. Disclosures regarding related party transactions under Ind AS 24 were also missing. Management attributed these failures to a shortage of staff. Other qualifications included the absence of documentation for business promotion expenses paid via credit card and insufficient details on contingent liabilities and bank guarantee commitments.
Financial Highlights for FY24
| Particulars | Amount (₹ in Lakhs) |
|---|---|
| Total Income | 843.01 |
| Total Expenditure | 1797.50 |
| Net Profit/(Loss) | (712.78) |
| Earnings Per Share | (1.74) |
| Total Assets | 7898.67 |
| Total Liabilities | 7898.67 |
| Net Worth | 4256.30 |
How will the multiple adverse and disclaimer opinions impact SecUR Credentials' ability to secure future funding or maintain banking relationships?
What specific measures is management taking to resolve the staff shortages and documentation gaps that led to the audit qualifications?
Will the restatement of financials be required to address the non-compliance with Ind AS 109 and the incorrect booking of property liabilities as income?
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