Mahanagar Telephone Nigam Ltd (MTNL) has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. The Company has adopted the basis for valuing Fixed Assets, Capital Work in Progress & Depreciation and expenditure on replacement on cables, apparatus & plants installation and rehabilitation work is capitalized as per Significant Accounting Policy of the Company, which in the auditors opinion, is not in agreement with Accounting Standard - 10 - According for Fixed Assets, and Accounting Standard - 6 - Accounting for Depreciation, issued by the Institute of Chartered Accountants of India.
2. The Company has adopted the basis of valuation of inventories (except for WLL Handsets) as per Significant Accounting Policy of the Company which is not in accordance with the Accounting Standard - 2 on Valuation of Inventories issued by the Institute of Chartered Accountants of India. Further the Company has not done compliance of AS - 28 Impairment of Assets.
3. The provision for Bonus / Ex-Gratia, Liabilities of post retirement benefits as per AS - 15, accrual income & depreciation has been made on estimated basis Pending actual determination of the liability, the impact of the same on the accounts for the quarter under review is not ascertainable.
4. The sundry debtors control account, subscriber account and interest accrued thereon unlinked receipts from subscribers balance with DOT & BSNL are subject to reconciliation and consequent adjustments.
5. To the best of our knowledge and belief and according to the explanation given to the auditors the Company is in process of giving effect of the qualifications made by the auditors in respect of previous accounting years. The impact of these qualifications on the Profit and Loss account for the quarter under report, as required under the provisions of clause 41 of the Listing Agreement is unascertainable.
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