AUDITORS’ REPORT          

             We have audited the attached Balance sheet of CHENNAI METROPOLITAN WATER SUPPLY AND  SEWERAGE BOARD (CMWSSB), as at 31^st March 2007,  the Income and Expenditure Account for the year ended on that date and the schedules annexed thereto. These financial statements are the responsibility of the management of the CMWSS Board. Our responsibility is to express an opinion on these financial statements based on our audit.

1.    We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit  includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the over presentation  financial statements. We believe that our audit provides a reasonable basis for our opinion.

Further to our comments referred to in paragraph (1) above we report that :

(a)  We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

(b)  In our opinion, proper books of accounts have been kept by the Board, so far as it appears from our examination of such books.

(c)  The Balance Sheet and Income and Expenditure Account referred to in this report are in agreement with the books of account.

          (d)  Attention is drawn to

 1.   Note No.1 (i) of Schedule Q regarding transfer of "Deposit from Public".-Service Connections to "Contribution from Public"

2.    Note No.1 (ii) of Schedule Q regarding credit to "Capital Reserve Account" a sum of  Rs.6.10 crores received towards Infrastructure Development charges from CMDA during the year.

3.    Note No.1 (viii) of Schedule Q regarding Non reconciliation of (a) Inter office transactions (b) bank balances.

4. Note No.3 (i) of Schedule Q regarding non - provision of income tax.

5. The Board does not have an internal audit system commensurate with the size of its operations.

6.   Our inability to express an opinion on Capital Work in progress of  Rs.1636.01 Crores (PreviousYear Rs.1643.21 Crores) appearing in Schedule - F (Fixed Assets) as proper methodology/reconciliation for capitalization is not available. The amount to be capitalized as fixed assets out of the Capital Work in Progress and corresponding depreciation chargeable are not ascertainable.    

7.   Non  charging of depreciation on assets capitalized during the year from out of work in progress from the date on which the asset was put to use as depreciation is charged only from the date of capitalization. The shortfall in depreciation thereof is not ascertainable.

8.    Non -provision of Accrued liability in respect of pension, gratuity and leave encashment as at the end of the year as referred to  Note No 2 (iii) of Schedule Q and impact whereof on the Income and Expenditure Account and the  Balance Sheet is not ascertainable.

9.    Non-adjustment of "Sundry Debtors Taxes and Charges" against advance collection to the extent Taxes and charges have become due up to the year end and the impact thereof on  the Balance Sheet is not ascertainable.