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      Question

      According to the Independent Auditor’s Report in the

      FY 2024–25 Annual Report of India Infrastructure Finance Company Limited, which of the following was identified as a Key Audit Matter (KAM)?
      A Recognition of government grants received from the Government of India Correct Answer Incorrect Answer
      B Impairment assessment of loans and advances under the Expected Credit Loss (ECL) model Correct Answer Incorrect Answer
      C Valuation of employee stock options granted to senior management Correct Answer Incorrect Answer
      D Recognition of dividend income from subsidiaries Correct Answer Incorrect Answer
      E Accounting treatment of CSR expenditure Correct Answer Incorrect Answer

      Solution

      For development finance institutions like India Infrastructure Finance Company Limited, the largest asset on the balance sheet is loans to infrastructure projects. Therefore, auditors focus heavily on: • Expected Credit Loss (ECL) estimation • Classification of loans (Stage 1, Stage 2, Stage 3) • Probability of default assumptions • Recovery estimates from infrastructure projects Hence, impairment of loans and advances under ECL provisioning becomes a Key Audit Matter.

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