Meaning - The mining and metals industry involves the extraction, processing, and production of minerals, metals, and other raw materials. This sector includes activities such as the extraction of coal, iron ore, and precious metals, as well as the production of finished metals such as aluminum, steel, and copper. The industry is a major contributor to the global economy and plays a crucial role in the production of various products, including construction materials, electronics, and transportation equipment. The mining and metals industry faces challenges such as declining ore grades, increasing costs, and concerns over environmental impacts and sustainability.
Scope of Audit – Apart from conventionally covered areas such as presentation of accounts in a true and fair view and verification of internal controls, various areas specific to this industry is taken into consideration
- Reserve and resource estimation: A substantial portion of the balance sheets of organizations in this industry consists of inventory and stock-in-trade. An assessment of the accuracy and completeness of such company's reserve and resource estimates is conducted.
- Asset valuation: The value of mining assets, including property, plant, and equipment, is confirmed and any impairment testing is performed. This also involves the rights acquired to extract resources from certain locations.
- Compliance with laws and regulations: the company’s compliance with
relevant laws and regulations, apart from the IT Act, 1962 and Companies act,
2013 such as the following is reviewed :- Mines and Minerals Act, 1957
- Environmental Impact Assessment (EIA) Notification, 1994
- FDI Policy to ensure compliance and reporting as prescribed.
- Consultancy: The purpose of conducting audits at PSC is not only to cover the points mentioned above, but also to consult clients about various tax savings practices, cost saving mechanisms and techniques which can be taken up. This is not a generic suggestion provided, rather one which is developed to suit the needs of each individual client taking into consideration their financial and non-financial practices.
Footnotes- The companies in this sector tend to be large scale, listed, MNC’s and an audit takes a few months to be completed. Metal exports have constantly cushioned the fiscal deficit of the nation as a whole and has been one of the oldest industries to be established in India. The industry has shown a solid 14.7% CAGR in production in the last decade. This industry continues to support the large-scale infrastructure push advocated by the government. The government, through their PLI’s and the decisions made during annual budget sessions continue to reinforce their belief in this core sector and therefore it is modest to assume that this industry will continue to show strong growth in the coming decades.