ABC Computers Services Ltd. has been a pioneering force in the global information technology (IT), outsourcing market — the company prefers the term right sourcing since late 2013 the company provides full range of IT se

ABC Computers Services Ltd. has been a pioneering force in the global information technology (IT), outsourcing market — the company prefers the term right sourcing since late 2013 the company provides full range of IT services including software and systems management and development, engineering solutions, infrastructure management, and enterprise business solutions. They also serve the business processing outsourcing (BPO), market in particular through majority held subsidiary providing back office customer care, product and technical support, human resources, finance and accounting, and many other related services. The company also provides e-commerce and website development and management operations including web based financial, supply chain, customer relationship and other services. They operate on global level with offices in 40 countries and more than 50,000 employees serving nearly 600 clients and companies. The company offers outsourcing services through its network offices throughout India. The company also provides onsite services and offsite operations in other western countries and in India. The company has also been developing network of near shore offices, filling the gap between offshore and onsite segment. The company is listed on the New York stock exchange. The company has been recognised as part of the growing computer industry and the rapid incorporation of computer technology into the corporate market would create demand for new type of specialised services. Their operation started in the year 2013 and within a span of 5 years its turnover reached ₹ 7,162 crore. Each and every year turnover is rapidly increasing. The company was also accepting fixed deposits from the public. It pays interest in crore and also the company took loans from the reputed banks each year. The yearwise details of the related figures are given below : Balance Sheet in Crore Year ended Mar. 18 Mar. 17 Mar. 16 Mar. 15 Mar. 14 Sources of Funds Total Share Capital 6855 4557 3839 3169 2438 Reserves 800 450 400 300 250 Loans from Banks 111 89 45 25 8 Deposits from public 180 65 20 25 40 Current liabilities and Provisions 174 180 116 50 72 Total Liabilities 8120 5341 4420 3569 2808 Application of Funds Fixed Assets 2205 2180 1162 1147 1128 Investments 3840 2020 2060 1660 1297 Cash and Bank Balance 1415 900 650 435 310 Other Current Assets 660 241 548 327 73 Total Assets 8120 5341 4420 3569 2808 Standalone Profit & Loss account in Crore Year ended Mar. 18 Mar. 17 Mar. 16 Mar. 15 Mar. 14 Income Sales Turnover IT Services 7162 5413 3933 2825 2296 BPO 145 68 35 7 0 Total Income 7307 5481 3968 2832 2296 Less : Cost of Revenue 4688 3445 2534 1718 1376 Gross Profit 2619 2036 1434 1114 920 Less : operating expenses (Selling, General and Administration Expenses) 1161 938 622 508 502 Operating Income 1458 1098 812 606 418 Add : Interest income 186 132 112 102 36 Less : Interest expenses 18 7 2 3 4 Net Income 1626 1223 922 705 450 Assume that the company was involved in falsifying accounts and inflating the company revenue and the profit and profit margin. If you are appointed as the Forensic auditor, answer the following questions : (a) Identify the Green flags and Red flags indicators. What may be the reasons for such unusual increase in Turnover ?