Eventions restated prior profits after employee-cost corrections

Eventions Limited restated profit across the three years presented after moving gratuity and leave encashment from cash to accrual accounting, recognising missed provident-fund and Employees’ State Insurance costs, and recomputing tax. The largest disclosed change was a Rs 51.40 lakh reduction in FY2025 profit, from Rs 5.64 crore in audited accounts to Rs 5.13 crore in the restated reconciliation.

Why did Eventions restate prior profits?

Eventions restated prior profits because employee-benefit obligations and certain statutory employee-contribution costs had not been recognised in the periods to which they related. The restated financial statements, or RFS, cover the years ended March 31, 2024, March 31, 2025 and March 31, 2026. They were prepared under the Companies Act, 2013, the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations, 2018, and prospectus-report guidance issued by the Institute of Chartered Accountants.

The policy changes concern gratuity and leave encashment. Eventions changed both items from cash-basis to accrual-basis accounting from the earliest period presented in the RFS. Gratuity is now recorded using an actuarial valuation under Accounting Standard 15 (Revised), Employee Benefits, while leave encashment is also based on actuarial valuation. An actuarial valuation estimates an employee-benefit obligation at a reporting date rather than relying solely on payments made during that year.

How much did Eventions restatement change prior profits?

Eventions’ reconciliation shows that restatement reduced FY2025 profit after tax but increased the stated results for FY2024 and FY2026. The reconciliation combines adjustments for liabilities written back, provident fund and Employees’ State Insurance, or ESI, expenses, other expense movements and deferred tax. Provident fund, or PF, and ESI are statutory employee-contribution schemes.

The FY2025 reconciliation produced a Rs 51.40 lakh reduction, compared with increases of Rs 18.60 lakh for FY2024 and Rs 20.48 lakh for FY2026. In FY2025, the adjustment schedule includes Rs 47.95 lakh for liabilities written back, Rs 3.78 lakh for PF and ESI, Rs 0.42 lakh for expense changes and Rs 0.11 lakh for deferred tax. Separately, the restated statement of profit and loss reports FY2026 profit of Rs 7.72 crore, FY2025 profit of Rs 5.13 crore and FY2024 profit of Rs 3.29 crore.

How did employee-benefit accounting affect Eventions provisions and tax?

Eventions’ revised accounting created employee-benefit provisions and related deferred-tax balances. The long-term gratuity provision increased from Rs 1.31 lakh at March 31, 2024 to Rs 3.37 lakh at March 31, 2025 and Rs 7.46 lakh at March 31, 2026. The leave-encashment provision was nil at March 31, 2024, then Rs 0.94 lakh at March 31, 2025 and Rs 1.51 lakh at March 31, 2026.

The tax effect results from timing differences between accounting income and taxable income. Under Accounting Standard 22, Accounting for Taxes on Income, Eventions states that deferred-tax assets are recognised only against existing deferred-tax liabilities and other timing differences where reasonable certainty of future taxable income exists. The restated deferred-tax total was an asset of Rs 5.52 lakh at March 31, 2026, compared with liabilities of Rs 1.96 lakh at March 31, 2025 and Rs 7.65 lakh at March 31, 2024. The March 2026 schedule included Rs 1.92 lakh for gratuity and Rs 0.56 lakh for leave encashment.

What did Eventions disclose about PF and ESI compliance?

Eventions stated that certain PF and ESI expenses for FY2022-23, FY2023-24 and FY2024-25 had not been provided in the respective years. The expenses were initially recorded in the year of payment instead of the year to which they pertained. The RFS therefore reassigned those costs to the relevant financial years, changing the timing of expense recognition and reported profit.

The table of prior-year audit matters records “NIL” in the audit-qualification column for FY2024-25, but its remarks state that compliance under the Employees’ Provident Fund and Employees’ State Insurance Acts had yet to be completed and that the non-compliance affected the financial statements. For FY2023-24, the remarks state that registrations had been obtained, liabilities paid and returns filed as of the signing date of the RFS. The profit reconciliation labels the adjustment “P&F ESL”, while the explanatory note identifies it as EPF and ESI contributions.

Why do Eventions FY2024 restated figures need careful reading?

Eventions’ disclosures present different FY2024 restated profit figures in two places. The material-adjustments reconciliation gives FY2024 profit after tax of Rs 3.27 crore, while the restated statement of profit and loss gives Rs 3.29 crore. Against audited FY2024 profit of Rs 3.08 crore in the reconciliation, the two disclosed restated figures imply different movements, and the supplied statements do not explain the Rs 2.00 lakh difference.

The reserves disclosures also require comparison across the relevant tables. The material-adjustments schedule reports restated reserves and surplus of Rs 9.18 crore at March 31, 2026, Rs 9.85 crore at March 31, 2025 and Rs 4.72 crore at March 31, 2024. A separate reserves note reports the same headline balances but has differing adjustment components, including a Rs 2.33 lakh FY2026 line for liabilities written back. The RFS says regrouping, reclassification and corrective adjustments were made to meet disclosure and accounting requirements.

Conclusion

Eventions’ restatement changes the period in which employee-related obligations, statutory contributions and related taxes are recognised. FY2025 had the largest disclosed impact, with profit after tax reduced by Rs 51.40 lakh in the material-adjustments reconciliation, while the same reconciliation increased FY2024 and FY2026 profit by Rs 18.60 lakh and Rs 20.48 lakh respectively. The adjustments also affected employee-benefit provisions, deferred tax and reserves.

The next reported periods should show whether Eventions continues to obtain actuarial valuations for gratuity and leave encashment at each relevant year end, as its revised policy states. Readers should also watch for any clarification of the Rs 2.00 lakh difference between the FY2024 restated profit in the reconciliation and the restated statement of profit and loss, an unresolved difference in the supplied RFS.