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CARO 2016
Background Ministry of Corporate Affairs has proposed New Companies (Auditor's report) Order, 2016. The draft if approved then it will be applicable for FY 15-16 onwards. Applicability Companies (Auditor's report) Order, 2016. It shall be applicable to every company including a foreign company except, 1. Banking Company. 2. Insurance company. 3. Sec.8 Companies (Non-profit Organisations) 4. One Person Company. 5. Private company if it satisfy the following conditions a. Not a subsidiary or holding Company of a Public company. b. Paid up capital and Reserves & Surpluses should be less than or equal to 1Crore on the Balance sheet Date. c. Total borrowings should be less than or equal to 1 crore from Banks or Financial institutions at any point of time. d. Total revenue as per schedule III (including Revenue from Discontinued Operations) should be less than or equal to Rs.10 Crores. (Total Revenue as per schedule III = Revenue from Operations less Excise Duty + Other Income.)
cacmacstopics.blogspot.com By Chandra Sekhar Reddy K
[email protected] Cell: 7097705631
cacmacstopics.blogspot.com
Matters to be Included in the Auditors Report Auditors Report shall include a statement on the following matters 1. Fixed Assets a. Whether maintaining proper records showing full particulars (including Quantitative details) and Situation of Fixed Assets. b. Whether physical verification by management is in reasonable intervals. Whether the deficiencies have been properly dealt in the books of Accounts, if any. c. Whether the title deeds of Immovable properties are held in the name of the company. If not provide the details thereof. 2. Inventory Whether physical verification has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, how they dealt in books. 3. Loans (Secured or Unsecured) to Companies, firms or Related Parties under 2(76) of Companies act, 2013. a. Whether the terms and conditions are not prejudicial to the company's interest. b. Whether receipt of the principle amount and interest are regular. If not provide details thereof, c. If overdue is more than Rs.5 lakh, whether reasonable steps has been taken for recovery of Principle and Interest. 4. Section 185 and 186 In respect of loans, investments and guarantees, whether provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof. 185: Loans to Directors, etc. 186: Loan and investment by company.
cacmacstopics.blogspot.com By Chandra Sekhar Reddy K
[email protected] Cell: 7097705631
cacmacstopics.blogspot.com
5. Acceptance of Deposits a. Whether the directive issued by RBI and the provisions from 73 to 76 or any other relevant provisions of the companies act and the rules framed thereunder where applicable, have been complied with? b. If not complied, the nature of such contraventions to be stated. c. If an order has been passed by the CLB or NCLT or RBI or Court or any other Tribunal, whether the same has been complied with or not. 6. Maintenance of cost records whether maintenance of cost records has been specified by the Central Government under 148(1) of the Companies Act, 2013 and whether such accounts and records have been so made and maintained; 7. Statutory Dues a. Undisputed Statutory Dues i. Whether the company is regular in depositing undisputed statutory dues with the appropriate authorities. ii. If not depositing regularly, the extent of outstanding of statutory dues for a period of more than 6 months from the date they become payable as at the last day of the financial year concerned. b. Disputed Statutory Dues i.
If the disputed dues of income tax or Service tax or customs or excise or VAT have not been deposited, then the amount involved and the forum where the dispute is pending shall be mentioned.
8. Defaulted in repayment of dues to a financial institution or Bank or Debenture holders If the company is defaulted in repayment of dues to a financial institution or banks or debenture holders, then the period and amount of default to be reported.
cacmacstopics.blogspot.com By Chandra Sekhar Reddy K
[email protected] Cell: 7097705631
cacmacstopics.blogspot.com 9. Application of Money raised from Public issue and term loan Whether moneys raised by way of public issue/ follow-on offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not, the details together with delays / default and subsequent rectification, if any, as may be applicable, be reported; 10. Fraud Detection Whether any fraud by the company or any fraud on the Company by its officers/ employees has been noticed or reported during the year; if yes, the nature and the amount involved be indicated. 11. Managerial Remuneration If the managerial Remuneration has not paid/ provided in accordance with the requisite approvals mandated by sec.197 read with schedule V of the companies act, then state the amount involved and steps taken by the company for securing refund of the same. 12. Nidhi Company Whether the Nidhi Company has complied with the Net Owned Fund in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% liquid assets to meet out the unencumbered liability. 13. Transactions with related parties Whether all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc.., as required by the accounting standards and Companies Act, 2013. 14. Preferential allotment or Private placement of shares or Convertible Debentures a. If any Preferential allotment / Private placement of shares or partly or fully convertible debentures is made during the year under review, then i. The requirements of Sec.42 of the companies act, 2013 have been complied. ii. The amount raised have been used for the purpose for which the funds were raised. If not, provide the details. cacmacstopics.blogspot.com By Chandra Sekhar Reddy K
[email protected] Cell: 7097705631
cacmacstopics.blogspot.com 15. Section 192 Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether provisions of Section 192 of Companies Act, 2013 have been complied with. (Section 192: Restrictions on non-cash transactions involving Directors) Reasons to be stated for unfavourable Qualified Answers 1. Where, in the auditor's report, the answer to any of the questions referred above is unfavourable or qualified, the auditor's report shall also state the basis for such unfavourable or qualified answer, as the case may be. 2. Where the auditor is unable to express any opinion on any specified matter, his report shall indicate such fact together with the reasons as to why it is not possible for him to give his opinion on the same.
cacmacstopics.blogspot.com By Chandra Sekhar Reddy K
[email protected] Cell: 7097705631
