2. Backdrop
• Section 227(4A) Cessation
• MCA introduced CARO 2015
• Introduction of Section 143(11)
• Reporting requirement for auditors
of certain class of companies
• CURRENT STATUS
3. • Banking company
• Insurance company
• Section 8 Company
• OPC
• Small company
• Private company not :
subsidiary / holding of a public company
having NW > Rs.1 Cr
having borrowings > Rs.1 Cr from Bank/FI
having total revenue > Rs.10 crores during FY
Non Applicability
4. [3(i)] Fixed Assets
WHETHER:
• Proper records maintained?
• PV conducted at reasonable intervals?
• Material discrepancies noticed &
dealt in books?
• Title deeds of immovable properties
are held in name of company?
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
5. [3(ii)] Inventories
• PV has been conducted at
“reasonable intervals”?
• Material discrepancies noticed & dealt
in books?
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
6. [3(iii)] Loans and Advances
• Granted to Companies, Firms or LLP u/s
189:
• And, whether:
– T&C are prejudicial?
– Schedule of repayment stipulated ?
– Repayments are regular?
– Amount overdue
for > 90 days
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
7. [3(iv)] Compliance of Provisions:
Sec 185 & 186
• Loans, Investments, Guarantees, and
Security – Provide details
• Section 185 – Restriction on giving loans,
guarantees to directors
• Section 186 : Limits of Sanctioning a Loan
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
8. [3(v)] Deposit from Public
• Compliance of Companies Act & Rules
• State contraventions, if any
• Compliance of order
passed by relevant authority
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
9. [3(vi)] Cost Accounting Records
• Required to be maintain u/s 148(1) ?
• If maintained or not ?
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
10. [3(vii)] Statutory dues
• Whether undisputed statutory dues paid
regularly?
• Report if outstanding for > 6 months
• For disputed dues – Report amount
involved + forum
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
11. [3(viii)] Repayment of Dues
• Whether company defaulted in repayment of
dues for : F.I.| Bank| Govt. |Deb. Holder
• Yes ? Mention nature and amount of
default
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
12. [3(ix)] Application of Fund
Received from IPO/FPO/LOANS
• Whether money raised by way of
IPO/FPO/LOANS were applied for the
stated purposes
• If not, details along delay and subsequent
ratification be reported
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
13. [3(x)] Reporting on Frauds
• Fraud by the company or on the
company by officers or employees?
• If noticed & reported?
Indicate nature and amount involved.
• Reporting Responsibilities- Auditor to
comply with SA-240, 260.
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
14. [3(xi)] Managerial Remuneration
• Whether Sec-197 (Sch V) complied with?
• If not?
-State amount involved ?
-Steps taken for
securing refund?
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
15. [3(xii)] Nidhi Company
To meet Liabilities :
• Net owned fund to deposit ratio of 1:20
• Maintained a 10% “Unencumbered” Term
Deposit
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
16. [3(xiii)] RELATED PARTY TRANSACTIONS
• Sec.177 and 188
• Disclosure in Financial Statements
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of
Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
17. [3(xiv)] PREFERENTIAL ALLOTMENT
• Preferential Allotment
• Private Placement of Shares
• Fully or Partly Convertible Debentures
Used for the
Slated Purpose
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of
Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
18. [3(xv)]NON CASH TRANSACTIONS
WITH SPECIFIED PERSONS
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of
Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
CA. Meet Kotecha
Managing Director
19. [3(xvi)] REGISTRATION UNDER RBI ACT
• Required to be
registered under
Sec.45–IA of RBI
Act’34.
Fixed Assets
Inventory
Loans
185,186
Deposits
Cost Records
Statutory Dues
Repayment of
Dues
Moneys Raised
Fraud
Managerial
Remuneration
Nidhi Companies
Related Party
Transactions
Pvt Placements
Non Cash
transactions
NBFC
20. Reasons to be Stated for Unfavourable or
Qualified Answers [Para 4]
• Auditor’s Report shall
state the reasons
• Auditor is unable to
express any opinion in
answer to any particular
question
