Sumit Binani, profile picture
Uploaded bySumit Binani
2,389 views

CARO 2016

This document discusses the Companies Auditor's Report Order, 2016 and provides guidance on its applicability and the matters to be reported by auditors. It specifies that the order is applicable to all companies except for banking, insurance, Section 8, OPCs, small and select private companies. It outlines the regulatory framework and illustrates examples of companies that would be subject to the order. It provides the general approach auditors should take and notes the matters that must be included in the audit report such as fixed assets, inventory, loans, deposits, cost records, statutory dues and others.

Law◦

Embed presentation

Companies Auditor’s Report Order, 2016 Sumit Binani, sumit_binani@hotmail.com, +919830810003, B.Com (H), MBA (IIM-Cal), FCA, FCS, ACMA
A • Sec 143(11) of CA 2013 B • ICAI Guidance Notes on CARO, 2016 Regulatory Framework C • ICAI Standards of Auditing D • Other Applicable Provisions of CA 2013 & Rules
Applicability of CARO 2016 Applicable to every company including foreign company Exemptions from Applicability 1)Banking Company 2)Insurance Company 3)Section 8, 25 Company 4)OPCs 5)Small Company u/s 2(85) of CA 2013 6)Select Private Company Effective from FY commencing on or after 1st April 2015 Exemptions from Applicability 1)Banking Company 2)Insurance Company 3)Section 8, 25 Company 4)OPCs 5)Small Company u/s 2(85) of CA 2013 6)Select Private Company CFSBranch Auditor
Applicability of CARO 2016 The applicability of the Order would be based on the status of the company as at the balance sheet date It may also be noted that in case a company is covered under the definition of small company, it will remain exempted from the applicability of the Order even if it falls under any of the criteria specified for private company. The applicability of the Order would be based on the status of the company as at the balance sheet date It may also be noted that in case a company is covered under the definition of small company, it will remain exempted from the applicability of the Order even if it falls under any of the criteria specified for private company.
Illustrations on CARO Applicability Particulars Applicability Comments Public company (irrespective of size of its paid up capital, reserves, surplus, borrowings & revenue) Yes Applicable to all public cos except certain categories exempted Private company having paid up capital of Rs 25 lacs, Reserves, Surplus of Rs 80 lacs, borrowings of Rs 2 Crores from Bank, Revenue of Rs 2 crores No General exemption to small company Private company having paid up capital of Rs 1.5 Crores with no Reserves and Turnover Yes Not a select private or small company Private company having paid up capital of Rs 1.5 Crores with no Reserves and Turnover Yes Not a select private or small company Private Company (a subsidiary of public company) having paid up capital of Rs 25 lacs with no Reserves and Turnover Yes Not a select private or small company Private Company (an associate of public company) having Paid up Capital of Rs 25 lacs with R & S of Rs 1 Crore, Revenue of Rs 2 Crores No General exemption to small company Private Company having capital, R & S of 1 crore, inter corporate borrowings of 5 crores, revenue of 1 crore No Exemption to a select private company
General Approach • the auditor is not to carry out an investigation but give specific information on certain aspects of his work • reporting is supplemental to the audit of FS 11, not to be construed as a separate reporting engagement • section 143(9) the Act, casts a duty on the auditor to comply with the auditing standards specified under section 143(10) of the Act. • auditor’s procedures for reporting on the Order would, as in the case of audit of financial statements, need to be within the framework of the principles enunciated in SA. • the auditor is not to carry out an investigation but give specific information on certain aspects of his work • reporting is supplemental to the audit of FS 11, not to be construed as a separate reporting engagement • section 143(9) the Act, casts a duty on the auditor to comply with the auditing standards specified under section 143(10) of the Act. • auditor’s procedures for reporting on the Order would, as in the case of audit of financial statements, need to be within the framework of the principles enunciated in SA.
General Approach • the auditor should also consider obtaining management representations, on matters on which the Order requires the auditor make a statement on certain aspects. • necessity for preserving working papers by auditors assumes greater importance in context of the requirements of the Order • SA 230 “Audit Documentation, SA 315 Materiality in Planning & Performing an Audit, Exercise of Judgement • where a requirement of the Order is not complied with but the auditor decides not to make an adverse comment, in view of the immateriality of the item, he should record rationale for the same in his working papers • the auditor should also consider obtaining management representations, on matters on which the Order requires the auditor make a statement on certain aspects. • necessity for preserving working papers by auditors assumes greater importance in context of the requirements of the Order • SA 230 “Audit Documentation, SA 315 Materiality in Planning & Performing an Audit, Exercise of Judgement • where a requirement of the Order is not complied with but the auditor decides not to make an adverse comment, in view of the immateriality of the item, he should record rationale for the same in his working papers
Matters to be Included in Audit Report Auditor's Report to Contain Matters Specified in Paragraphs 3 and 4 of the Order..as may be applicable Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Reporting under this Order shall be applicable for the financial year 2015-16 and onwards In case auditor has to report on the FS for the FY prior to 2015-16, then the relevant earlier Order shall be applicable. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs In case auditor has to report on the FS for the FY prior to 2015-16, then the relevant earlier Order shall be applicable. Reporting on the matters specified in paragraph 3 and 4 of the Order are to be made only on those matters which are applicable to the Company.
Matters to be Included in Audit Report Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of accountFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs Whether title deeds of immovable properties are held in the name of the company. If not, provide details thereof.
Matters to be Included in Audit Report Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, whether they have been dealt with in the books of account Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl FraudFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Whether the company has granted any loans, secured or unsecured to companies, firms, LLPs, or other parties covered in the register maintained under section 189 of the Companies Act, If so: Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest?Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest? Whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular If the amount is overdue, state the total amount due for 90 days and whether reasonable steps have been taken by the company for recovery of the principal or interest
Matters to be Included in Audit Report In respect of loans, investments guarantees and security, whether provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof. Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl FraudFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under, where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not? Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under, where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not? Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Where maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act, whether such accounts and records have been so made and maintained Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl FraudFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Is the company regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Is the company regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditorFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs where dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute)
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the company has defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders? If yes, the period and amount of default to be reported (in case of banks financial institutions and government, lender wise details to be provided). Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether moneys raised by way of initial public offer or further public 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 Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud 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 is to be indicated Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the Nidhi Company has complied with the Net Owned Fund to Deposits in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether all transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc as required by the applicable accounting standards Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details in respect of the amount involved and nature of non compliance. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details in respect of the amount involved and nature of non compliance.
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud 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. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Matters to be Included in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and if so, whether the registration has been obtained. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
Comments on Form of Report where an auditor is unable to express any opinion, he should indicate such fact the auditor is also required to give reasons for any unfavourable or qualified answer where the auditor is unable to express an opinion on any such matter which is applicable to the company, he is also required to indicate in his report such fact together with the reasons as to why he is unable to express any opinion where an auditor is unable to express any opinion, he should indicate such fact the auditor is also required to give reasons for any unfavourable or qualified answer where the auditor is unable to express an opinion on any such matter which is applicable to the company, he is also required to indicate in his report such fact together with the reasons as to why he is unable to express any opinion
Reference in Main Reporting “Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. As required by Section 143 (3) of the Act, we report that: ............................. ……………………………” “Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. As required by Section 143 (3) of the Act, we report that: ............................. ……………………………”
6/11/2016 Sumit Binani, sumit_binani@hotmail.com, +919830810003, B.Com (H), PGDBM (IIM-Cal), FCA, FCS, ACMA
Foreign Company The Order also applies to foreign companies as defined in clause (42) of section 2 of the Act. According to the aforesaid section, a “foreign company” means: “Any company or body corporate incorporated outside India which - (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner.” In the case of a foreign company, wherever under any of the provisions of the Act, an audit under Chapter X of the Act is required to be carried out, the Order would be applicable The Order also applies to foreign companies as defined in clause (42) of section 2 of the Act. According to the aforesaid section, a “foreign company” means: “Any company or body corporate incorporated outside India which - (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner.” In the case of a foreign company, wherever under any of the provisions of the Act, an audit under Chapter X of the Act is required to be carried out, the Order would be applicable
Small Company u/s 2(85) of CA 2013 • Meaning of a Small Company •The limits of paid up capital and turnover are as follows: * Under Companies Bill, 2016 •Additional Conditions • needs to be a private company • It cannot be a holding or subsidiary company • It cannot be a section 8 company • It cannot be a company regulated by a special act Criteria Existing Limit (Rs) Maximum Prescribed Proposed Maximum* Paid Up Capital 50 lacs 5 crores 10 crores Turnover 2 crores 20 crores 100 crores • Meaning of a Small Company •The limits of paid up capital and turnover are as follows: * Under Companies Bill, 2016 •Additional Conditions • needs to be a private company • It cannot be a holding or subsidiary company • It cannot be a section 8 company • It cannot be a company regulated by a special act
Turnover • Defined u/s 2(91) of CA 2013...amendment also proposed in Companies Bill 2016 • "turnover" means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year • Order does not define turnover separately • Defined u/s 2(91) of CA 2013...amendment also proposed in Companies Bill 2016 • "turnover" means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year • Order does not define turnover separately
Select Private Company • Not a holding company of a public company • Not a subsidiary company of a public company • Private Company with: a) paid up capital + reserves + surplus up to Rs 1 crore as at the balance sheet date b) total borrowings up to Rs 1 crore from any Bank or FI at any point of time during the FY c) total revenue up to Rs 10 crores as disclosed in Schedule III (including revenue from discontinuing operations) during the FY as per Financial Statement A private limited company, to be exempt from the applicability of CARO, must satisfy all the conditions mentioned above collectively. In other words, even if one of the conditions is not satisfied, a private limited company’s auditor has to report on the matters specified in the Order. • Not a holding company of a public company • Not a subsidiary company of a public company • Private Company with: a) paid up capital + reserves + surplus up to Rs 1 crore as at the balance sheet date b) total borrowings up to Rs 1 crore from any Bank or FI at any point of time during the FY c) total revenue up to Rs 10 crores as disclosed in Schedule III (including revenue from discontinuing operations) during the FY as per Financial Statement A private limited company, to be exempt from the applicability of CARO, must satisfy all the conditions mentioned above collectively. In other words, even if one of the conditions is not satisfied, a private limited company’s auditor has to report on the matters specified in the Order.
Paid Up Capital, Reserves, Borrowings • Share application money not to be considered • Both capital and revenue reserves to be considered. Revaluation reserve to be considered • Non fund based limits not to be considered as borrowings • Interest accrued and due to be considered. Interest accrued but not due not be considered as borrowings • If guarantee has been invoked and encashed or where, say, a letter of credit has been devolved on the company, to be considered. • For cash credit facility, the Order would apply to the company in case on any day during the financial year concerned, the amount outstanding in the cash credit facility exceeds Rs. 1 crore as per books of the company along with other borrowings. • Share application money not to be considered • Both capital and revenue reserves to be considered. Revaluation reserve to be considered • Non fund based limits not to be considered as borrowings • Interest accrued and due to be considered. Interest accrued but not due not be considered as borrowings • If guarantee has been invoked and encashed or where, say, a letter of credit has been devolved on the company, to be considered. • For cash credit facility, the Order would apply to the company in case on any day during the financial year concerned, the amount outstanding in the cash credit facility exceeds Rs. 1 crore as per books of the company along with other borrowings.
Title deed of Immovable Property [Para 3(i)(c)] • This clause shall cover the immovable properties which are included under the head Fixed Assets, as the reporting under Clause 3(i)(a) & 3(i)(b) pertains to Fixed Assets only • The Act does not define the term “Immovable Property”. However, as per General Clauses Act, 1897, “Immovable Property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. • TDRs (Transfer Development Rights), Plant and Machinery embedded in land etc., are not considered as an immovable property • This clause shall cover the immovable properties which are included under the head Fixed Assets, as the reporting under Clause 3(i)(a) & 3(i)(b) pertains to Fixed Assets only • The Act does not define the term “Immovable Property”. However, as per General Clauses Act, 1897, “Immovable Property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. • TDRs (Transfer Development Rights), Plant and Machinery embedded in land etc., are not considered as an immovable property
Title deed of Immovable Property [Para 3(i)(c)] • title deeds of the immovable property in case of leasehold land and land & buildings together, covered under the head fixed assets, the lease agreement duly registered with the appropriate authority • detailed examination required in the cases where immovable property is transferred as a result of conversion of partnership firm or LLP into company or amalgamation of companies • mortgaged title deeds • lost cases, legal dispute cases • the management is responsible for legal determination of the validity of title deeds • title deeds of the immovable property in case of leasehold land and land & buildings together, covered under the head fixed assets, the lease agreement duly registered with the appropriate authority • detailed examination required in the cases where immovable property is transferred as a result of conversion of partnership firm or LLP into company or amalgamation of companies • mortgaged title deeds • lost cases, legal dispute cases • the management is responsible for legal determination of the validity of title deeds
Sec 192 Following transactions are permitted subject to conditions An arrangement by which a director of the company or its holding, subsidiary or associate company or a person connected with such director acquires or is to acquire assets for consideration other than cash, from the company. An arrangement by which the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected. Following transactions are permitted subject to conditions An arrangement by which a director of the company or its holding, subsidiary or associate company or a person connected with such director acquires or is to acquire assets for consideration other than cash, from the company. An arrangement by which the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected.

More Related Content

PDF
CARO,2016 (revised)
byDivesh Gupta
 
PPTX
Caro 2016 a detailed analysis
bySai Ganesh
 
PPTX
Caro 2016 ppt
byCA Acharya
 
PPTX
Companies Audit Report Order 2016
byMallampalli Ruthvik
 
PDF
The draft caro 2016
byAshok Sharma
 
PPTX
Analysis on caro 2016(p)
bySBS AND COMPANY LLP, CHARTERED ACCOUNTANTS
 
PDF
Caro 2016 kalyan_28-5-16
byCA. V Kalyan Chakravarthy
 
PPTX
CARO 2015
byAbhishek Murali
 
CARO,2016 (revised)
byDivesh Gupta
 
Caro 2016 a detailed analysis
bySai Ganesh
 
Caro 2016 ppt
byCA Acharya
 
Companies Audit Report Order 2016
byMallampalli Ruthvik
 
The draft caro 2016
byAshok Sharma
 
Analysis on caro 2016(p)
bySBS AND COMPANY LLP, CHARTERED ACCOUNTANTS
 
Caro 2016 kalyan_28-5-16
byCA. V Kalyan Chakravarthy
 
CARO 2015
byAbhishek Murali
 

What's hot

PPTX
Caro 2015
byCA Rohit Chauhan
 
PDF
Mca notifies-caro-2016-applicable-for-fy-beginning-on-or-after-april-1-2015
byKunal Gandhi
 
PPTX
What are the new reporting requirements in CARO, 2020?
byDVSResearchFoundatio
 
PPTX
Implications and Procedures for NRI Selling Property in India and Remittance ...
byDVSResearchFoundatio
 
PPTX
Analysis of Supreme Court Ruling- National Co-Operative Development Corporati...
byDVSResearchFoundatio
 
PDF
CARO lucknow
byAbhishek Tak
 
PPTX
What are the provisions governing maintenance of registers under singapore co...
byDVSResearchFoundatio
 
PPTX
Caro 2015 presented by Kishan Keshri
byKISHAN KESHRI
 
PPTX
Auditors report and caro 2015
byGanesh G Fca
 
PPTX
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill...
byDVSResearchFoundatio
 
PPTX
How to wind up a Company? – Part - 7
byDVSResearchFoundatio
 
PPTX
SEBI(LODR) Regulations, 2015- Obligations on listing of specified securities-...
byDVSResearchFoundatio
 
PPTX
What are the salient features of CFSS, 2020 and LLP Settlement Scheme, 2020?
byDVSResearchFoundatio
 
PPTX
How auditors are governed under Singapore Companies Act?
byDVSResearchFoundatio
 
PDF
Cash credit-28-dec-18
byAdmin SBS
 
PDF
Fem regulations-2015
byAdmin SBS
 
PDF
NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (AUDITOR’S REPORT) ORDER, 2016
byGAURAV KR SHARMA
 
PPTX
The Code on Wages, 2019 - Part III
byDVSResearchFoundatio
 
PPTX
What are the key elements of the companies (amendment) bill, 2020
byDVSResearchFoundatio
 
PPTX
Managerial Remuneration under Companies Act and SEBI (LODR) Regulations
byDVSResearchFoundatio
 
Caro 2015
byCA Rohit Chauhan
 
Mca notifies-caro-2016-applicable-for-fy-beginning-on-or-after-april-1-2015
byKunal Gandhi
 
What are the new reporting requirements in CARO, 2020?
byDVSResearchFoundatio
 
Implications and Procedures for NRI Selling Property in India and Remittance ...
byDVSResearchFoundatio
 
Analysis of Supreme Court Ruling- National Co-Operative Development Corporati...
byDVSResearchFoundatio
 
CARO lucknow
byAbhishek Tak
 
What are the provisions governing maintenance of registers under singapore co...
byDVSResearchFoundatio
 
Caro 2015 presented by Kishan Keshri
byKISHAN KESHRI
 
Auditors report and caro 2015
byGanesh G Fca
 
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill...
byDVSResearchFoundatio
 
How to wind up a Company? – Part - 7
byDVSResearchFoundatio
 
SEBI(LODR) Regulations, 2015- Obligations on listing of specified securities-...
byDVSResearchFoundatio
 
What are the salient features of CFSS, 2020 and LLP Settlement Scheme, 2020?
byDVSResearchFoundatio
 
How auditors are governed under Singapore Companies Act?
byDVSResearchFoundatio
 
Cash credit-28-dec-18
byAdmin SBS
 
Fem regulations-2015
byAdmin SBS
 
NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (AUDITOR’S REPORT) ORDER, 2016
byGAURAV KR SHARMA
 
The Code on Wages, 2019 - Part III
byDVSResearchFoundatio
 
What are the key elements of the companies (amendment) bill, 2020
byDVSResearchFoundatio
 
Managerial Remuneration under Companies Act and SEBI (LODR) Regulations
byDVSResearchFoundatio
 

Similar to CARO 2016

DOCX
Audit assignment m.com part ii – semester iv
byRutuja Chudnaik
 
PPTX
Caro 2015
byCA Rohit Chauhan
 
PPT
New audit reporting guidance
byCa Agrawal
 
DOC
Audit & Assurance
byAhmad Tariq Bhatti
 
PPTX
Audit report and caro 2003
byRanjan Sharma
 
PPTX
Auditing-DESKTOP-ITUD1J8.pptx
byMuhammadUmarIqbal11
 
PPTX
Acc 3531 notes_compiled
byShakira Ak
 
PPTX
Presentation chapter 9
byEmran Habeeb
 
PPTX
Principles & Practices of Auditing.pptx1
byDarshanNaik66
 
PPTX
Unit 2 Preparations Before Auditing
byAjay Nazarene
 
PPTX
PPA - Unit 6 - Company Auditor
byAjay Nazarene
 
PPTX
Role of Auditor in the Corporate World
byMallampalli Ruthvik
 
PPTX
Revised Audit Report Format
byPavanKalyan Sakepuram
 
DOCX
Audit process
byHema Thayanithy
 
PDF
Principles of Auditing and Other Assurance Services Whittington 19th Edition ...
byuuppomnaf
 
PPTX
Caro 2015 vs caro 2003
bysandeep rawat
 
PPTX
Auditing concepts.pptx Meaning and Definition of Auditing
bysharon877284
 
PPT
Chap002 (1)
byvmg23
 
DOCX
Reason for the audit letter
byJeamsVidal
 
PDF
Audit report- SA 700. 705, 706
byPiyali Parashari
 
Audit assignment m.com part ii – semester iv
byRutuja Chudnaik
 
Caro 2015
byCA Rohit Chauhan
 
New audit reporting guidance
byCa Agrawal
 
Audit & Assurance
byAhmad Tariq Bhatti
 
Audit report and caro 2003
byRanjan Sharma
 
Auditing-DESKTOP-ITUD1J8.pptx
byMuhammadUmarIqbal11
 
Acc 3531 notes_compiled
byShakira Ak
 
Presentation chapter 9
byEmran Habeeb
 
Principles & Practices of Auditing.pptx1
byDarshanNaik66
 
Unit 2 Preparations Before Auditing
byAjay Nazarene
 
PPA - Unit 6 - Company Auditor
byAjay Nazarene
 
Role of Auditor in the Corporate World
byMallampalli Ruthvik
 
Revised Audit Report Format
byPavanKalyan Sakepuram
 
Audit process
byHema Thayanithy
 
Principles of Auditing and Other Assurance Services Whittington 19th Edition ...
byuuppomnaf
 
Caro 2015 vs caro 2003
bysandeep rawat
 
Auditing concepts.pptx Meaning and Definition of Auditing
bysharon877284
 
Chap002 (1)
byvmg23
 
Reason for the audit letter
byJeamsVidal
 
Audit report- SA 700. 705, 706
byPiyali Parashari
 

Recently uploaded

PDF
FY2027 H1B Cap Filing Secrets: Why You Should Plan Now?
byVisaPro Immigration Services LLC
 
PDF
EMMANUEL MOUKA FOOD POISONING CAUGHT ON CCTV PETITION
byMouka Emmanuel
 
PPTX
Labour Codes 2025, ppt on new labour codes
byYASHJAIN886310
 
PDF
Final Judgment Angelina Martinz v Isabel Maria Aguilar Broward Case No. CACE-...
byRaymond R. Dieppa
 
PPTX
When Did DUI Become Illegal: A Complete Guide
byJosh Mcdowell
 
PDF
The Architecture of Sovereignty: A Comprehensive Analysis of Recognition unde...
by Judge Nazmul Hasan.
 
PDF
For-Website-251218-CJP-complaint-to-NCM-on-hate-speech-vigilantism-etc-target...
bysabranghindi
 
PDF
Marginalizing People with Disabilities By Police Conduct & Judicial Actions.pdf
byChristopherCross19
 
PDF
Final Judgement - Glen Blanco v Paul Jerome Case No. 2018-034632-CA-01
byRaymond R. Dieppa
 
PDF
Claudia Barber Laurel MD - An Educator
byClaudia Barber Laurel MD
 
PDF
Medical Termination of Pregnancy (MTP) & Abortion Rights in India- A Comprehe...
bySiddharthNair96
 
PDF
Cecilia Alvarez v Supreme Rent a Car jury verdict $5,643,981.00 (Miami-Dade 2...
byRaymond R. Dieppa
 
PDF
FY2027 H-1B Cap Filing Mistakes: How To Avoid Them?
byVisaPro Immigration Services LLC
 
PPTX
PresentationRequisites Valid Custom.pptx
bysyedazufishan
 
PDF
What Will Show Up on My Background Check
byJosh Mcdowell
 
PDF
Shamir Hospital evidence filled with lies 26 03 2023
byHaim R. Branisteanu
 
PDF
ADR. Part one Definition and Basic features
byyusufwerkineh4
 
PPTX
Arts University Plymouth Transcripts
byjp47f9p04u
 
PDF
122392022_2024-11-13-bulldozer-justice-judgment-1.pdf
bysabranghindi
 
PDF
Shamir hospital deciding that I do not a guardian need for guardian
byHaim R. Branisteanu
 
FY2027 H1B Cap Filing Secrets: Why You Should Plan Now?
byVisaPro Immigration Services LLC
 
EMMANUEL MOUKA FOOD POISONING CAUGHT ON CCTV PETITION
byMouka Emmanuel
 
Labour Codes 2025, ppt on new labour codes
byYASHJAIN886310
 
Final Judgment Angelina Martinz v Isabel Maria Aguilar Broward Case No. CACE-...
byRaymond R. Dieppa
 
When Did DUI Become Illegal: A Complete Guide
byJosh Mcdowell
 
The Architecture of Sovereignty: A Comprehensive Analysis of Recognition unde...
by Judge Nazmul Hasan.
 
For-Website-251218-CJP-complaint-to-NCM-on-hate-speech-vigilantism-etc-target...
bysabranghindi
 
Marginalizing People with Disabilities By Police Conduct & Judicial Actions.pdf
byChristopherCross19
 
Final Judgement - Glen Blanco v Paul Jerome Case No. 2018-034632-CA-01
byRaymond R. Dieppa
 
Claudia Barber Laurel MD - An Educator
byClaudia Barber Laurel MD
 
Medical Termination of Pregnancy (MTP) & Abortion Rights in India- A Comprehe...
bySiddharthNair96
 
Cecilia Alvarez v Supreme Rent a Car jury verdict $5,643,981.00 (Miami-Dade 2...
byRaymond R. Dieppa
 
FY2027 H-1B Cap Filing Mistakes: How To Avoid Them?
byVisaPro Immigration Services LLC
 
PresentationRequisites Valid Custom.pptx
bysyedazufishan
 
What Will Show Up on My Background Check
byJosh Mcdowell
 
Shamir Hospital evidence filled with lies 26 03 2023
byHaim R. Branisteanu
 
ADR. Part one Definition and Basic features
byyusufwerkineh4
 
Arts University Plymouth Transcripts
byjp47f9p04u
 
122392022_2024-11-13-bulldozer-justice-judgment-1.pdf
bysabranghindi
 
Shamir hospital deciding that I do not a guardian need for guardian
byHaim R. Branisteanu
 

CARO 2016

  • 1.
    Companies Auditor’s Report Order,2016 Sumit Binani, sumit_binani@hotmail.com, +919830810003, B.Com (H), MBA (IIM-Cal), FCA, FCS, ACMA
  • 2.
    A • Sec 143(11)of CA 2013 B • ICAI Guidance Notes on CARO, 2016 Regulatory Framework C • ICAI Standards of Auditing D • Other Applicable Provisions of CA 2013 & Rules
  • 3.
    Applicability of CARO2016 Applicable to every company including foreign company Exemptions from Applicability 1)Banking Company 2)Insurance Company 3)Section 8, 25 Company 4)OPCs 5)Small Company u/s 2(85) of CA 2013 6)Select Private Company Effective from FY commencing on or after 1st April 2015 Exemptions from Applicability 1)Banking Company 2)Insurance Company 3)Section 8, 25 Company 4)OPCs 5)Small Company u/s 2(85) of CA 2013 6)Select Private Company CFSBranch Auditor
  • 4.
    Applicability of CARO2016 The applicability of the Order would be based on the status of the company as at the balance sheet date It may also be noted that in case a company is covered under the definition of small company, it will remain exempted from the applicability of the Order even if it falls under any of the criteria specified for private company. The applicability of the Order would be based on the status of the company as at the balance sheet date It may also be noted that in case a company is covered under the definition of small company, it will remain exempted from the applicability of the Order even if it falls under any of the criteria specified for private company.
  • 5.
    Illustrations on CAROApplicability Particulars Applicability Comments Public company (irrespective of size of its paid up capital, reserves, surplus, borrowings & revenue) Yes Applicable to all public cos except certain categories exempted Private company having paid up capital of Rs 25 lacs, Reserves, Surplus of Rs 80 lacs, borrowings of Rs 2 Crores from Bank, Revenue of Rs 2 crores No General exemption to small company Private company having paid up capital of Rs 1.5 Crores with no Reserves and Turnover Yes Not a select private or small company Private company having paid up capital of Rs 1.5 Crores with no Reserves and Turnover Yes Not a select private or small company Private Company (a subsidiary of public company) having paid up capital of Rs 25 lacs with no Reserves and Turnover Yes Not a select private or small company Private Company (an associate of public company) having Paid up Capital of Rs 25 lacs with R & S of Rs 1 Crore, Revenue of Rs 2 Crores No General exemption to small company Private Company having capital, R & S of 1 crore, inter corporate borrowings of 5 crores, revenue of 1 crore No Exemption to a select private company
  • 6.
    General Approach • theauditor is not to carry out an investigation but give specific information on certain aspects of his work • reporting is supplemental to the audit of FS 11, not to be construed as a separate reporting engagement • section 143(9) the Act, casts a duty on the auditor to comply with the auditing standards specified under section 143(10) of the Act. • auditor’s procedures for reporting on the Order would, as in the case of audit of financial statements, need to be within the framework of the principles enunciated in SA. • the auditor is not to carry out an investigation but give specific information on certain aspects of his work • reporting is supplemental to the audit of FS 11, not to be construed as a separate reporting engagement • section 143(9) the Act, casts a duty on the auditor to comply with the auditing standards specified under section 143(10) of the Act. • auditor’s procedures for reporting on the Order would, as in the case of audit of financial statements, need to be within the framework of the principles enunciated in SA.
  • 7.
    General Approach • theauditor should also consider obtaining management representations, on matters on which the Order requires the auditor make a statement on certain aspects. • necessity for preserving working papers by auditors assumes greater importance in context of the requirements of the Order • SA 230 “Audit Documentation, SA 315 Materiality in Planning & Performing an Audit, Exercise of Judgement • where a requirement of the Order is not complied with but the auditor decides not to make an adverse comment, in view of the immateriality of the item, he should record rationale for the same in his working papers • the auditor should also consider obtaining management representations, on matters on which the Order requires the auditor make a statement on certain aspects. • necessity for preserving working papers by auditors assumes greater importance in context of the requirements of the Order • SA 230 “Audit Documentation, SA 315 Materiality in Planning & Performing an Audit, Exercise of Judgement • where a requirement of the Order is not complied with but the auditor decides not to make an adverse comment, in view of the immateriality of the item, he should record rationale for the same in his working papers
  • 8.
    Matters to beIncluded in Audit Report Auditor's Report to Contain Matters Specified in Paragraphs 3 and 4 of the Order..as may be applicable Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Reporting under this Order shall be applicable for the financial year 2015-16 and onwards In case auditor has to report on the FS for the FY prior to 2015-16, then the relevant earlier Order shall be applicable. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs In case auditor has to report on the FS for the FY prior to 2015-16, then the relevant earlier Order shall be applicable. Reporting on the matters specified in paragraph 3 and 4 of the Order are to be made only on those matters which are applicable to the Company.
  • 9.
    Matters to beIncluded in Audit Report Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of accountFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs Whether title deeds of immovable properties are held in the name of the company. If not, provide details thereof.
  • 10.
    Matters to beIncluded in Audit Report Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, whether they have been dealt with in the books of account Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl FraudFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 11.
    Matters to beIncluded in Audit Report Whether the company has granted any loans, secured or unsecured to companies, firms, LLPs, or other parties covered in the register maintained under section 189 of the Companies Act, If so: Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest?Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest? Whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular If the amount is overdue, state the total amount due for 90 days and whether reasonable steps have been taken by the company for recovery of the principal or interest
  • 12.
    Matters to beIncluded in Audit Report In respect of loans, investments guarantees and security, whether provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof. Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl FraudFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 13.
    Matters to beIncluded in Audit Report in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under, where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not? Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under, where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not? Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 14.
    Matters to beIncluded in Audit Report Where maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act, whether such accounts and records have been so made and maintained Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl FraudFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 15.
    Matters to beIncluded in Audit Report Is the company regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Is the company regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditorFraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs where dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute)
  • 16.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the company has defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders? If yes, the period and amount of default to be reported (in case of banks financial institutions and government, lender wise details to be provided). Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 17.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether moneys raised by way of initial public offer or further public 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 Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 18.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud 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 is to be indicated Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 19.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 20.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the Nidhi Company has complied with the Net Owned Fund to Deposits in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 21.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether all transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc as required by the applicable accounting standards Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 22.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details in respect of the amount involved and nature of non compliance. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details in respect of the amount involved and nature of non compliance.
  • 23.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud 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. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 24.
    Matters to beIncluded in Audit Report Fixed Assets Inventory Loans 185, 186 Deposits Cost Records Statutory Dues Repayment of Dues Moneys Raised -Appl Fraud Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and if so, whether the registration has been obtained. Fraud Managerial Remuneration Nidhi Cos Related Party Txns Private Placements Non Cash Transactions NBFCs
  • 25.
    Comments on Formof Report where an auditor is unable to express any opinion, he should indicate such fact the auditor is also required to give reasons for any unfavourable or qualified answer where the auditor is unable to express an opinion on any such matter which is applicable to the company, he is also required to indicate in his report such fact together with the reasons as to why he is unable to express any opinion where an auditor is unable to express any opinion, he should indicate such fact the auditor is also required to give reasons for any unfavourable or qualified answer where the auditor is unable to express an opinion on any such matter which is applicable to the company, he is also required to indicate in his report such fact together with the reasons as to why he is unable to express any opinion
  • 26.
    Reference in MainReporting “Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. As required by Section 143 (3) of the Act, we report that: ............................. ……………………………” “Report on Other Legal and Regulatory Requirements As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. As required by Section 143 (3) of the Act, we report that: ............................. ……………………………”
  • 27.
    6/11/2016 Sumit Binani, sumit_binani@hotmail.com,+919830810003, B.Com (H), PGDBM (IIM-Cal), FCA, FCS, ACMA
  • 28.
    Foreign Company The Orderalso applies to foreign companies as defined in clause (42) of section 2 of the Act. According to the aforesaid section, a “foreign company” means: “Any company or body corporate incorporated outside India which - (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner.” In the case of a foreign company, wherever under any of the provisions of the Act, an audit under Chapter X of the Act is required to be carried out, the Order would be applicable The Order also applies to foreign companies as defined in clause (42) of section 2 of the Act. According to the aforesaid section, a “foreign company” means: “Any company or body corporate incorporated outside India which - (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner.” In the case of a foreign company, wherever under any of the provisions of the Act, an audit under Chapter X of the Act is required to be carried out, the Order would be applicable
  • 29.
    Small Company u/s2(85) of CA 2013 • Meaning of a Small Company •The limits of paid up capital and turnover are as follows: * Under Companies Bill, 2016 •Additional Conditions • needs to be a private company • It cannot be a holding or subsidiary company • It cannot be a section 8 company • It cannot be a company regulated by a special act Criteria Existing Limit (Rs) Maximum Prescribed Proposed Maximum* Paid Up Capital 50 lacs 5 crores 10 crores Turnover 2 crores 20 crores 100 crores • Meaning of a Small Company •The limits of paid up capital and turnover are as follows: * Under Companies Bill, 2016 •Additional Conditions • needs to be a private company • It cannot be a holding or subsidiary company • It cannot be a section 8 company • It cannot be a company regulated by a special act
  • 30.
    Turnover • Defined u/s2(91) of CA 2013...amendment also proposed in Companies Bill 2016 • "turnover" means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year • Order does not define turnover separately • Defined u/s 2(91) of CA 2013...amendment also proposed in Companies Bill 2016 • "turnover" means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year • Order does not define turnover separately
  • 31.
    Select Private Company •Not a holding company of a public company • Not a subsidiary company of a public company • Private Company with: a) paid up capital + reserves + surplus up to Rs 1 crore as at the balance sheet date b) total borrowings up to Rs 1 crore from any Bank or FI at any point of time during the FY c) total revenue up to Rs 10 crores as disclosed in Schedule III (including revenue from discontinuing operations) during the FY as per Financial Statement A private limited company, to be exempt from the applicability of CARO, must satisfy all the conditions mentioned above collectively. In other words, even if one of the conditions is not satisfied, a private limited company’s auditor has to report on the matters specified in the Order. • Not a holding company of a public company • Not a subsidiary company of a public company • Private Company with: a) paid up capital + reserves + surplus up to Rs 1 crore as at the balance sheet date b) total borrowings up to Rs 1 crore from any Bank or FI at any point of time during the FY c) total revenue up to Rs 10 crores as disclosed in Schedule III (including revenue from discontinuing operations) during the FY as per Financial Statement A private limited company, to be exempt from the applicability of CARO, must satisfy all the conditions mentioned above collectively. In other words, even if one of the conditions is not satisfied, a private limited company’s auditor has to report on the matters specified in the Order.
  • 32.
    Paid Up Capital,Reserves, Borrowings • Share application money not to be considered • Both capital and revenue reserves to be considered. Revaluation reserve to be considered • Non fund based limits not to be considered as borrowings • Interest accrued and due to be considered. Interest accrued but not due not be considered as borrowings • If guarantee has been invoked and encashed or where, say, a letter of credit has been devolved on the company, to be considered. • For cash credit facility, the Order would apply to the company in case on any day during the financial year concerned, the amount outstanding in the cash credit facility exceeds Rs. 1 crore as per books of the company along with other borrowings. • Share application money not to be considered • Both capital and revenue reserves to be considered. Revaluation reserve to be considered • Non fund based limits not to be considered as borrowings • Interest accrued and due to be considered. Interest accrued but not due not be considered as borrowings • If guarantee has been invoked and encashed or where, say, a letter of credit has been devolved on the company, to be considered. • For cash credit facility, the Order would apply to the company in case on any day during the financial year concerned, the amount outstanding in the cash credit facility exceeds Rs. 1 crore as per books of the company along with other borrowings.
  • 33.
    Title deed ofImmovable Property [Para 3(i)(c)] • This clause shall cover the immovable properties which are included under the head Fixed Assets, as the reporting under Clause 3(i)(a) & 3(i)(b) pertains to Fixed Assets only • The Act does not define the term “Immovable Property”. However, as per General Clauses Act, 1897, “Immovable Property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. • TDRs (Transfer Development Rights), Plant and Machinery embedded in land etc., are not considered as an immovable property • This clause shall cover the immovable properties which are included under the head Fixed Assets, as the reporting under Clause 3(i)(a) & 3(i)(b) pertains to Fixed Assets only • The Act does not define the term “Immovable Property”. However, as per General Clauses Act, 1897, “Immovable Property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. • TDRs (Transfer Development Rights), Plant and Machinery embedded in land etc., are not considered as an immovable property
  • 34.
    Title deed ofImmovable Property [Para 3(i)(c)] • title deeds of the immovable property in case of leasehold land and land & buildings together, covered under the head fixed assets, the lease agreement duly registered with the appropriate authority • detailed examination required in the cases where immovable property is transferred as a result of conversion of partnership firm or LLP into company or amalgamation of companies • mortgaged title deeds • lost cases, legal dispute cases • the management is responsible for legal determination of the validity of title deeds • title deeds of the immovable property in case of leasehold land and land & buildings together, covered under the head fixed assets, the lease agreement duly registered with the appropriate authority • detailed examination required in the cases where immovable property is transferred as a result of conversion of partnership firm or LLP into company or amalgamation of companies • mortgaged title deeds • lost cases, legal dispute cases • the management is responsible for legal determination of the validity of title deeds
  • 35.
    Sec 192 Following transactionsare permitted subject to conditions An arrangement by which a director of the company or its holding, subsidiary or associate company or a person connected with such director acquires or is to acquire assets for consideration other than cash, from the company. An arrangement by which the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected. Following transactions are permitted subject to conditions An arrangement by which a director of the company or its holding, subsidiary or associate company or a person connected with such director acquires or is to acquire assets for consideration other than cash, from the company. An arrangement by which the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected.