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CARO 2016 (Short Notes)
- 1. Companies (Auditors’ Report) Order, 2016 Anaadi Mish
- 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
- 21. Thankyou