2. 1. Applicability of CARO.
2. Auditor’s Report to contain matters specified in
Paragraphs of 3 & 4.
3. Matters to be included in auditor’s Report.
4. Reasons to be stated for unfavourable or qualified
answers.
3. 1.Applicability of CARO, 2016:-
It shall apply to every company including foreign company , except:-
Company licensed
u/s 8 of Company
Act, 2013 (NGO,
NPO)
One Person
Company (u/s-
2(62)) & Small
Company (u/s-
2(85))
Insurance
Company
Registered under
Insurance
Act,1938
Banking Company
registered under
Banking Regulation
Act, 1949.
Private Limited Company Having:-
1. Paid up capital & Reserve and Surplus < One crore
as on Balance Sheet date
&
2. Borrowing from Bank or Financial Institution < One
crore at any point of time during the year.
&
3. Total Revenue during the year < 10 crore during the
year.
4. under section 143 of the Companies Act, 2013 on the
accounts of every company audited by him, to which
this Order applies, for the financial years commencing
on or after 1st April, 2015, shall in addition, contain the
matters specified in paragraphs 3 and 4, as may be
applicable:
5. 3.Matters to be included
in the auditor's report: -
The auditor's report on
the accounts of the
company to which this
Order applies shall include
a statement on such listed
matters.
Fixed Assets
Inventory
Loans
Loan to Directors
Deposits
Cost Records
Statutory Dues
Repayment of Loans
IPO & Term Loan
Frauds
Managerial Remuneration
Registration Under RBI
Non Cash Trans with Directors
Related Parties Transactions
Nidhi Company
Private placement of Shares & Deb.
6. Title deed of immovable
property are held in name
of company. (New)
Proper Records With
Quantitive Details
Physical verification in
reasonable time period, if
discrepancies are there,
properly dealt with books of
accounts.
8. 3.Loans to others:-
Schedule of repayment of Principal &
interest is stipulated & whether
payments or receipts are regular.
State the total amount overdue >90 days
as on date of F.Y. & whether reasonable
steps have been taken for the recovery
of same.
Terms & conditions are not prejudicial to
company
Loans to companies, partnership firm,
LLP & other parties
9. Compliance with Sec.
185 & 186 of Company
Act, 2013. If not
complied provide
details.
4.Loans To Directors:-
According to sec 185 of CA,2013, No company shall provide loan to directors or in
whom director is interested or any guarantee or provide any security in connection
with a loan taken by him..
According to sec 186 of CA,2013, No company shall give loan or guarantee or
provide security to any person or body corporate or acquire by way of subscription,
purchase any body corporate,
exceeding 60% of its paid up capital +free reserves +securities premium a/c or/c
100% of free reserves + securities premium a/c, which ever is more.
10. Complying with
directives
issued by RBI
5.Deposits:- In case of company have accepted
deposits, whether the company is-
Complying with sec
73 to 76 of
companies act,
2013
If not complied,
Nature of such
contravention to
be stated.
Sec 73 to 76 of CA, 2013 prohibit company from accept deposits from public,
payment of deposits taken before commencement of Act, responsibility to
officers of co. for non payment of deposits, accept deposits from public by certain
companies.
11. 6. Cost Records:-
Whether cost records are
maintained as per sec 148 (1)
of Companies Act, 2013
Regulatory Sectors Non Regulatory Sectors
Telecommunication Services Turbo jets & turbo propellers
Generation, Transmission &
distribution of electricity
Machinery used in defense, space &
atomic energy
Petroleum products regulated by
Petroleum & Natural Gas Regulatory
Board.
Production, Import & supply or
trading of medical devices such as
heart valves, orthopedic implants,
pacemaker, etc.
Drugs & pharmaceutical Steel, Cement
Sugar & industrial alcohol Tyres & tubes
As per sec 148 (1) of CA, 2013 following companies required to maintain
cost records including foreign company but excluding small company &
micro enterprises:-
12. Report amount dues more then 6 months as on last day of
financial year from the date from they became payable.
Regularly
Depositing of
Undisputed
Statutory Dues
From
Excise
Duty
Income
tax
Provident
fund
VAT
Sales Tax
Custom
Duty
Employee
State
Insurance
Service
Tax
7.Statutory Dues:-
7.a:-
13. Disputed
dues not has
been
deposited of
Excise
Duty
Income
tax
VAT
Sales
Tax
Custom
Duty
Service
Tax
Report amount due on account of dispute & Forum where
dispute is pending shall be indicated.
7.b:-
14. Default in payment of
loans & Borrowing to
Bank Government
Financial
Institution
Dues to
Debenture
Holders
If default is made amount & period to be reported. (Lender wise details in case
of Govt, Banks, Financial Institutions.)
8.Repayment:-
15. IPO & Term Loan
Money raised by way of IPO (including debt
instrument) & term Loan were applied for the
purpose for which they are raised.
If not used for the same purpose, details with
delays or default and subsequent
rectification , if any, as may be applicable to
be reported.
16. 10.Fraud:-
If fraud by company or fraud on the
company by its officers or employees
has been noticed, nature and amount to
indicated
17. 11. Managerial Remuneration:-
Managerial Remuneration as per provisions of sec 197 of
company act, 2013 with schedule V of companies Act,
2013. If not, report on amount involved
&Steps taken by company for securing refund.
As per sec 197 maximum remuneration of directors is as follow:-
1. Remuneration to one MD, WTM, Manager shall not be exceed 5%
of not profit & more then 1 director shall not exceed 10 % of net
profit.
2. Remuneration if to directors who are neither MD nor WTM shall not
exceed :-
(a) 1 % of net profit, if there is a managing or whole time
director or manager.
(b) 3% of the net profit in any other case.
18. 12. Nidhi Company:-
As per sec 406 of CA, 2016 nidhi means a company which has been
incorporated as nidhi with the object of:-
Receiving deposits from, and lending to, its members only, for their
mutual benefit, and which complies with rules of chapter xxvi of
companies rules, 2014.
Whether Nidhi company has complied with net
own funds to deposit in ratio of 1:20 to meet
out the liabilities
&
Is maintaining 10 % unencumbered term
deposit as specified in Nidhi Rules, 2014 to
meet out liability.
19. 13. Related Parties Transactions;-
Transactions with related parties are
in accordance with sec 177 & 188 of
companies act, 2013
Disclosed as per accounting standards
in financial statements.
20. Preferential allotment private
placement of shares or convertible
debentures during the year is in
accordance with sec 42 of
companies act, 2013
Amount raised used for the purpose
for which the funds are raised. If not,
provide details amount and nature of
non-compliance.
14. Private Placement:-
21. 16.Regestration. Under RBI:-
15 .Non Cash Transactions:-
Whether company has entered into any non cash transactions with directors
or persons connected with him and if so, whether provisions of sec 192 of
companies act, 2013 have been complied with.
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.
22. 4. Reasons to be stated for unfavourable or qualified
answers.-
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.
1.Where, in the auditor's report, the answer to any of the questions
referred to in paragraph 3 is unfavourable or qualified, the auditor's
report shall also state the basis for such unfavourable or qualified
answer, as the case may be.
23. Applicability of CARO, 2016 Applicability of CARO, 2015
Not applicable to Pvt Ltd companies,
which fulfills following 3 conditions:-
Not applicable to Pvt Ltd companies,
which fulfills following 3 conditions:-
1. Paid up capital + Reserve & Surplus >
1 crore
1. Paid up capital + Reserve & Surplus >
50 Lakhs
2. Borrowing from Bank & Financial
Institution > 1 crore
2. Borrowing from Bank & Financial
Institution > 25 Lakhs
3.Turn over > 10 crore 3.Turn over > 5 crore
CARO, 2016 VS CARO, 2015:-
24. Matters Added in CARO,
2016
Matters Deleted from CARO,
2015
Loans to others Internal control system
Managerial Remuneration Accumulated Losses
Preference issue of shares &
debentures
Guarantee
Non Cash Transactions
Nidhi Company
Reg. Under RBI
IPO & Term Loan
CARO, 2016 VS CARO, 2016:-