Practical aspects of audit including caro 2016

CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
CA. PRAMOD JAIN
FCA, FCS, FCMA, LL.B, MIMA, DISA
LUNAWAT & CO.
Chartered Accountants
LUNAWAT & CO.
Chartered Accountants
16th June 2016, Karnal16th June 2016, Karnal
PRACTICAL ASPECTSPRACTICAL ASPECTSPRACTICAL ASPECTSPRACTICAL ASPECTS
OFOFOFOF
AUDITAUDITAUDITAUDIT
(Including CARO 2016 )(Including CARO 2016 )(Including CARO 2016 )(Including CARO 2016 )
PRACTICAL ASPECTSPRACTICAL ASPECTSPRACTICAL ASPECTSPRACTICAL ASPECTS
OFOFOFOF
(Including CARO 2016 )(Including CARO 2016 )(Including CARO 2016 )(Including CARO 2016 )

AGENDAAGENDAAGENDAAGENDA
Practical Issues of Audit underPractical Issues of Audit underPractical Issues of Audit underPractical Issues of Audit under
Companies Act 2013Companies Act 2013Companies Act 2013Companies Act 2013
Practical IssuesPractical IssuesPractical IssuesPractical Issues ofofofof Audit underAudit underAudit underAudit under
Income Tax Act 1961Income Tax Act 1961Income Tax Act 1961Income Tax Act 1961
CAROCAROCAROCARO 2016201620162016
Lunawat & Co.

AUDIT PROCESSAUDIT PROCESSAUDIT PROCESSAUDIT PROCESS
Lunawat & Co.
APPOINTMENTAPPOINTMENTAPPOINTMENTAPPOINTMENT
REPORTINGREPORTINGREPORTINGREPORTING
BILLINGBILLINGBILLINGBILLING
COLLECTIONCOLLECTIONCOLLECTIONCOLLECTION

APPOINTMENTAPPOINTMENTAPPOINTMENTAPPOINTMENT
Lunawat & Co.

Lunawat & Co.
PROCEDURE FOR 1PROCEDURE FOR 1PROCEDURE FOR 1PROCEDURE FOR 1STSTSTST APPOINTMENTAPPOINTMENTAPPOINTMENTAPPOINTMENT
Board/AC toBoard/AC toBoard/AC toBoard/AC to
considerconsiderconsiderconsider
qualification &qualification &qualification &qualification &
experience ofexperience ofexperience ofexperience of
auditorauditorauditorauditor –––– To beTo beTo beTo be
commensurate withcommensurate withcommensurate withcommensurate with
size & requirementssize & requirementssize & requirementssize & requirements
of coof coof coof co
consider completedconsider completedconsider completedconsider completed
& pending& pending& pending& pending
proceedings againstproceedings againstproceedings againstproceedings against
auditor before ICAI /auditor before ICAI /auditor before ICAI /auditor before ICAI /
NFRA / Tribunal /NFRA / Tribunal /NFRA / Tribunal /NFRA / Tribunal /
Other Court.Other Court.Other Court.Other Court.
Obtain writtenObtain writtenObtain writtenObtain written
consent +consent +consent +consent +
certificate fromcertificate fromcertificate fromcertificate from
proposed auditor.proposed auditor.proposed auditor.proposed auditor.
Certificate to includeCertificate to includeCertificate to includeCertificate to include
satisfaction of s.satisfaction of s.satisfaction of s.satisfaction of s.
141 conditions by141 conditions by141 conditions by141 conditions by
auditorauditorauditorauditor
Board to appointBoard to appointBoard to appointBoard to appoint
within 30 days ofwithin 30 days ofwithin 30 days ofwithin 30 days of
incorporationincorporationincorporationincorporation
If Board fails,If Board fails,If Board fails,If Board fails,
appoint in EGMappoint in EGMappoint in EGMappoint in EGM
Board informingBoard informingBoard informingBoard informing
membersmembersmembersmembers
Inform auditor andInform auditor andInform auditor andInform auditor and
option to file ADT 1option to file ADT 1option to file ADT 1option to file ADT 1
with ROC within 15with ROC within 15with ROC within 15with ROC within 15
daysdaysdaysdays

CA to issue certificate that:CA to issue certificate that:CA to issue certificate that:CA to issue certificate that:
He / It is eligible for appointment u/s 141 andHe / It is eligible for appointment u/s 141 andHe / It is eligible for appointment u/s 141 andHe / It is eligible for appointment u/s 141 and
is not disqualified under the Act, the CA Act, &is not disqualified under the Act, the CA Act, &is not disqualified under the Act, the CA Act, &is not disqualified under the Act, the CA Act, &
related Rulesrelated Rulesrelated Rulesrelated Rules
The proposed appointment is within the termThe proposed appointment is within the termThe proposed appointment is within the termThe proposed appointment is within the term
allowedallowedallowedallowed
The proposed appointment is within the limitThe proposed appointment is within the limitThe proposed appointment is within the limitThe proposed appointment is within the limit
ListListListList of proceedings againstof proceedings againstof proceedings againstof proceedings against auditor pendingauditor pendingauditor pendingauditor pending
w.r.t.w.r.t.w.r.t.w.r.t. professional matters of conduct, asprofessional matters of conduct, asprofessional matters of conduct, asprofessional matters of conduct, as
disclosed,disclosed,disclosed,disclosed, is true &is true &is true &is true & correctcorrectcorrectcorrect
Lunawat & Co.
CA CERTIFICATECA CERTIFICATECA CERTIFICATECA CERTIFICATE

Lunawat & Co.
PROCEDURE FOR APPOINTMENTPROCEDURE FOR APPOINTMENTPROCEDURE FOR APPOINTMENTPROCEDURE FOR APPOINTMENT
Board/AC to consider qualification &Board/AC to consider qualification &Board/AC to consider qualification &Board/AC to consider qualification &
experience of auditorexperience of auditorexperience of auditorexperience of auditor –––– To be commensurateTo be commensurateTo be commensurateTo be commensurate
with size & requirements of cowith size & requirements of cowith size & requirements of cowith size & requirements of co
Board/AC to consider completed & pendingBoard/AC to consider completed & pendingBoard/AC to consider completed & pendingBoard/AC to consider completed & pending
proceedings against auditor before ICAI /proceedings against auditor before ICAI /proceedings against auditor before ICAI /proceedings against auditor before ICAI /
NFRA / Tribunal / Other Court.NFRA / Tribunal / Other Court.NFRA / Tribunal / Other Court.NFRA / Tribunal / Other Court.
Obtain written consent + certificate fromObtain written consent + certificate fromObtain written consent + certificate fromObtain written consent + certificate from
proposed auditor. Certificate to includeproposed auditor. Certificate to includeproposed auditor. Certificate to includeproposed auditor. Certificate to include
satisfaction of s. 141 conditions by auditorsatisfaction of s. 141 conditions by auditorsatisfaction of s. 141 conditions by auditorsatisfaction of s. 141 conditions by auditor
Appointment is to be done in AGM for 5Appointment is to be done in AGM for 5Appointment is to be done in AGM for 5Appointment is to be done in AGM for 5
years. Ratification to be done annually.years. Ratification to be done annually.years. Ratification to be done annually.years. Ratification to be done annually.
Inform auditor and file ADT 1 with ROC withinInform auditor and file ADT 1 with ROC withinInform auditor and file ADT 1 with ROC withinInform auditor and file ADT 1 with ROC within
15 days of appointment15 days of appointment15 days of appointment15 days of appointment

RERERERE----APPOINTMENTAPPOINTMENTAPPOINTMENTAPPOINTMENT
RetiringRetiringRetiringRetiring auditor may be reauditor may be reauditor may be reauditor may be re----appointed atappointed atappointed atappointed at
AGM,AGM,AGM,AGM, ifififif————
HHHHeeee is not disqualified foris not disqualified foris not disqualified foris not disqualified for rererere----appointment;appointment;appointment;appointment;
HHHHeeee has not givenhas not givenhas not givenhas not given Co. aCo. aCo. aCo. a notice in writing ofnotice in writing ofnotice in writing ofnotice in writing of
his unwillingness tohis unwillingness tohis unwillingness tohis unwillingness to be rebe rebe rebe re----appointedappointedappointedappointed;;;; andandandand
A SRA SRA SRA SR has not been passed at that meetinghas not been passed at that meetinghas not been passed at that meetinghas not been passed at that meeting
appointingappointingappointingappointing some othersome othersome othersome other auditor or providingauditor or providingauditor or providingauditor or providing
expressly that he shall not be reexpressly that he shall not be reexpressly that he shall not be reexpressly that he shall not be re----appointedappointedappointedappointed
AutomaticAutomaticAutomaticAutomatic reappointment of existingreappointment of existingreappointment of existingreappointment of existing
auditor at AGM if not reauditor at AGM if not reauditor at AGM if not reauditor at AGM if not re----appointedappointedappointedappointed....
Lunawat & Co.

Lunawat & Co.
CASUAL VACANCYCASUAL VACANCYCASUAL VACANCYCASUAL VACANCY
considerconsiderconsiderconsider
qualification &qualification &qualification &qualification &
experience , etc..experience , etc..experience , etc..experience , etc..
And pendingAnd pendingAnd pendingAnd pending
proceedingsproceedingsproceedingsproceedings
Obtain writtenObtain writtenObtain writtenObtain written
consent +consent +consent +consent +
certificate fromcertificate fromcertificate fromcertificate from
proposed auditor.proposed auditor.proposed auditor.proposed auditor.
Certificate to includeCertificate to includeCertificate to includeCertificate to include
satisfaction of s.satisfaction of s.satisfaction of s.satisfaction of s.
141 conditions by141 conditions by141 conditions by141 conditions by
auditorauditorauditorauditor
Board to fill withinBoard to fill withinBoard to fill withinBoard to fill within
30 days of vacancy30 days of vacancy30 days of vacancy30 days of vacancy
If vacancy due toIf vacancy due toIf vacancy due toIf vacancy due to
resignation,resignation,resignation,resignation,
approval alsoapproval alsoapproval alsoapproval also
required in EGMrequired in EGMrequired in EGMrequired in EGM
Board’sBoard’sBoard’sBoard’s
recommendationrecommendationrecommendationrecommendation
Inform auditor andInform auditor andInform auditor andInform auditor and
option to file ADT 1option to file ADT 1option to file ADT 1option to file ADT 1
in 15 days with ROCin 15 days with ROCin 15 days with ROCin 15 days with ROC

QUALIFICATIONQUALIFICATIONQUALIFICATIONQUALIFICATION
Must be a CAMust be a CAMust be a CAMust be a CA
AAAA firm including LLP whereof majority offirm including LLP whereof majority offirm including LLP whereof majority offirm including LLP whereof majority of
partners practicing in India are qualifiedpartners practicing in India are qualifiedpartners practicing in India are qualifiedpartners practicing in India are qualified
for appointment as auditorfor appointment as auditorfor appointment as auditorfor appointment as auditor
Where such firm/LLP is appointed as anWhere such firm/LLP is appointed as anWhere such firm/LLP is appointed as anWhere such firm/LLP is appointed as an
auditor of a company, only the partnersauditor of a company, only the partnersauditor of a company, only the partnersauditor of a company, only the partners
who are CAs shall be authorized to actwho are CAs shall be authorized to actwho are CAs shall be authorized to actwho are CAs shall be authorized to act
and sign on behalf of the firm.and sign on behalf of the firm.and sign on behalf of the firm.and sign on behalf of the firm.
Lunawat & Co.

DISQUALIFICATIONSDISQUALIFICATIONSDISQUALIFICATIONSDISQUALIFICATIONS
AAAA body corporate other than LLP;body corporate other than LLP;body corporate other than LLP;body corporate other than LLP;
AAAAn officer or employee of the company;n officer or employee of the company;n officer or employee of the company;n officer or employee of the company;
AAAA person who, or his relative or partnerperson who, or his relative or partnerperson who, or his relative or partnerperson who, or his relative or partner————
IIIIs holding any security of or interest in Co. or itss holding any security of or interest in Co. or itss holding any security of or interest in Co. or itss holding any security of or interest in Co. or its
subsidiary, or of its holding or associate Co. orsubsidiary, or of its holding or associate Co. orsubsidiary, or of its holding or associate Co. orsubsidiary, or of its holding or associate Co. or
a subs. of such holding co. Relativea subs. of such holding co. Relativea subs. of such holding co. Relativea subs. of such holding co. Relative –––– RsRsRsRs. 1 L. 1 L. 1 L. 1 L
CCCCorrective action to bring within limits (relative)orrective action to bring within limits (relative)orrective action to bring within limits (relative)orrective action to bring within limits (relative) ––––
60 days60 days60 days60 days
IIIIs indebted to the co….s indebted to the co….s indebted to the co….s indebted to the co…. –––– RsRsRsRs. 5 L (ICAI. 5 L (ICAI. 5 L (ICAI. 5 L (ICAI –––– 10K)10K)10K)10K)
HHHHas given a guarantee /provided securityas given a guarantee /provided securityas given a guarantee /provided securityas given a guarantee /provided security –––– 1 L1 L1 L1 L
Lunawat & Co.

AAAA person who is a partner, or who is in theperson who is a partner, or who is in theperson who is a partner, or who is in theperson who is a partner, or who is in the
employment, of an officer or employee of Coemployment, of an officer or employee of Coemployment, of an officer or employee of Coemployment, of an officer or employee of Co
AAAA person whose relative is a director or is KMPperson whose relative is a director or is KMPperson whose relative is a director or is KMPperson whose relative is a director or is KMP
of the company;of the company;of the company;of the company;
AAAA person who is in full time employmentperson who is in full time employmentperson who is in full time employmentperson who is in full time employment
elsewhereelsewhereelsewhereelsewhere
A person who has been convicted by a court ofA person who has been convicted by a court ofA person who has been convicted by a court ofA person who has been convicted by a court of
an offence involving fraud & a period of 10an offence involving fraud & a period of 10an offence involving fraud & a period of 10an offence involving fraud & a period of 10 YrsYrsYrsYrs
has not elapsed from date of such convictionhas not elapsed from date of such convictionhas not elapsed from date of such convictionhas not elapsed from date of such conviction
A person or a partner of a firm holdingA person or a partner of a firm holdingA person or a partner of a firm holdingA person or a partner of a firm holding
appointment as auditor of more than 20 cosappointment as auditor of more than 20 cosappointment as auditor of more than 20 cosappointment as auditor of more than 20 cos
Lunawat & Co.

AAAA person or a firm who, whether directly orperson or a firm who, whether directly orperson or a firm who, whether directly orperson or a firm who, whether directly or
indirectly, has business relationship with co., orindirectly, has business relationship with co., orindirectly, has business relationship with co., orindirectly, has business relationship with co., or
its ….….. of nature i.e.,its ….….. of nature i.e.,its ….….. of nature i.e.,its ….….. of nature i.e., any transaction enteredany transaction enteredany transaction enteredany transaction entered
into for commercial purpose except:into for commercial purpose except:into for commercial purpose except:into for commercial purpose except:
In nature of professional services permittedIn nature of professional services permittedIn nature of professional services permittedIn nature of professional services permitted
IIIInnnn thethethethe ordinary course of business ofordinary course of business ofordinary course of business ofordinary course of business of cocococo.... atatatat ALPALPALPALP likelikelikelike
salesalesalesale of products orof products orof products orof products or
servicesservicesservicesservices
TTTToooo auditorauditorauditorauditor, as customer, in the ordinary course of, as customer, in the ordinary course of, as customer, in the ordinary course of, as customer, in the ordinary course of
businessbusinessbusinessbusiness, by companies engaged in, by companies engaged in, by companies engaged in, by companies engaged in businessbusinessbusinessbusiness ofofofof
telecommunications, airlines, hospitals, hotelstelecommunications, airlines, hospitals, hotelstelecommunications, airlines, hospitals, hotelstelecommunications, airlines, hospitals, hotels &&&&
such other similar businessessuch other similar businessessuch other similar businessessuch other similar businesses
Lunawat & Co.

Any person whose:Any person whose:Any person whose:Any person whose:
subsidiary orsubsidiary orsubsidiary orsubsidiary or
associate company orassociate company orassociate company orassociate company or
any other form of entity,any other form of entity,any other form of entity,any other form of entity,
is engaged as on the date of appointment inis engaged as on the date of appointment inis engaged as on the date of appointment inis engaged as on the date of appointment in
consulting and specialized services as provided inconsulting and specialized services as provided inconsulting and specialized services as provided inconsulting and specialized services as provided in
s. 144.s. 144.s. 144.s. 144.
If the auditor after appointment incurs any ofIf the auditor after appointment incurs any ofIf the auditor after appointment incurs any ofIf the auditor after appointment incurs any of
the disqualificationsthe disqualificationsthe disqualificationsthe disqualifications –––– vacate his office byvacate his office byvacate his office byvacate his office by
casual vacancycasual vacancycasual vacancycasual vacancy
Lunawat & Co.

OTHER SERVICES BY AUDITOROTHER SERVICES BY AUDITOROTHER SERVICES BY AUDITOROTHER SERVICES BY AUDITOR
Auditor not to provide other servicesAuditor not to provide other servicesAuditor not to provide other servicesAuditor not to provide other services
directly or indirectlydirectly or indirectlydirectly or indirectlydirectly or indirectly to theto theto theto the companycompanycompanycompany
or itsor itsor itsor its holding companyholding companyholding companyholding company orororor subsidiarysubsidiarysubsidiarysubsidiary
company:company:company:company:
AAAAccounting & Book Keeping Services;ccounting & Book Keeping Services;ccounting & Book Keeping Services;ccounting & Book Keeping Services;
IIIInternal Audit;nternal Audit;nternal Audit;nternal Audit;
DDDDesign and implementation of anyesign and implementation of anyesign and implementation of anyesign and implementation of any
financial IS;financial IS;financial IS;financial IS;
Lunawat & Co.

OTHER SERVICES BY AUDITOROTHER SERVICES BY AUDITOROTHER SERVICES BY AUDITOROTHER SERVICES BY AUDITOR
AAAActuarial services;ctuarial services;ctuarial services;ctuarial services;
IIIInvestment advisory services;nvestment advisory services;nvestment advisory services;nvestment advisory services;
IIIInvestment banking services;nvestment banking services;nvestment banking services;nvestment banking services;
RRRRendering of outsourced financialendering of outsourced financialendering of outsourced financialendering of outsourced financial
services;services;services;services;
MMMManagement services;anagement services;anagement services;anagement services;
Others PrescribedOthers PrescribedOthers PrescribedOthers Prescribed
Lunawat & Co.

Not to include:Not to include:Not to include:Not to include:----
OOOOnenenene person companies,person companies,person companies,person companies,
DDDDormantormantormantormant companies,companies,companies,companies,
SSSSmallmallmallmall companies, andcompanies, andcompanies, andcompanies, and
PPPPrivate cos.rivate cos.rivate cos.rivate cos. having paidhaving paidhaving paidhaving paid----up share capitalup share capitalup share capitalup share capital
lesslesslessless thanthanthanthan RsRsRsRs. 100. 100. 100. 100 CrsCrsCrsCrs
LimitLimitLimitLimit currently as per ICAI is 30 companiescurrently as per ICAI is 30 companiescurrently as per ICAI is 30 companiescurrently as per ICAI is 30 companies
per auditor including private companiesper auditor including private companiesper auditor including private companiesper auditor including private companies
(unless changed by ICAI later)(unless changed by ICAI later)(unless changed by ICAI later)(unless changed by ICAI later)
Lunawat & Co.
20 LIMIT ON AUDITORS20 LIMIT ON AUDITORS20 LIMIT ON AUDITORS20 LIMIT ON AUDITORS

RESIGNATIONRESIGNATIONRESIGNATIONRESIGNATION
Auditor may resign before his term.Auditor may resign before his term.Auditor may resign before his term.Auditor may resign before his term.
To file a statement with ROC in ADTTo file a statement with ROC in ADTTo file a statement with ROC in ADTTo file a statement with ROC in ADT----3 as3 as3 as3 as
well as the Co.well as the Co.well as the Co.well as the Co. within 30 days, indicatingwithin 30 days, indicatingwithin 30 days, indicatingwithin 30 days, indicating
reasonsreasonsreasonsreasons
In case of Government companies to beIn case of Government companies to beIn case of Government companies to beIn case of Government companies to be
filed with CAG too.filed with CAG too.filed with CAG too.filed with CAG too.
Non complianceNon complianceNon complianceNon compliance –––– fine on auditor:fine on auditor:fine on auditor:fine on auditor:
MinimumMinimumMinimumMinimum –––– 50K50K50K50K
MaximumMaximumMaximumMaximum ---- 500K500K500K500K
Lunawat & Co.

REMOVAL BEFORE TERMREMOVAL BEFORE TERMREMOVAL BEFORE TERMREMOVAL BEFORE TERM
Removal before termRemoval before termRemoval before termRemoval before term
Special Resolution; andSpecial Resolution; andSpecial Resolution; andSpecial Resolution; and
Prior CG approvalPrior CG approvalPrior CG approvalPrior CG approval –––– application in ADTapplication in ADTapplication in ADTapplication in ADT----2 within 302 within 302 within 302 within 30
days of Board resolution & filing fee to be paid:days of Board resolution & filing fee to be paid:days of Board resolution & filing fee to be paid:days of Board resolution & filing fee to be paid:
OPCOPCOPCOPC & small& small& small& small ---- < 25 L< 25 L< 25 L< 25 L –––– 1000; 251000; 251000; 251000; 25 –––– 50 L50 L50 L50 L –––– 2500250025002500
OthersOthersOthersOthers ---- < 25< 25< 25< 25 –––– 2000; 25 to 50 L2000; 25 to 50 L2000; 25 to 50 L2000; 25 to 50 L –––– 5000; 50L to 5 Cr5000; 50L to 5 Cr5000; 50L to 5 Cr5000; 50L to 5 Cr ––––
10000; 5 Cr to 10 Cr10000; 5 Cr to 10 Cr10000; 5 Cr to 10 Cr10000; 5 Cr to 10 Cr –––– 15000; above 10 Cr15000; above 10 Cr15000; above 10 Cr15000; above 10 Cr ---- 20000200002000020000
Reasonable opportunity of hearing to be givenReasonable opportunity of hearing to be givenReasonable opportunity of hearing to be givenReasonable opportunity of hearing to be given
Co. to hold GM within 60 days of CG approval for SRCo. to hold GM within 60 days of CG approval for SRCo. to hold GM within 60 days of CG approval for SRCo. to hold GM within 60 days of CG approval for SR
Special notice required at AGM to appoint otherSpecial notice required at AGM to appoint otherSpecial notice required at AGM to appoint otherSpecial notice required at AGM to appoint other
auditor than the retiring auditor except in case ofauditor than the retiring auditor except in case ofauditor than the retiring auditor except in case ofauditor than the retiring auditor except in case of
rotationrotationrotationrotation
Lunawat & Co.

REMOVAL BY TRIBUNALREMOVAL BY TRIBUNALREMOVAL BY TRIBUNALREMOVAL BY TRIBUNAL
TribunalTribunalTribunalTribunal suosuosuosuo motomotomotomoto or on application of CG or anyor on application of CG or anyor on application of CG or anyor on application of CG or any
person concerned may change auditor if it isperson concerned may change auditor if it isperson concerned may change auditor if it isperson concerned may change auditor if it is
satisfied, that auditor has directly or indirectly:satisfied, that auditor has directly or indirectly:satisfied, that auditor has directly or indirectly:satisfied, that auditor has directly or indirectly:
Acted in fraudulent manner, orActed in fraudulent manner, orActed in fraudulent manner, orActed in fraudulent manner, or
Abetted, orAbetted, orAbetted, orAbetted, or
Colluded in any fraud by orColluded in any fraud by orColluded in any fraud by orColluded in any fraud by or in relation to,in relation to,in relation to,in relation to, Co. orCo. orCo. orCo. or itsitsitsits
directors or officersdirectors or officersdirectors or officersdirectors or officers
If on CG applicationIf on CG applicationIf on CG applicationIf on CG application –––– Tribunal on satisfactionTribunal on satisfactionTribunal on satisfactionTribunal on satisfaction
change in 15 days. CG to appoint another auditorchange in 15 days. CG to appoint another auditorchange in 15 days. CG to appoint another auditorchange in 15 days. CG to appoint another auditor
On final orderOn final orderOn final orderOn final order ---- shall not be appointed for 5shall not be appointed for 5shall not be appointed for 5shall not be appointed for 5 yrsyrsyrsyrs inininin
any other Co. and shall be liable u/s 447any other Co. and shall be liable u/s 447any other Co. and shall be liable u/s 447any other Co. and shall be liable u/s 447
Lunawat & Co.

WHO CAN CONDUCT AUDITWHO CAN CONDUCT AUDITWHO CAN CONDUCT AUDITWHO CAN CONDUCT AUDIT
W.e.fW.e.fW.e.fW.e.f. 1. 1. 1. 1stststst June 2015June 2015June 2015June 2015
AccountantAccountantAccountantAccountant as defined in Explanationas defined in Explanationas defined in Explanationas defined in Explanation
below S. 288 (2)below S. 288 (2)below S. 288 (2)below S. 288 (2)
AAAA CCCChartered Accountanthartered Accountanthartered Accountanthartered Accountant as defined inas defined inas defined inas defined in
sectionsectionsectionsection 2222 (1) (b) of(1) (b) of(1) (b) of(1) (b) of the Charteredthe Charteredthe Charteredthe Chartered
Accountants Act, 1949 who holds a validAccountants Act, 1949 who holds a validAccountants Act, 1949 who holds a validAccountants Act, 1949 who holds a valid
certificate of practicecertificate of practicecertificate of practicecertificate of practice u/su/su/su/s 6666 (1) of(1) of(1) of(1) of thatthatthatthat ActActActAct
CA in practice (can represent)CA in practice (can represent)CA in practice (can represent)CA in practice (can represent)
Lunawat & Co.

DISQUALIFICATIONDISQUALIFICATIONDISQUALIFICATIONDISQUALIFICATION ---- COMPANIESCOMPANIESCOMPANIESCOMPANIES
Lunawat & Co.

DISQUALIFICATIONDISQUALIFICATIONDISQUALIFICATIONDISQUALIFICATION –––– OTHERSOTHERSOTHERSOTHERS
AssesseeAssesseeAssesseeAssessee himselfhimselfhimselfhimself
InInInIn case ofcase ofcase ofcase of aaaa firmfirmfirmfirm ---- any partner of theany partner of theany partner of theany partner of the firmfirmfirmfirm
In case of AOPIn case of AOPIn case of AOPIn case of AOP ---- membermembermembermember of the associationof the associationof the associationof the association
In case of HUFIn case of HUFIn case of HUFIn case of HUF ---- member of the familymember of the familymember of the familymember of the family
PersonPersonPersonPerson referred to inreferred to inreferred to inreferred to in section 13(3)(a),(b),(c),section 13(3)(a),(b),(c),section 13(3)(a),(b),(c),section 13(3)(a),(b),(c),
(cc);(cc);(cc);(cc);
Relative of any of above personsRelative of any of above personsRelative of any of above personsRelative of any of above persons
Other than above, personOther than above, personOther than above, personOther than above, person who is competentwho is competentwho is competentwho is competent
to verifyto verifyto verifyto verify return u/s 139/140;return u/s 139/140;return u/s 139/140;return u/s 139/140;
OfficerOfficerOfficerOfficer or employee ofor employee ofor employee ofor employee of assesseeassesseeassesseeassessee;;;;
Lunawat & Co.

DISQUALIFICATIONSDISQUALIFICATIONSDISQUALIFICATIONSDISQUALIFICATIONS ---- OTHERSOTHERSOTHERSOTHERS
WWWWhohohoho is a partner, or who is in employment, of anis a partner, or who is in employment, of anis a partner, or who is in employment, of anis a partner, or who is in employment, of an
officer or employee ofofficer or employee ofofficer or employee ofofficer or employee of assesseeassesseeassesseeassessee;;;;
WWWWhohohoho has been convicted by a court of an offencehas been convicted by a court of an offencehas been convicted by a court of an offencehas been convicted by a court of an offence
involving fraud and a period of 10 years has notinvolving fraud and a period of 10 years has notinvolving fraud and a period of 10 years has notinvolving fraud and a period of 10 years has not
elapsed from the date of such convictionelapsed from the date of such convictionelapsed from the date of such convictionelapsed from the date of such conviction
AnAnAnAn individual who, or his relative or partnerindividual who, or his relative or partnerindividual who, or his relative or partnerindividual who, or his relative or partner
IsIsIsIs holding any security of or interest inholding any security of or interest inholding any security of or interest inholding any security of or interest in assesseeassesseeassesseeassessee––––
RelativeRelativeRelativeRelative face valueface valueface valueface value ---- RsRsRsRs. 1 L. 1 L. 1 L. 1 L
Is indebted to theIs indebted to theIs indebted to theIs indebted to the assesseeassesseeassesseeassessee. Relative. Relative. Relative. Relative –––– RsRsRsRs. l. l. l. l LLLL
Has given a guarantee /provided securityHas given a guarantee /provided securityHas given a guarantee /provided securityHas given a guarantee /provided security . Relative. Relative. Relative. Relative ––––
1111 LLLL
Lunawat & Co.

RELATIVERELATIVERELATIVERELATIVE –––– INCOME TAX AUDITORINCOME TAX AUDITORINCOME TAX AUDITORINCOME TAX AUDITOR
SSSSpousepousepousepouse of the individual;of the individual;of the individual;of the individual;
BBBBrotherrotherrotherrother or sister of the individual;or sister of the individual;or sister of the individual;or sister of the individual;
BBBBrotherrotherrotherrother or sister of the spouse of the individual;or sister of the spouse of the individual;or sister of the spouse of the individual;or sister of the spouse of the individual;
AAAAnynynyny lineal ascendant or descendant of thelineal ascendant or descendant of thelineal ascendant or descendant of thelineal ascendant or descendant of the
individual;individual;individual;individual;
AAAAnynynyny lineal ascendant or descendant of thelineal ascendant or descendant of thelineal ascendant or descendant of thelineal ascendant or descendant of the
spouse of the individual;spouse of the individual;spouse of the individual;spouse of the individual;
SSSSpousepousepousepouse of a person referredof a person referredof a person referredof a person referred aboveaboveaboveabove
AAAAnynynyny lineal descendant of a brother or sister oflineal descendant of a brother or sister oflineal descendant of a brother or sister oflineal descendant of a brother or sister of
either the individual or ofeither the individual or ofeither the individual or ofeither the individual or of spouse of individualspouse of individualspouse of individualspouse of individual
Lunawat & Co.

AAAA person or a firm who, whether directly orperson or a firm who, whether directly orperson or a firm who, whether directly orperson or a firm who, whether directly or
indirectly, has business relationship withindirectly, has business relationship withindirectly, has business relationship withindirectly, has business relationship with
assesseeassesseeassesseeassessee. i.e.,. i.e.,. i.e.,. i.e., any transaction entered into forany transaction entered into forany transaction entered into forany transaction entered into for
commercial purpose except:commercial purpose except:commercial purpose except:commercial purpose except:
In nature of professional services permittedIn nature of professional services permittedIn nature of professional services permittedIn nature of professional services permitted
IIIInnnn thethethethe ordinary course of business ofordinary course of business ofordinary course of business ofordinary course of business of cocococo.... atatatat ALPALPALPALP likelikelikelike
salesalesalesale of products orof products orof products orof products or
servicesservicesservicesservices
TTTToooo auditorauditorauditorauditor, as customer, in the ordinary course of, as customer, in the ordinary course of, as customer, in the ordinary course of, as customer, in the ordinary course of
businessbusinessbusinessbusiness, by companies engaged in, by companies engaged in, by companies engaged in, by companies engaged in businessbusinessbusinessbusiness ofofofof
telecommunications, airlines, hospitals, hotelstelecommunications, airlines, hospitals, hotelstelecommunications, airlines, hospitals, hotelstelecommunications, airlines, hospitals, hotels &&&&
such other similar businessessuch other similar businessessuch other similar businessessuch other similar businesses
Lunawat & Co.
DISQUALIFICATIONSDISQUALIFICATIONSDISQUALIFICATIONSDISQUALIFICATIONS –––– TAX AUDITORTAX AUDITORTAX AUDITORTAX AUDITOR

AUDITORS’ COMPLIANCEAUDITORS’ COMPLIANCEAUDITORS’ COMPLIANCEAUDITORS’ COMPLIANCE
SSSSee that he is not disqualified to beee that he is not disqualified to beee that he is not disqualified to beee that he is not disqualified to be
appointed.appointed.appointed.appointed.
In case of cos. issue required certificateIn case of cos. issue required certificateIn case of cos. issue required certificateIn case of cos. issue required certificate
In case of being appointed in place ofIn case of being appointed in place ofIn case of being appointed in place ofIn case of being appointed in place of
another auditoranother auditoranother auditoranother auditor
Ensure due compliance made if it’s a co.Ensure due compliance made if it’s a co.Ensure due compliance made if it’s a co.Ensure due compliance made if it’s a co.
Intimation to previous auditorIntimation to previous auditorIntimation to previous auditorIntimation to previous auditor
Obtain AppointmentObtain AppointmentObtain AppointmentObtain Appointment LLLLetteretteretteretter
Issue Engagement LetterIssue Engagement LetterIssue Engagement LetterIssue Engagement Letter
Lunawat & Co.

????????????
Can a CA in practice who is givingCan a CA in practice who is givingCan a CA in practice who is givingCan a CA in practice who is giving
accounting services to a company conductaccounting services to a company conductaccounting services to a company conductaccounting services to a company conduct
tax audit of that company?tax audit of that company?tax audit of that company?tax audit of that company?
Can an internal auditor of a company issueCan an internal auditor of a company issueCan an internal auditor of a company issueCan an internal auditor of a company issue
Form 15CB certificate for that company?Form 15CB certificate for that company?Form 15CB certificate for that company?Form 15CB certificate for that company?
Can a CA in practice who is givingCan a CA in practice who is givingCan a CA in practice who is givingCan a CA in practice who is giving
accounting services to a companyaccounting services to a companyaccounting services to a companyaccounting services to a company issueissueissueissue
certificate in Form 29B for MATcertificate in Form 29B for MATcertificate in Form 29B for MATcertificate in Form 29B for MAT
calculation?calculation?calculation?calculation?
Lunawat & Co.

AUDITING STANDARDSAUDITING STANDARDSAUDITING STANDARDSAUDITING STANDARDS
Auditor to comply with auditing standardsAuditor to comply with auditing standardsAuditor to comply with auditing standardsAuditor to comply with auditing standards
NFRA to notify auditing standards. Till NFRANFRA to notify auditing standards. Till NFRANFRA to notify auditing standards. Till NFRANFRA to notify auditing standards. Till NFRA
doesdoesdoesdoes –––– as by ICAIas by ICAIas by ICAIas by ICAI
Total 38 SAsTotal 38 SAsTotal 38 SAsTotal 38 SAs
Lunawat & Co.
SA. No.SA. No.SA. No.SA. No. SubSubSubSub----divisiondivisiondivisiondivision No.No.No.No.
100100100100----199199199199 Introductory MattersIntroductory MattersIntroductory MattersIntroductory Matters 0000
200200200200----299299299299 General Principles & ResponsibilitiesGeneral Principles & ResponsibilitiesGeneral Principles & ResponsibilitiesGeneral Principles & Responsibilities 9999
300300300300----499499499499 Risk Assessment and Response to Assessed RisksRisk Assessment and Response to Assessed RisksRisk Assessment and Response to Assessed RisksRisk Assessment and Response to Assessed Risks 6666
500500500500----599599599599 Audit EvidenceAudit EvidenceAudit EvidenceAudit Evidence 11111111
600600600600----699699699699 Using Work of OthersUsing Work of OthersUsing Work of OthersUsing Work of Others 3333
700700700700----799799799799 Audit Conclusions and ReportingAudit Conclusions and ReportingAudit Conclusions and ReportingAudit Conclusions and Reporting 6666
800800800800----899899899899 Specialized AreasSpecialized AreasSpecialized AreasSpecialized Areas 3333

DOCUMENTATIONDOCUMENTATIONDOCUMENTATIONDOCUMENTATION
Have checklists, tell articles to cross verifyHave checklists, tell articles to cross verifyHave checklists, tell articles to cross verifyHave checklists, tell articles to cross verify
Seniors to cross verifySeniors to cross verifySeniors to cross verifySeniors to cross verify
Take necessary certificates / representationTake necessary certificates / representationTake necessary certificates / representationTake necessary certificates / representation
from managementfrom managementfrom managementfrom management
External ConfirmationsExternal ConfirmationsExternal ConfirmationsExternal Confirmations
Ensure Compliance of ASsEnsure Compliance of ASsEnsure Compliance of ASsEnsure Compliance of ASs
Ensure all applicable regulatoryEnsure all applicable regulatoryEnsure all applicable regulatoryEnsure all applicable regulatory
compliances including Companies Act,compliances including Companies Act,compliances including Companies Act,compliances including Companies Act,
2013201320132013
Comply with SAsComply with SAsComply with SAsComply with SAs
Work not documented is work not done.Work not documented is work not done.Work not documented is work not done.Work not documented is work not done.
Lunawat & Co.

REPORTREPORTREPORTREPORT
Under Companies ActUnder Companies ActUnder Companies ActUnder Companies Act
CAROCAROCAROCARO
NonNonNonNon---- CAROCAROCAROCARO
OthersOthersOthersOthers
Tax AuditTax AuditTax AuditTax Audit
Form 3 CAForm 3 CAForm 3 CAForm 3 CA
Form 3 CBForm 3 CBForm 3 CBForm 3 CB
LLPLLPLLPLLP
SocietySocietySocietySociety
Lunawat & Co.

REPORTREPORTREPORTREPORT ---- COMPANIESCOMPANIESCOMPANIESCOMPANIES
Inquiry u/s 143(1)Inquiry u/s 143(1)Inquiry u/s 143(1)Inquiry u/s 143(1) –––– 6 points6 points6 points6 points –––– onlyonlyonlyonly
to be reported when commentsto be reported when commentsto be reported when commentsto be reported when comments
requiredrequiredrequiredrequired
Report to include:Report to include:Report to include:Report to include:
Matters specified u/s 143(3)Matters specified u/s 143(3)Matters specified u/s 143(3)Matters specified u/s 143(3) ---- 9 points9 points9 points9 points
Matters specified in RulesMatters specified in RulesMatters specified in RulesMatters specified in Rules ---- 3 points3 points3 points3 points
AnyAnyAnyAny order madeorder madeorder madeorder made u/s 143(3) foru/s 143(3) foru/s 143(3) foru/s 143(3) for
specified Companies in consultationspecified Companies in consultationspecified Companies in consultationspecified Companies in consultation
with NFRAwith NFRAwith NFRAwith NFRA –––– CARO 2016CARO 2016CARO 2016CARO 2016 –––– 16 points16 points16 points16 points
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 –––– APPLICABILITYAPPLICABILITYAPPLICABILITYAPPLICABILITY
Applicable to all including Foreign Co.Applicable to all including Foreign Co.Applicable to all including Foreign Co.Applicable to all including Foreign Co.
for a/for a/for a/for a/cingcingcingcing period after 1.4.15 except:period after 1.4.15 except:period after 1.4.15 except:period after 1.4.15 except:
Banking Co. / Insurance Co.Banking Co. / Insurance Co.Banking Co. / Insurance Co.Banking Co. / Insurance Co.
Section 8 Co.Section 8 Co.Section 8 Co.Section 8 Co.
OPCOPCOPCOPC
Small Co.Small Co.Small Co.Small Co.
Not applicable on CFSNot applicable on CFSNot applicable on CFSNot applicable on CFS
Branch auditor also covered, if applicableBranch auditor also covered, if applicableBranch auditor also covered, if applicableBranch auditor also covered, if applicable
to co.to co.to co.to co.
Lunawat & Co.

P. CoP. CoP. CoP. Co not being sub. or holding ofnot being sub. or holding ofnot being sub. or holding ofnot being sub. or holding of
Pub. CoPub. CoPub. CoPub. Co. whose:. whose:. whose:. whose:
Paid up Capital & Reserves <Paid up Capital & Reserves <Paid up Capital & Reserves <Paid up Capital & Reserves < 1 Cr1 Cr1 Cr1 Cr asasasas
at B/s date; andat B/s date; andat B/s date; andat B/s date; and
Bonus, Pref. shares to be includedBonus, Pref. shares to be includedBonus, Pref. shares to be includedBonus, Pref. shares to be included
Share Application money !!Share Application money !!Share Application money !!Share Application money !!
All reserves to be included includingAll reserves to be included includingAll reserves to be included includingAll reserves to be included including
revaluation reserverevaluation reserverevaluation reserverevaluation reserve
Lunawat & Co.

P. CoP. CoP. CoP. Co not being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Co. whose:. whose:. whose:. whose:
Outstanding LoansOutstanding LoansOutstanding LoansOutstanding Loans ---- Bank or FIs <Bank or FIs <Bank or FIs <Bank or FIs < 1 Cr during1 Cr during1 Cr during1 Cr during
FYFYFYFY; and; and; and; and
All borrowings includedAll borrowings includedAll borrowings includedAll borrowings included –––– non fund basednon fund basednon fund basednon fund based –––– totototo
extent devolved, invoked guarantees & devolvedextent devolved, invoked guarantees & devolvedextent devolved, invoked guarantees & devolvedextent devolved, invoked guarantees & devolved
LCsLCsLCsLCs
TLTLTLTL –––– interest accrued & due only to be consideredinterest accrued & due only to be consideredinterest accrued & due only to be consideredinterest accrued & due only to be considered
CCCCCCCC –––– balance on any day as per booksbalance on any day as per booksbalance on any day as per booksbalance on any day as per books
OD against FD includedOD against FD includedOD against FD includedOD against FD included
Outstanding due of Credit card also includedOutstanding due of Credit card also includedOutstanding due of Credit card also includedOutstanding due of Credit card also included
Foreign banksForeign banksForeign banksForeign banks coveredcoveredcoveredcovered ---- FIs include NBFCFIs include NBFCFIs include NBFCFIs include NBFC
Lunawat & Co.

Pvt.Pvt.Pvt.Pvt. CoCoCoCo not being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Co....
whose:whose:whose:whose:
Total Revenue (including from discontinuingTotal Revenue (including from discontinuingTotal Revenue (including from discontinuingTotal Revenue (including from discontinuing
operations < 10 crores as per Financialoperations < 10 crores as per Financialoperations < 10 crores as per Financialoperations < 10 crores as per Financial
Statements as perStatements as perStatements as perStatements as per SchSchSchSch IIIIIIIIIIII
Other income includedOther income includedOther income includedOther income included
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES
1(a)1(a)1(a)1(a) ---- PPPProperroperroperroper recordsrecordsrecordsrecords ---- full particulars,full particulars,full particulars,full particulars,
quantitative details and situation ofquantitative details and situation ofquantitative details and situation ofquantitative details and situation of FA.FA.FA.FA.
FAR in electronic form ifFAR in electronic form ifFAR in electronic form ifFAR in electronic form if 2222 conditionsconditionsconditionsconditions satisfiedsatisfiedsatisfiedsatisfied::::
CCCControlsontrolsontrolsontrols &&&& security measures insecurity measures insecurity measures insecurity measures in Co. areCo. areCo. areCo. are such that oncesuch that oncesuch that oncesuch that once
finalised,finalised,finalised,finalised, FARFARFARFAR cannot be altered without propercannot be altered without propercannot be altered without propercannot be altered without proper
authorizationauthorizationauthorizationauthorization &&&& audit trail.audit trail.audit trail.audit trail.
FAR canFAR canFAR canFAR can be retrieved in a legible formbe retrieved in a legible formbe retrieved in a legible formbe retrieved in a legible form....
In caseIn caseIn caseIn case above conditions not satisfiedabove conditions not satisfiedabove conditions not satisfiedabove conditions not satisfied,,,, to obtainto obtainto obtainto obtain aaaa
duly authenticated printduly authenticated printduly authenticated printduly authenticated print----out ofout ofout ofout of FAR.FAR.FAR.FAR. In caseIn caseIn caseIn case auditorauditorauditorauditor
decides to rely ondecides to rely ondecides to rely ondecides to rely on electronically FARelectronically FARelectronically FARelectronically FAR ---- to maintainto maintainto maintainto maintain
adequate documentationadequate documentationadequate documentationadequate documentation evidencing evaluationevidencing evaluationevidencing evaluationevidencing evaluation ofofofof
controls that seek to ensurecontrols that seek to ensurecontrols that seek to ensurecontrols that seek to ensure completenesscompletenesscompletenesscompleteness, accuracy, accuracy, accuracy, accuracy
& security& security& security& security ofofofof registerregisterregisterregister.
Lunawat & Co.

1(b)1(b)1(b)1(b) –––– Physical verificationPhysical verificationPhysical verificationPhysical verification –––– materialmaterialmaterialmaterial
discrepancydiscrepancydiscrepancydiscrepancy
1(c1(c1(c1(c)))) ---- WhetherWhetherWhetherWhether title deeds of immovabletitle deeds of immovabletitle deeds of immovabletitle deeds of immovable
propertiespropertiespropertiesproperties are held in the name of theare held in the name of theare held in the name of theare held in the name of the
company. If not, provide details thereofcompany. If not, provide details thereofcompany. If not, provide details thereofcompany. If not, provide details thereof
TDR /TDR /TDR /TDR / PltPltPltPlt & Mach imbedded in land not& Mach imbedded in land not& Mach imbedded in land not& Mach imbedded in land not immimmimmimm. Prop.. Prop.. Prop.. Prop.
In case of conversionIn case of conversionIn case of conversionIn case of conversion
In case of mortgageIn case of mortgageIn case of mortgageIn case of mortgage –––– banksbanksbanksbanks
Online if availableOnline if availableOnline if availableOnline if available
DetailsDetailsDetailsDetails –––– no. of cases, leasehold/freehold, gross/netno. of cases, leasehold/freehold, gross/netno. of cases, leasehold/freehold, gross/netno. of cases, leasehold/freehold, gross/net
block, remarksblock, remarksblock, remarksblock, remarks
Lunawat & Co.

2(a2(a2(a2(a)(b)(c) merged into 2)(b)(c) merged into 2)(b)(c) merged into 2)(b)(c) merged into 2 ---- Whether physicalWhether physicalWhether physicalWhether physical
verification of inventory has beenverification of inventory has beenverification of inventory has beenverification of inventory has been
conducted at reasonable intervals by theconducted at reasonable intervals by theconducted at reasonable intervals by theconducted at reasonable intervals by the
managementmanagementmanagementmanagement &&&& whether any materialwhether any materialwhether any materialwhether any material
discrepancies were noticed and if so, howdiscrepancies were noticed and if so, howdiscrepancies were noticed and if so, howdiscrepancies were noticed and if so, how
they have been dealt with inthey have been dealt with inthey have been dealt with inthey have been dealt with in booksbooksbooksbooks ofofofof a/ca/ca/ca/c
3333 ---- Whether company has granted anyWhether company has granted anyWhether company has granted anyWhether company has granted any
loans, secured or unsecured to cos, firms,loans, secured or unsecured to cos, firms,loans, secured or unsecured to cos, firms,loans, secured or unsecured to cos, firms,
LLPLLPLLPLLP or other parties covered is registeredor other parties covered is registeredor other parties covered is registeredor other parties covered is registered
maintained u/s 189maintained u/s 189maintained u/s 189maintained u/s 189....[MBP[MBP[MBP[MBP----4]4]4]4] –––– 184(2)/188184(2)/188184(2)/188184(2)/188
Lunawat & Co.

3333 –––– MBP 4MBP 4MBP 4MBP 4 ---- IfIfIfIf so,so,so,so,
(a)(a)(a)(a) WhetherWhetherWhetherWhether termstermstermsterms & conditions of grant of such& conditions of grant of such& conditions of grant of such& conditions of grant of such
loans are not prejudicial toloans are not prejudicial toloans are not prejudicial toloans are not prejudicial to company’s interestcompany’s interestcompany’s interestcompany’s interest;;;;
CY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standing
(b)(b)(b)(b) Whether the schedule of repayment of principal &Whether the schedule of repayment of principal &Whether the schedule of repayment of principal &Whether the schedule of repayment of principal &
interest is stipulatedinterest is stipulatedinterest is stipulatedinterest is stipulated & whether repayments && whether repayments && whether repayments && whether repayments &
interest are regular.interest are regular.interest are regular.interest are regular.
Opening + CY, squared up loans coveredOpening + CY, squared up loans coveredOpening + CY, squared up loans coveredOpening + CY, squared up loans covered –––– no. of casesno. of casesno. of casesno. of cases
(c) If overdue amount(c) If overdue amount(c) If overdue amount(c) If overdue amount for more than 90 daysfor more than 90 daysfor more than 90 daysfor more than 90 days, whether, whether, whether, whether
reasonable steps taken by Co. for recovery of thereasonable steps taken by Co. for recovery of thereasonable steps taken by Co. for recovery of thereasonable steps taken by Co. for recovery of the
principal & interestprincipal & interestprincipal & interestprincipal & interest
OpeningOpeningOpeningOpening ++++ CYCYCYCY –––– no. of cases, principalno. of cases, principalno. of cases, principalno. of cases, principal amtamtamtamt overdue,overdue,overdue,overdue, inttinttinttintt
overdue, steps takenoverdue, steps takenoverdue, steps takenoverdue, steps taken
Lunawat & Co.

4444 –––– Internal control on purchaseInternal control on purchaseInternal control on purchaseInternal control on purchase etcetcetcetc notnotnotnot
requiredrequiredrequiredrequired
4444 ---- In respect of loans, investments andIn respect of loans, investments andIn respect of loans, investments andIn respect of loans, investments and
guarantees, whether provisions of Sectionguarantees, whether provisions of Sectionguarantees, whether provisions of Sectionguarantees, whether provisions of Section
185 and 186185 and 186185 and 186185 and 186 havehavehavehave been complied with. Ifbeen complied with. Ifbeen complied with. Ifbeen complied with. If
not, provide details thereofnot, provide details thereofnot, provide details thereofnot, provide details thereof.
185 Details185 Details185 Details185 Details –––– maximum amount and closing Bal.maximum amount and closing Bal.maximum amount and closing Bal.maximum amount and closing Bal.
186186186186 –––– more than 2 layers, exceeding limits, rate ofmore than 2 layers, exceeding limits, rate ofmore than 2 layers, exceeding limits, rate ofmore than 2 layers, exceeding limits, rate of
interest, other defaultsinterest, other defaultsinterest, other defaultsinterest, other defaults
5555 –––– DepositsDepositsDepositsDeposits –––– nononono change 73change 73change 73change 73----76767676
Lunawat & Co.

6666 –––– Cost RecordsCost RecordsCost RecordsCost Records –––– nononono changechangechangechange
7777 –––– Statutory DuesStatutory DuesStatutory DuesStatutory Dues –––– Wealth taxWealth taxWealth taxWealth tax (c)(c)(c)(c) IEPFIEPFIEPFIEPF
StatutoryStatutoryStatutoryStatutory duedueduedue arisesarisesarisesarises out of a statuteout of a statuteout of a statuteout of a statute, rather, rather, rather, rather thanthanthanthan onononon
an independent contractual or legal relationshipan independent contractual or legal relationshipan independent contractual or legal relationshipan independent contractual or legal relationship
Advance tax, TDS, Custom duty… ifAdvance tax, TDS, Custom duty… ifAdvance tax, TDS, Custom duty… ifAdvance tax, TDS, Custom duty… if inttinttinttintt –––– irregular.irregular.irregular.irregular.
Instalments granted by authority, penalty/Instalments granted by authority, penalty/Instalments granted by authority, penalty/Instalments granted by authority, penalty/inttinttinttintt coveredcoveredcoveredcovered
Irregularity vs. due more than 6 monthsIrregularity vs. due more than 6 monthsIrregularity vs. due more than 6 monthsIrregularity vs. due more than 6 months
Mere show causeMere show causeMere show causeMere show cause –––– not disputed, S. 154not disputed, S. 154not disputed, S. 154not disputed, S. 154 –––– disputeddisputeddisputeddisputed
If no appeal filedIf no appeal filedIf no appeal filedIf no appeal filed –––– undisputed duesundisputed duesundisputed duesundisputed dues
Disclose disputed amounts even if provision made orDisclose disputed amounts even if provision made orDisclose disputed amounts even if provision made orDisclose disputed amounts even if provision made or
amount deposited under protestamount deposited under protestamount deposited under protestamount deposited under protest
Lunawat & Co.

8888 –––– AccumAccumAccumAccum. /cash losses. /cash losses. /cash losses. /cash losses–––– not requirednot requirednot requirednot required
8888 –––– Earlier 9Earlier 9Earlier 9Earlier 9 –––– Default to Bank, FIs,Default to Bank, FIs,Default to Bank, FIs,Default to Bank, FIs, Govt.Govt.Govt.Govt. &&&&
debenture holdersdebenture holdersdebenture holdersdebenture holders ---- (in case of(in case of(in case of(in case of banks,banks,banks,banks, Govt.Govt.Govt.Govt.
andandandand FIs,FIs,FIs,FIs, lender wise details to be provided).lender wise details to be provided).lender wise details to be provided).lender wise details to be provided).
DefaultDefaultDefaultDefault –––– non payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCs
Period of default and amount lender wisePeriod of default and amount lender wisePeriod of default and amount lender wisePeriod of default and amount lender wise
All defaults existing on B/S dateAll defaults existing on B/S dateAll defaults existing on B/S dateAll defaults existing on B/S date –––– even earlier yearseven earlier yearseven earlier yearseven earlier years
DebenturesDebenturesDebenturesDebentures –––– lenderlenderlenderlender----wise detail not requiredwise detail not requiredwise detail not requiredwise detail not required
Govt. does not includeGovt. does not includeGovt. does not includeGovt. does not include –––– Foreign govt., Govt. Co, PSU,Foreign govt., Govt. Co, PSU,Foreign govt., Govt. Co, PSU,Foreign govt., Govt. Co, PSU,
Boards,Boards,Boards,Boards, CCCCorporationsorporationsorporationsorporations
Lunawat & Co.

9999 –––– NewNewNewNew ---- Whether moneys raised by way ofWhether moneys raised by way ofWhether moneys raised by way ofWhether moneys raised by way of IPOIPOIPOIPO
/ FPO (including/ FPO (including/ FPO (including/ FPO (including debt instruments) &debt instruments) &debt instruments) &debt instruments) & term loansterm loansterm loansterm loans
were applied forwere applied forwere applied forwere applied for purposespurposespurposespurposes for which those arefor which those arefor which those arefor which those are
raised. If not,raised. If not,raised. If not,raised. If not, detailsdetailsdetailsdetails together with delays /together with delays /together with delays /together with delays /
defaultdefaultdefaultdefault &&&& subsequentsubsequentsubsequentsubsequent rectification.rectification.rectification.rectification.
DefaultDefaultDefaultDefault ---- amount involvedamount involvedamount involvedamount involved , nature, nature, nature, nature ofofofof default, delaydefault, delaydefault, delaydefault, delay inininin
utilizationutilizationutilizationutilization
Co. to disclose endCo. to disclose endCo. to disclose endCo. to disclose end use ofuse ofuse ofuse of IPO/FPO in notes & auditorIPO/FPO in notes & auditorIPO/FPO in notes & auditorIPO/FPO in notes & auditor
totototo verifyverifyverifyverify –––– seeseeseesee SEBI (ListingSEBI (ListingSEBI (ListingSEBI (Listing Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.
Temporary investment (FDR) to be reportedTemporary investment (FDR) to be reportedTemporary investment (FDR) to be reportedTemporary investment (FDR) to be reported
Term Loans from Private PartiesTerm Loans from Private PartiesTerm Loans from Private PartiesTerm Loans from Private Parties
If against property, FDR,If against property, FDR,If against property, FDR,If against property, FDR, etcetcetcetc –––– no specific purposeno specific purposeno specific purposeno specific purpose
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 –––– CHANGESCHANGESCHANGESCHANGES
10101010 ---- Whether any fraud by Co. or any fraudWhether any fraud by Co. or any fraudWhether any fraud by Co. or any fraudWhether any fraud by Co. or any fraud
on Co. by itson Co. by itson Co. by itson Co. by its officers/ employeesofficers/ employeesofficers/ employeesofficers/ employees has beenhas beenhas beenhas been
noticed or reported during the year; If yes,noticed or reported during the year; If yes,noticed or reported during the year; If yes,noticed or reported during the year; If yes,
nature and amount involved be indicatednature and amount involved be indicatednature and amount involved be indicatednature and amount involved be indicated
Only to report ‘noticed or reported’ frauds.Only to report ‘noticed or reported’ frauds.Only to report ‘noticed or reported’ frauds.Only to report ‘noticed or reported’ frauds. 143(12143(12143(12143(12))))
frauds tofrauds tofrauds tofrauds to CG/AC. Reported frauds u/s 143(12) to beCG/AC. Reported frauds u/s 143(12) to beCG/AC. Reported frauds u/s 143(12) to beCG/AC. Reported frauds u/s 143(12) to be
reported not suspected fraudsreported not suspected fraudsreported not suspected fraudsreported not suspected frauds
Management fraud vs. Employee fraudManagement fraud vs. Employee fraudManagement fraud vs. Employee fraudManagement fraud vs. Employee fraud
FraudulentFraudulentFraudulentFraudulent Financial ReportingFinancial ReportingFinancial ReportingFinancial Reporting vs. Misappropriationvs. Misappropriationvs. Misappropriationvs. Misappropriation
of assetsof assetsof assetsof assets
Lunawat & Co.

11111111 –––– NewNewNewNew ---- WhetherWhetherWhetherWhether managerial remunerationmanagerial remunerationmanagerial remunerationmanagerial remuneration
has been paid / provided in accordance with thehas been paid / provided in accordance with thehas been paid / provided in accordance with thehas been paid / provided in accordance with the
requisite approvals mandated by the provisionsrequisite approvals mandated by the provisionsrequisite approvals mandated by the provisionsrequisite approvals mandated by the provisions
ofofofof s.s.s.s. 197197197197 r.w.r.w.r.w.r.w. scheduleschedulescheduleschedule V?V?V?V? If not, state theIf not, state theIf not, state theIf not, state the
amount involvedamount involvedamount involvedamount involved &&&& steps takensteps takensteps takensteps taken forforforfor securingsecuringsecuringsecuring
refund of the same.refund of the same.refund of the same.refund of the same.
Only Public CosOnly Public CosOnly Public CosOnly Public Cos
ExclusionExclusionExclusionExclusion –––– sittingsittingsittingsitting fee,fee,fee,fee, for professional servicesfor professional servicesfor professional servicesfor professional services
Entitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approval
ReportingReportingReportingReporting –––– payment to MD, WTD, MD, Manager,payment to MD, WTD, MD, Manager,payment to MD, WTD, MD, Manager,payment to MD, WTD, MD, Manager,
Excess amountExcess amountExcess amountExcess amount paid/ provided, Due for recovery &paid/ provided, Due for recovery &paid/ provided, Due for recovery &paid/ provided, Due for recovery &
steps takensteps takensteps takensteps taken
Lunawat & Co.

12121212 –––– NidhiNidhiNidhiNidhi Co..Co..Co..Co..
13131313 –––– NewNewNewNew ---- WhetherWhetherWhetherWhether all transactions withall transactions withall transactions withall transactions with
related parties are in compliance with S.related parties are in compliance with S.related parties are in compliance with S.related parties are in compliance with S.
177177177177 andandandand 188 and188 and188 and188 and details have beendetails have beendetails have beendetails have been
disclosed in FSdisclosed in FSdisclosed in FSdisclosed in FS etcetcetcetc as required byas required byas required byas required by
applicable AS.applicable AS.applicable AS.applicable AS.
To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18
S. 188 applicable to all companies other than onS. 188 applicable to all companies other than onS. 188 applicable to all companies other than onS. 188 applicable to all companies other than on
arm’s length transactions entered into in ordinaryarm’s length transactions entered into in ordinaryarm’s length transactions entered into in ordinaryarm’s length transactions entered into in ordinary
course of businesscourse of businesscourse of businesscourse of business
May testMay testMay testMay test on TP mechanism peron TP mechanism peron TP mechanism peron TP mechanism per IT ActIT ActIT ActIT Act
Lunawat & Co.

13131313 –––– SA 550 Related PartiesSA 550 Related PartiesSA 550 Related PartiesSA 550 Related Parties ---- transactionstransactionstransactionstransactions
not in normal course ofnot in normal course ofnot in normal course ofnot in normal course of business (business (business (business (EgEgEgEg):):):):
Complex equity transactions, such as corporateComplex equity transactions, such as corporateComplex equity transactions, such as corporateComplex equity transactions, such as corporate
restructurings or acquisitionsrestructurings or acquisitionsrestructurings or acquisitionsrestructurings or acquisitions
Transactions with offshore entities in jurisdictions withTransactions with offshore entities in jurisdictions withTransactions with offshore entities in jurisdictions withTransactions with offshore entities in jurisdictions with
weak corporate lawsweak corporate lawsweak corporate lawsweak corporate laws
LLLLeasingeasingeasingeasing of premises orof premises orof premises orof premises or renderingrenderingrenderingrendering of management servicesof management servicesof management servicesof management services
bybybyby entityentityentityentity to another party if no consideration is exchangedto another party if no consideration is exchangedto another party if no consideration is exchangedto another party if no consideration is exchanged
Sales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returns
Transactions with circular arrangements, for example, salesTransactions with circular arrangements, for example, salesTransactions with circular arrangements, for example, salesTransactions with circular arrangements, for example, sales
with a commitment to repurchasewith a commitment to repurchasewith a commitment to repurchasewith a commitment to repurchase
Transactions under contracts whose terms are changedTransactions under contracts whose terms are changedTransactions under contracts whose terms are changedTransactions under contracts whose terms are changed
before expirybefore expirybefore expirybefore expiry.
Lunawat & Co.

14141414 ––––NewNewNewNew ---- Whether Co. has madeWhether Co. has madeWhether Co. has madeWhether Co. has made
preferential allotment / PP of shares orpreferential allotment / PP of shares orpreferential allotment / PP of shares orpreferential allotment / PP of shares or
fully or partlyfully or partlyfully or partlyfully or partly convertibleconvertibleconvertibleconvertible deb. duringdeb. duringdeb. duringdeb. during yryryryr....
WhetherWhetherWhetherWhether SSSS. 42 complied &. 42 complied &. 42 complied &. 42 complied & amountamountamountamount raisedraisedraisedraised
used for purposes for which funds wereused for purposes for which funds wereused for purposes for which funds wereused for purposes for which funds were
raised.raised.raised.raised.
If not, details of amount involved andIf not, details of amount involved andIf not, details of amount involved andIf not, details of amount involved and
nature of nonnature of nonnature of nonnature of non----compliance.compliance.compliance.compliance.
Lunawat & Co.

15151515 –––– NewNewNewNew ---- WhetherWhetherWhetherWhether the company hasthe company hasthe company hasthe company has
entered into any nonentered into any nonentered into any nonentered into any non----cash transactions withcash transactions withcash transactions withcash transactions with
directors or persons connected with himdirectors or persons connected with himdirectors or persons connected with himdirectors or persons connected with him
and if so, whether provisions ofand if so, whether provisions ofand if so, whether provisions ofand if so, whether provisions of S. 192S. 192S. 192S. 192
compliedcompliedcompliedcomplied withwithwithwith
Persons connectedPersons connectedPersons connectedPersons connected ---- 185(1)185(1)185(1)185(1) ExplExplExplExpl.... –––– check MBP 1check MBP 1check MBP 1check MBP 1
Loan, guarantee,Loan, guarantee,Loan, guarantee,Loan, guarantee, etcetcetcetc –––– MBP 2; ContractsMBP 2; ContractsMBP 2; ContractsMBP 2; Contracts –––– MBP 4MBP 4MBP 4MBP 4
FAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGM
Merger under court schemesMerger under court schemesMerger under court schemesMerger under court schemes –––– Not nonNot nonNot nonNot non----cashcashcashcash
Acquisition of asset in one year, settlement of liabilityAcquisition of asset in one year, settlement of liabilityAcquisition of asset in one year, settlement of liabilityAcquisition of asset in one year, settlement of liability
in another yearin another yearin another yearin another year –––– Not nonNot nonNot nonNot non----cashcashcashcash
Lunawat & Co.

16161616 –––– NewNewNewNew ---- Whether Co is required to beWhether Co is required to beWhether Co is required to beWhether Co is required to be
registered u/s 45registered u/s 45registered u/s 45registered u/s 45----IA of RBI and if soIA of RBI and if soIA of RBI and if soIA of RBI and if so
whether the registration has been obtainedwhether the registration has been obtainedwhether the registration has been obtainedwhether the registration has been obtained
Understanding business, if principal business isUnderstanding business, if principal business isUnderstanding business, if principal business isUnderstanding business, if principal business is
Financing activityFinancing activityFinancing activityFinancing activity
50505050----50 Test50 Test50 Test50 Test ---- Financial Assets > 50% of total assetsFinancial Assets > 50% of total assetsFinancial Assets > 50% of total assetsFinancial Assets > 50% of total assets
and income from Financial assets > 50% of Grossand income from Financial assets > 50% of Grossand income from Financial assets > 50% of Grossand income from Financial assets > 50% of Gross
IncomeIncomeIncomeIncome
If required and registration not obtained reasons toIf required and registration not obtained reasons toIf required and registration not obtained reasons toIf required and registration not obtained reasons to
be statedbe statedbe statedbe stated
Lunawat & Co.

CARO 2016CARO 2016CARO 2016CARO 2016 –––– FINER POINTSFINER POINTSFINER POINTSFINER POINTS
Comply SAsComply SAsComply SAsComply SAs–––– DDDDocumentation, Materialityocumentation, Materialityocumentation, Materialityocumentation, Materiality
AssessAssessAssessAssess thethethethe effecteffecteffecteffect of failure to complyof failure to complyof failure to complyof failure to comply
It’s notIt’s notIt’s notIt’s not a separate audit engagementa separate audit engagementa separate audit engagementa separate audit engagement
Have CheckHave CheckHave CheckHave Check listslistslistslists
Need to document basis of reaching atNeed to document basis of reaching atNeed to document basis of reaching atNeed to document basis of reaching at
adverse opinionadverse opinionadverse opinionadverse opinion
Management RepresentationManagement RepresentationManagement RepresentationManagement Representation
Cross check with Board ReportCross check with Board ReportCross check with Board ReportCross check with Board Report
Lunawat & Co.

Lunawat & Co.
THE ONLY WAYTHE ONLY WAYTHE ONLY WAYTHE ONLY WAY

CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod Jain
pramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.com
+91 9811073867+91 9811073867+91 9811073867+91 9811073867
© 2016 CA. Pramod Jain, Lunawat & Co

Practical aspects of audit including caro 2016

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (7)

Similar to Practical aspects of audit including caro 2016

Similar to Practical aspects of audit including caro 2016 (20)

More from CA. Pramod Jain

More from CA. Pramod Jain (20)

Recently uploaded

Recently uploaded (20)

Practical aspects of audit including caro 2016