Applicability of caro

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amit (Querist)
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20 October 2011 A private limited company’s paid up share capital Rs . 20,00,000.00 + Total of reserves (accumulative profits after adjusting profit/loss of current year )Rs. 31,00,000.00 = Rs. 51,00,000.00 , my interpretation CARO compulsorily applicable

A private limited company’s paid up share capital Rs. 50,00,000 + Total of reserves ( accumulative losses after adjusting current year’s profit/ loss) Rs. 29,00,000/- = Rs. 21,00,000/-, my interpretation CARO not compulsorily applicable

The same criteria applies to internal audit system as per paragraph 4(vii)of CARO order.

Assumption : The abovementioned company's turnover at any time during FY is not more than Rs. 5 crores and no outstanding more than Rs. 25 lacs towards bank/financial institution.

CA Jeen paul

CA Jeen paul (Expert)
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07 November 2011 as per caro - companies not covered by the order states that
(iv) a pvt co. with a paid up capital and reserves not more than Rs.50 lakhs

means the paid up capital together with reserves but the reserves does not include loss
guidence not on terms used in FS defines the term "reserve" as " the portion of earnings, receipts, or other surpluses of an enterprise (whether capital or revenue) appropriated by mgt for a general or specific purpose other than provision for dep or dimiution in the value of assets or for known liability"

schedule vi of companies act 1956 form of balance sheet heading " reserves and surplus" does not contain loss and the loss is specifically shown in the asset side

from the above it is evident that the debit balance in p&l a/c is not taken for the purpose of calculating reserves under caro