CARO 2016

QUICK LEARNING NOTES CA PRATEEK GARG B.COM, ACA MOBILE : +91 87 4393 6809 E MAIL ID : gargtaxcon@gmail.com FACE BOOK : facebook.com/PrateekGargCo TWITTER : twitter.com/ PrateekGargCo COMPANIES (AUDITOR'S REPORT) ORDER 2016 CA PRATEEK GARG _ MOB. 87 4393 6809 PAGE NO. [2] PARA 1 – SHORT TITLE, APPLICATION AND COMMENCEMENT 1. TITLE Companies (Auditor's Report) Order 2016 2. APPLICABILITY Applies to every company [Including a foreign compa ny u/s 2(42) of Companies Act 2013] However CARO 2015 would not apply on the following: - Banking Company Banking company as defined u/s 5(c) of Banking Regulation Act 1949 Insurance Company Insurance company as defined under Insurance Act 1938 Section 8 Company Section 8 Company as defined under Companies Act OPC/Small Company OPC as defined u/s 2(62) and Small Company as defined u/s 2(85) of Companies Act Pvt. Ltd. Co. Private Limited Company (Not being a holding or subsidiary of Public Ltd Company) if it satisfy all of these 3 condition throughout the FY
PUC + Reserves ≤ Rs. 1 Crore; and
Total Borrowing from Bank or Financial Institution ≤ Rs. 1 Crore; and
Turnover (Including revenue from Discontinued opera tions) ≤ Rs. 10 Crore PARA 2 – AUDITOR'S REPORT TO CONTAIN MATTERS SPECIFI ED IN PARAGRAPHS 3 AND 4 Every report made by the auditor u/s 143 of Companies Act 2013, on the accounts of every company examined by him to whom this Order applies for the FY 2015-16 onwards, shall contain the matters speci fied in paragraphs 3 and 4. CA PRATEEK GARG _ MOB. 87 4393 6809 PAGE NO. [3] PARA 3 – MATTERS TO BE INCLUDED IN THE AUDITOR'S REPORT The auditor's report on the account of a company to which this Order applies shall include a statement on the following matters, namely:— (1) Fixed Asset Proper Records
Whether the company is maintaining proper records s howing full particulars of fixed asset
Whether such proper records includes quantitative d etails and situation of fixed asset Physical Verification
Whether fixed assets have been physically verified by the management at reasonable intervals
Whether any material discrepancies were noticed on such verification
Whether such discrepancies, if noticed, have been p roperly dealt with in the books of account Title of Immovable
Whether the title deeds of immovable properties are held in the name of the company
If not. Provide the details thereof. (2) Inventory Physical Verification
Whether inventory have been physically verified by the management at reasonable intervals
Whether any material discrepancies were noticed on physical verification
Whether such discrepancies, if noticed, have been p roperly dealt with in the books of account (3) Loan to Related Party Terms and Conditions
Whether the company has granted any loans (secured or unsecured) to companies, firms, LLPs or other parties covered in the register maint ained u/s 189 of the Companies Act.
If yes, Whether the terms and conditions of the gra nt of such loans are not prejudicial to the company’s interest, Repayment
Whether the schedule of repayment of principal and payment of interest has been stipulated
Whether the repayments or receipts are regular, acc ording to such schedule CA PRATEEK GARG _ MOB. 87 4393 6809 PAGE NO. [4] Overdue Amount
State the total amount overdue for more than 90 day s
Whether the reasonable steps has been taken by the company for the recovery of the principal and interest. (4) Investment, Loan, etc. Compliance of 185 and 186
Whether provisions of section 185 and 186 of the Co mpanies Act, 2013 have been complied with, in respect of loans, investments, guarantees, and security.
If not, Provide the details of non compliance (5) Deposit Acceptance Legal Compliance
In case the company has accepted deposits, whether the directives issued by the RBI and the provisions of sections 73 to 76 or any other releva nt provisions of the Companies Act and the rules framed there under, where applicable, have be en complied with?
If not, State the nature of contraventions Judicial Compliances
If an order has been passed by CLB or NCLT or RBI o r any court or any other tribunal, whether the same has been complied with or not? (6) Cost Records Maintenance
Where maintenance of cost records has been specifie d by the CG u/s 148(1) of Companies Act,
Whether such accounts and records have been made an d maintained (7) Statutory Dues Undisputed Dues
Whether the company is regular in depositing undisp uted statutory dues including PF / ESI / I. Tax / Sales-Tax / Wealth Tax / Service Tax / Cus tom Duty / Excise Duty / VAT / Cess and any other statutory dues with the appropriate autho rities
If not, then indicate the extent of arrears of outs tanding statutory dues as at the last day of FY concerned for a period of > 6 months from the date they became payable CA PRATEEK GARG _ MOB. 87 4393 6809 PAGE NO. [5] Disputed Dues
Mention the amount any T. Tax / Sales Tax / Wealth Tax / Service Tax / Customs Duty / Excise Duty / VAT or Cess which have not been depos ited on account of any dispute
Also mention the forum where dispute is pending. (NOTE: A mere representation to the concerned Depar tment shall not constitute a dispute). (8) Debt Repayment Default in Repayment
Whether the company has defaulted in repayment of d ues to a financial institution or bank or government or debenture holders?
If yes, the period and amount of default to be repo rted. (Lender wise details in case of default to financial institution or bank or government) (9) Fund Utilization Utilization of IPO/FPO/Term Loans
Whether moneys raised by way of initial public offe r or further public offer (including debt instruments) and term loans were applied for the pu rposes for which those are raised.
If not, the details together with delays or default and subsequent rectification, if any, as may be applicable, be reported (10) Fraud Fraud on/by Company
Whether any fraud by the company or fraud on the co mpany by its officers and employees has been noticed or reported during the year
If yes, indicate the nature and the amount involve d (11) Managerial Remuneration Compliance
Whether managerial remuneration has been paid or pr ovided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to Companies Act?
If not, state the amount involved and steps taken b y the company for securing refund of the same CA PRATEEK GARG _ MOB. 87 4393 6809 PAGE NO. [6] (12) Nidhi Company NOF and unencumbered time deposit
Whether the NIDHI Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability
Whether the NIDHI Company is maintaining 10% unencu mbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability (13) Related Party Transactions Compliance and Disclosure
Whether all transactions with the related parties a re in compliance with sections 177 and 188 of Companies Act, 2013 where applicable
Whether the details have been disclosed in the Fina ncial Statements etc., as required by the applicable accounting standards (14) Preferential Allotment or Private placement Compliance of Section 42 and Utilization
Whether the company has made any preferential allot ment or private placement of shares or fully or partly convertible debentures during the y ear under review
Whether the requirement of section 42 of the Compan ies Act, 2013 have been complied with, is so allotted
Whether the raised amount has been used for the pur poses for which it was raised
Provide the details in respect of the amount involv ed and nature of non-compliance, in respect of section 42 or of fund utilization. (15) Non Cash Transaction with Directors etc. Compliance of 192
Whether the company has entered into any non-cash t ransactions with directors or persons connected with him
Whether the provisions of section 192 of Companies Act, 2013 have been complied with, if so entered. CA PRATEEK GARG _ MOB. 87 4393 6809 PAGE NO. [7] (16) RBI Registration Compliance of Registration
Whether the company is required to be registered u/ s 45-IA of the Reserve Bank of India Act, 1934
Whether the registration has been obtained, if so r equired. PARA 4 – REASONS TO BE STATED FOR UNFAVOURABLE OR QU ALIFIED ANSWERS (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 reasons for such unfavourable or qualifie d answer, as the case may be. (2) Where the auditor is unable to express any opin ion in answer to a particular question, his report shall indicate such fact together with the reasons why it is not possible for him to give an answer to suc h question.