Reporting under CARO 2020

Clause (i)

i) Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment           (WORD PPE REPLACED FIXED ASSET)

ii) Whether the company is maintaining proper records showing full particulars of intangible assets ( NEWLY INSERTED )

iii) Whether PPE physically verified by the management at reasonable intervals and whether any material discrepancies have noticed.

iv) Whether title deeds of all immovable properties disclosed in the financial statements are held in the name of the company (other than properties where company is lessee). If not, then provide details in the prescribed format.( NEWLY INSERTED)

v) Whether the company has revalued its PPE or Intangible Assets or both during the year and whether the registered valuer has done the revaluation and if the change in the net value of assets is more than 10%, then amount of change has to be informed under this clause (NEWLY INSERTED)

vi) Whether any proceeding has initiated or pending against the company for holding Benami property under the Benami Transactions Act. If so, whether company has appropriately disclosed the details in the financial statements.

Clause (ii)

i) Whether Physical  Verification of the inventory has been conducted at reasonable   interval by the management and whether any discrepancies of 10% or more in aggregate for each class of inventory has been noticed and if so has been properly dealt with in books (EARLIER 10% WAS NOT SPECIFIED)

ii) If the company has sanctioned working capital limits in excess of Rs. 5 crores in aggregate from Banks/FIs on the basis of the security of Current Assets, whether the Quarterly returns or statements filed with Banks/FIs are in agreement with the books of accounts. (NEWLY INSERTED)

Clause (iii)

Whether the company has made investments in, provided any guarantee or security or granted any loans or advances to Co.’s/LLPs or any other party(EARLIER ONLY LOAN TO RELATED PARTIES WERE  REPORTED)

If Yes:

Indicate the Aggregate amount outstanding at the balance sheet date with respect to loans to subsidiaries, joint ventures and other parties.

i) Whether investments made, guarantee given, security provided are prejudicial to the company’s interest.

ii) Where schedule of repayment has been stipulated in case of loans and advances whether repayments or receipts are regular

iii) If the amount is overdue: State total amount overdue for more than ninety days and whether the company has taken reasonable steps for recovery of principal or interest.

iv) if any new loan has given to settle old loan or there has been an extension in existing loan, the amount and percentage of such loan to total loan has to be reported. (NEWLY INSERTED)

Clause (iv)

In respect of loans, investments, guarantees, and security whether provisions of section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide the details thereof

Clause (v)

Whether the company has accepted deposits and if yes then whether directives issued by RBI and provisions of section 73 to 76 of companies act 2013 and rules framed thereunder have complied and if not then state nature of the contravention. If an order has been passed by CLB/RBI/NCLT/Tribunal, whether same complied with.

Clause (vi)

Whether maintenance of cost records has specified by CG u/s 148(1) of companies act and whether such accounts and records have been so made and maintained.

Clause (vii)

i) Whether the company is regular in depositing undisputed statutory dues and if not the extent of arrears of outstanding statutory dues as on last day of FY for a period more than six months from the date they became payable shall be indicated.

ii) If statutory due not deposited on account of the dispute, the amount involved and forum where the dispute is pending has to be reported.

Clause (viii)

Whether any transaction not recorded in books have been surrendered or disclosed as income during the year. If so, whether previously unrecorded income properly recorded in the books of Accounts(NEWLY INSERTED)

Clause (ix)

i) Whether the company has defaulted in repayment of loans or payment of interest to any lender. If yes, then the period of default and the amount has to be reported in the prescribed format

ii) Whether the company is a declared wilful defaulter by any bank or financial institution or other lenders?  (NEWLY INSERTED)

iii) Whether term loans applied for the purpose for which they have obtained and if not then amount of loan and the purpose for which it has obtained to be reported (NEWLY INSERTED)

iv) Whether funds raised for short term basis have utilised for long term purposes.

If yes then report (NEWLY INSERTED)

v) Whether company has taken any funds from any entity or person to meet the obligation of its subsidiaries, associates or JVs. If so then details need to report (NEWLY INSERTED)

vi) Whether the company has obtained loan during the year from the pledge of securities held in its subsidiaries, associates and Joint ventures. If yes then details need to be reported (NEWLY INSERTED)

Clause (x)

Whether money raised from IPO/FPO applied for the purpose for which they have been raised.

ii) Whether the company has made any preferential allotment or private placement of shares or convertible debentures during the year. If so, whether the requirements of section 42 and section 62 of the Companies Act, 2013 complied with. And the funds raised used for the purposes for which funds were raised.

Clause (xi)

i)  Whether any fraud by/on the company has noticed or reported during the year. If Yes, nature and amount need to be indicated.

ii) Whether auditors have filed any report u/s 143(12) of the companies Act 2013 in Form ADT-4 (NEWLY INSERTED)

iii) Whether the auditor has considered whistle-blower complaints, if any, received during the year by the company? (NEWLY INSERTED)

Clause (xii)

i) Whether the Nidhi Company has complied with the Net Owned Funds: Deposits in the ratio of 1:20 to meet       out the liability

ii)  Whether the Nidhi Company is maintaining 10% unencumbered term deposits

iii) Whether there has been any default in payment of interest on deposits or repayment thereof. If so then details         (NEWLY INSERTED)

Clause (xiii)

Whether transactions with related parties comply with sec 177 and 188 of the companies act and details disclosed in Financial Statements.

Clause (xiv)

i) Whether the company has an Internal Audit system commensurate with the size and nature of the business. (NEWLY INSERTED)

ii) Whether statutory auditors have considered reports of internal auditors. (NEWLY INSERTED)

Clause (xv)

Whether the company has entered into non-cash transactions with directors or person associated with him and if so then whether provisions of sec 192 have complied.

Clause (xvi)

i) Whether the company is required to register u/s 45-IA of RBI Act, 1934 and whether the registration has obtained.

ii) Whether the company has conducted any Non-Banking Financial or Housing Finance Activities without a valid certificate of registration from RBI. (NEWLY INSERTED)

iii) Whether the company is a Core Investment Company (CIC) as per RBI Regulation and if so, whether it continues to fulfil the criteria.

iv) Whether the Group has more than one CIC as part of the Group, if yes, indicate the number of CICs which are part of the Group ( NEWLY INSERTED)

Clause (xvii)

Whether the company has incurred cash losses in the FY and in the immediately PFY if so, state the amount of cash losses. (NEWLY INSERTED)

Clause (xviii)

Whether there has been the resignation of the statutory auditors during the year. If so, whether the incoming auditor has considered issues, objections or concerns of outgoing auditor (NEWLY INSERTED)

 

Clause (xix)

Based on financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying FS, auditor’s knowledge of BOD and mgt plans, whether auditor is of the opinion that no material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet (NEWLY INSERTED)

Clause (xx)

Whether in respect of other than ongoing projects, the company has transferred the unspent amount to fund specified in schedule VII of companies act within 6 months from the end of FY in compliance of sec 135. (NEWLY INSERTED)

Clause (xxi)

If there is any qualification or adverse remarks in CARO report in Auditor’s report of the companies  included in the consolidated financial statements, if yes, indicate the details of the companies and the clauses of the CARO report containing the qualifications or adverse remarks. (NEWLY INSERTED)

CONCLUSION :

The CARO, 2020 is expected to improve the overall quality of reporting by the statutory auditors on the financial statements of the companies and thereby lead to greater transparency and faith in the financial affairs of the companies.

DISCLAIMER :

The content of this page is solely derived from the relevant provisions & are based on the understanding of author. Although the author has put all his efforts to provide authentic information , readers are requested not to take any decision by  trusting this document blindly.

 

 

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