Ministry of Corporate Affairs has amended Companies Auditor Report Order (CARO)
vide notification dated 25.02.2020
This Order may be called the Companies (Auditor's
Report) Order, 2020.
Key highlights of amended CARO
are as follows:
1.Whether
the company is maintaining proper records showing full particulars, including
quantitative details and situation of fixed assets Property,
Plant and Equipment;
2.Whether
the company is maintaining proper records showing full particulars of intangible
assets;
3.Report
about all immovable properties except other than properties where the company
is the lessee and the lease agreements are duly executed in
favour of the lessee disclosed in the financial statements. Table has been
prescribed in the notification for reporting the above details;
4.Whether
the company has revalue its Property, Plant and Equipment
(including Right of Use assets) or intangible assets or both during the year
and, if so, whether the revaluation is based on the valuation by a
Registered Valuer; specify the amount of change, if change is 10% or more
in the aggregate of the net carrying value of each class of Property, Plant and
Equipment or intangible assets;
5.Whether
any proceedings have been initiated or are pending under the Benami
Transactions (Prohibition) Act, 1988, if so, whether the company has
appropriately disclosed the details in its financial statements;
6.Whether
physical verification of inventory has been conducted, and procedure of such
verification by the management is appropriate; whether any discrepancies
of 10% or more in the aggregate for each class of inventory were
noticed and if so, whether they have been properly dealt with in the books of
account;
7. If
the Company has been sanctioned working capital limits in excess of five
crore rupees, in aggregate, from banks or financial institutions on the
basis of security of current assets; whether the quarterly returns or
statements filed by the company with such banks or financial institutions
are in agreement with the books of account of the Company, if not, give
details;
8.Whether
during the year the company has made investments in, provided any guarantee or
security or granted any loans or advances in the nature of loans, secured or
unsecured, to companies, firms, Limited Liability Partnerships or any other
parties covered in the register maintained under section 189 of the
Companies Act, 2013.;
9. Whether
during the year the company has provided loans or provided advances in the
nature of loans, or stood guarantee, or provided security to any other entity
[not applicable to companies whose principal business is to give loans], if so,
indicate-
Ø the aggregate amount during the year, and balance outstanding at the
balance sheet date with respect to such loans or advances and guarantees or
security to subsidiaries, joint ventures and associates;
Ø the aggregate amount during the year, and balance outstanding at the
balance sheet date with respect to such loans or advances and guarantees or
security to parties other than subsidiaries, joint ventures and associates;
10. Specify
the aggregate amount of such dues renewed or extended or settled by fresh loans
and the percentage of the aggregate to the total loans or advances in the
nature of loans granted during the year loan granted which has fallen
due during the year [not applicable to companies whose principal
business is to give loans];
11. Specify
the aggregate amount if the loan granted to Promoters, related
parties , percentage thereof to the total loans granted, aggregate
amount of loans granted to Promoters, related parties as
defined in clause (76) of section 2 of the Companies Act, 2013;
12. Whether
any transactions not recorded in the books of account have
been surrendered or disclosed as income during the year in the tax assessments
under the Income Tax Act, 1961, if so, whether the previously unrecorded
income has been properly recorded in the books of account during the year;
Format has been prescribed where
has Company has defaulted repayment of loans in the notification;
13. Whether
the company is a declared wilful defaulter by any bank
or financial institution or other lender;
14. If
funds raised on short term basis have been utilised for long
term purposes, the nature and amount to be indicated;
15. Whether
the company has taken any funds from any entity or person on account of or to
meet the obligations of its subsidiaries, associates or
joint ventures, if so, details thereof with nature of such transactions and the
amount in each case;
16. Whether
the company has raised loans during the year on the pledge of
securities held in its subsidiaries, joint ventures or associate companies, if
so, give details thereof and also report if the company has defaulted in
repayment of such loans raised;
17. Whether
the company has made any preferential allotment or private placement of shares
or convertible debentures (fully, partially or optionally convertible)pursuant
to section 42 and section 62 of the Companies Act, 2013
during the year and the same has been complied if not, provide details in
respect of amount involved and nature of non-compliance;
18. If
the auditor has reason to believe that an offence of fraud, which involves or
is expected to involve individually an amount of rupees one crore or
above he shall report in Form ADT-4 as
prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the
Central Government;
19. Whether
the auditor has considered whistle-blower complaints, if any,
received during the year by the company
20. Whether
there has been any default in payment of interest on deposits or
repayment thereof for any period and if so, the details thereof
21. Company
has an an internal audit system commensurate, whether the reports
of internal auditor has been raised and considered by Statutory
Auditor
22. Some
other points inserted pursuant to RBI
Guidelines
23. Whether
the company has conducted any Non-Banking Financial or Housing Finance
activities without a valid Certificate of Registration
(CoR) from the Reserve Bank of India as per the Reserve Bank of India Act,
1934;
24. Whether
the company is a Core Investment Company (CIC) as defined by RBI,
if so, whether it continues to fulfil the criteria of a CIC, and in case the
company is an exempted or unregistered CIC, whether it continues to fulfil such
criteria;
25. 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;
26. If
the company has incurred cash losses in the financial
year and in the immediately preceding financial year then state the amount of
cash losses;
27. If there
has been any resignation of the statutory auditors during the
year, if so, whether the auditor has taken into consideration the issues,
objections or concerns raised by the outgoing auditors;
28. Whether
the 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 as and when they
fall due within a period of one year from the balance sheet date;
29. Reporting
w.r.t Corporate Social Responsibility
30. whether,
in respect of other than ongoing projects, the company has transferred unspent
amount to a Fund specified in Schedule VII to the Companies Act within a period
of six months of the expiry of the financial year in
compliance with second proviso to sub-section (5) of section 135 of the said
Act;
31. whether
any amount remaining unspent under sub-section (5) of section 135 of the
Companies Act, pursuant to any ongoing project, has been transferred to special
account in compliance with the provision of sub- section (6) of section
135 of the said Act;
Above
CSR amendment has not notified yet
Important
note: Reporting with respect to Section 197 read with
Schedule V has been deleted form amended CARO.
Please
find below the link MCA notification for Amended CARO:
New amended CARO shall be effective from the publication in official gazette but it has not been published yet on the official gazette as on date.
Your
queries or suggestions are highly appreciated
By CS Prashant Kishanani
csprashantkishanani@gmail.com
+919999934484/8851685638
