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CARO 2015 Quick Learning File

CARO 2015 Quick Learning File

CARO 2015 Quick Learning File.

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This file consists of all the provisions of CARO 2015 are being presented in a Tabular form with short heading for each provision. Download to memorise the entire CARO 2015 in short time.

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Applicability of CARO-2015

Introduction & Background
In Exercise of the power Conferred by Sub section 11 of Section 143 of the Companies Act, 2013 and in Supersession of the Companies (Auditor’s report) order, 2003, the Central Govt. after consultation with the Institute of Chartered Accountant of India make Companies (Auditor’s Report) order, 2015 applicable from the Financial year Commencing on or after 1st April 2014.

Need For Issuance of CARO-15
AS Section 227(4A) of the Companies Act, 1956 Ceased to be operational from 1st April 2014 after notification of section 143(11) under the companies act, 2013. Though section 143(11) of the 2013 Act provides requirements similar to Section 227(4A) of the 1956 Act. Consequently after consulting With the Institute of Chartered Accountant of India (ICAI) THE MCA on 10th April 2015 Issued the “Companies (Auditor’s Report) Order, 2015 Known as CARO-2015. Such Order Prescribed Certain reporting requirement & Certain Class of Company on which CAR0-15 applicable.

Applicability of Order

MCA in notification Published In official gazette, prescribed a list of Exempted Categories on Which CARO-15 is not applicable. In other words other than exempted Category of companies CARO-15 is applicable to all companies. The Order also applies to Foreign Companies as defined U/S 2(42) of the 2013 Act. The Order is also applicable to the Audits of branch(es) of a Company Under the Act.
 

Class Of Companies Excluded from Ambit of CARO-15
  1. Banking Company,
  2. Insurance Company,
  3. Section 8 Companies (I.e. Companies Incorporated with the Charitable Objectives),
  4. Private Company ( Subject to Fulfilment of Specified Conditions),
  5. One Person Company U/S-2(62),
  6. Small Company.

 
Under new Caro Ambit there is Insertion of new Category of companies which never existed under the companies Act, 1956 (i.e. old Act). Which are,

  • One Person Company,
  • Small Company

Further there is no change In Conditions applicable to private company. Hence, private company is exempted from ambit of CARO-15 if it fulfils all the Following conditions.

  1. With a paid-up Capital and reserve not more than Rs.50 lakhs, and
  2. Does not have outstanding loan Exceeding Rs.25 lacks from any bank of financial institution, and
  3. Does not have turnover exceeding Rs. 5 crores.

At any point of time during the financial year.
 
In other Word’s even if one of the above condition is not satisfied, the private limited Company’s Auditor is required to report on the matters specified in the orders.
 

Small Company
The Companies Act,2013 defined U/S-2(85) A company other than a public company Whose ,

  1. Paid-up Share Capital does not exceed Rs.50 lack or such higher amount as may be prescribed. Such prescribed amount shall not be more than Rs 5 crore.
  2. Turnover of Which As per its last statement of Profit and Loss does not exceed Rs. 2 crore or such higher amount as may be prescribed. Such Prescribed amount shall not be more than Rs. 20 crore.

 
Further Act Specify list of Category of Companies Which will not qualify as a Small Company. Which are?

  • A Company registered under the Section 8 of 2013 Act,
  • A Company or Body Corporate governed by Any Special Act (e.g. banking co., Insurance Co.),
  • Holding or a Subsidiary Company.

Certain Clarification

  • If a private company is a subsidiary of a public company then it shall be deemed as public company and CAR)-15 always’ s be applicable.
  • The Indirect tax components such as Excise, Vat etc. shall be Included as a part of Turnover if the Company is Complying with Inclusive Method of Accounting.
  • The Expression Turnover Will Also Include Scrap Sales.
  • Whether CARO is applicable or not shall be examined on Balance-Sheet Date.
  • ICAI clarifies that if CARO not applicable to Private Company or Small Company as the case may be, The Statutory Auditor State this fact in their report.
  • One’s CARO Applicable it not means’ that it continued applicable for next year. Applicability for CARO-15 Will be examined on Year to Year basis.

Also Check Out Best Recommended Audit Books For CA IPCC May 2016 Exams

CA IPCC AUDITING & ASSURANCE for May 2016 Exam

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Download CARO 2015 Quick Learning File

CARO 2015 Quick Learning File

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