CARO 2016 Applicability
CARO 2016 Applicability: Applicability of CARO 2016 by ICAI MCA Draft Revised CARO, CA Final IPCC Nov 2016 Exams, Download CARO 2016 PDF (Companies Auditors’ Report Order). The MCA has recently made some amendments in CARO. The MCA has prepared-draft of CARO 2016 (Companies Auditor’s Report Order). MCA has also invited comments on draft CARO 2016.CARO 2016
CARO 2016 | New Audit Report Format
CARO 2016 | New Audit Report Format
| 1. APPLICABILITY2. REPORTING REQUIREMENTS|
3.BARE TEXT OF DRAFT CARO, 2016 (New Audit Report Format)
Draft of CARO-2016:
Ministry of Corporate Affairs has issued a notification on February 9, 2016. The draft Companies (Auditor’s Report) Order, 2016 has been placed on the Ministry’s website at www.mca.gov.in. It has been decided to invite suggestions/comments on the above draft.
Accordingly, the draft Companies (Auditor’s Report) Order, 2016 has been placed on the website of MCA, with a notice inviting suggestions/comments thereon along with justification in brief. The same may be submitted latest by 23rd February, 2016 all concerned through email at email@example.com.
Applicability of CARO-2016:
Still the MCA has prepared draft of CARO-2016. MCA or ICAI has not yet implemented it. Recently, MCA has invited comments on Draft CARO-2016. After taking view of all comments, the MCA and ICAI will take the decision in respect of applicability of CARO-2016.
Applicability of CARO-2016 on Companies:
It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) except:–
- A banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949).
- An insurance company as defined under the Insurance Act,1938 (4 of 1938).
- A company licensed to operate under section 8 of the Companies Act.
- A One Person Company as defined under clause (62) of section 2 of the Companies Act and a Small Company as defined under clause (85) of section 2 of the Companies Act.
- A private limited company:
- not being a subsidiary or holding of a public company,
- having a paid up capital and reserves and surplus not more than rupees one crore as at the balance sheet date
- which does not have total borrowings exceeding rupees one crore from any bank or financial institution at any point of time during the financial year
- and which does not have a total revenue as defined in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing operations) exceeding rupees ten crore during the financial year as per the financial statements.
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BARE TEXT OF DRAFT CARO, 2016 (New Audit Report Format)
The auditor’ report on the accounts of a company to which this order applies hall include a statement on the following matters, namely:
- Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
- Whether title deeds of immovable properties are held in the name of the company. If not, provide details thereof.
- Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;
- Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, how they have been dealt with in the books of account;
- Whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered by clause (76) of Section 2 of the Companies Act, 2013. If so,
- Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest;
- Whether receipt of the principal amount and interest are regular. If not provide details thereof; and
- If overdue amount is more than rupees five lakhs, whether reasonable steps have been taken by the company for recovery of the principal and interest;
- In respect of loans, investments and guarantees, whether provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof.
- in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed thereunder, where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not?
- Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported (in case of banks and financial institutions, lender wise details to be provided).
- whether maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 and whether such accounts and records have been so made and maintained;
- whether the company is regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-Lax, , service tax, duty of customs, duty of excise, value added tax, and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.
- Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute).
- Whether moneys raised by way of public issue/ follow-on offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not, the details together with delays / default and subsequent rectification, if any, as may be applicable, be reported;
- Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same.
- Whether any fraud by the company or any fraud on the Company by its officers/ employees has been noticed or reported during the year; if yes, the nature and the amount involved be indicated.
- Whether the Nidhi Company has complied with the Net Owned Fund in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% liquid assets to meet out the unencumbered liability.
- Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details thereof.
- Whether all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc. as required by the accounting standards and Companies Act, 2013.
- Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether provisions of Section 192 of Companies Act, 2013 have been complied with.
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