All About CARO 2015 in Summary
Few days back the Central Government, after consultation with the ICAI , makes the Companies (Auditor’s Report) Order, 2015 which will be Applicable w.e.f. FY Starting 1st April, 2015. and will be also known as ( CARO 2015 ) . Here we are trying to give you a breif knowledge of All About CARO 2015 in Summary So go through the complete article and be updated .
Applicability Of CARO 2015 –
Every company including a foreign company u/s 2(42) of CA, 2013.
Non-Applicability CARO 2015 –
(a) A Banking Company as defined in Section 5(c) of the Banking Regulation Act, 1949;
(b) An Insurance Company as defined under the Insurance Act, 1938;
(c) A company licensed to operate under Section 8 of the Companies Act;
(d) A One Person Company as defined u/s 2(62) of the Companies Act and a small company as defined u/s 2(85) of the Companies Act; and
(e) A Private Limited Company with a Paid up Capital and Reserves up to Rs. 50 Lakhs Loan Outstanding up to Rs. 25 Lakhs from any bank or financial institution and Turnover up to Rs. 5 crores at any point of time during the financial year.
Auditor’s report to contain matters ( CARO 2015 ) – Every report made by the auditor u/s 143 of the Companies Act, on the accounts of every company examined by him to which this Order applies for the FY w.e.f. 1st April, 2014, shall contain the matters as below.
Matters to be included in the auditor’s report – CARO 2015
(i) Fixed Assets –
- Maintenance + Physical Verification + Discrepancy Maintenance of proper records showing full particulars, including quantitative details and situation of fixed assets;
- Physically verified by the management at reasonable intervals;
- If any material discrepancies on verification then, properly dealt with in the books of account;
Maintenance + Physical Verification + Procedures + Discrepancy Maintenance of proper records showing full particulars, including quantitative details; Physical verification of inventory at reasonable intervals by the management; Procedures of physical verification followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If procedure inadequate it should be reported; If any material discrepancies on verification then, properly dealt with in the books of account;
(iii) Loans Given –
Granted + Repayment + Recovery Granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s 189 of the Companies Act; Receipt of the Principal amount and Interest are also regular; and If overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;
(iv) Internal Control System –
Adequate ICS + Weakness in ICS Adequate internal control system(ICS) commensurate with the size of the company and the nature of its business, ICS for the purchase of inventory and fixed assets and for the sale of goods and services. Report on continuing failure to correct major weaknesses in ICS.
(V) Accept Deposits – RBI Directions Compliances + Order of CLB/NCTL/RBI/Court Compliances Accepted Deposits as per direction by RBI and u/s 73 to 76 or any other relevant provisions of the Companies Act and the rules complied with; If not complied, the nature of contraventions should be stated; If an order has been passed by CLB or NCLT or RBI or any court or any other tribunal, whether the same has been complied with or not?
(vi) Cost Records –
Maintenance as specified by CG Maintenance of cost records has been specified by the Central Government u/s 148(1) of the Companies Act; Whether such accounts and records have been made and maintained;
(vii) Statutory Dues –
Depositing Regularly + O/s 6 months reported + Amount & Forum mentioned + Transfer to IEPF Regular in depositing undisputed statutory dues including PF, ESI, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities; If the arrears of O/s statutory dues as at the last day of the FY concerned for a period of more than six months from the date they became payable, shall be indicated; In case dues of taxes or cess have not been deposited on account of any dispute – Amount involved and the forum where dispute is pending shall be mentioned; (A mere representation to the concerned Department shall not constitute a dispute) Amount transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, and rules within time.
(viii) Accumulated Losses –
Reg. 5 yrs Co. + Acc. Losses min. 50% of Net Worth + Cash Losses in FY and Preceding FY Company which has been registered for a period not less than five years – its accumulated losses at the end of the FY are not less than 50% of its net worth; and Whether it has incurred cash losses in such FY and in the immediately preceding FY;
(ix) Repayment Defaults –
To Bank/FI/Debenture holders + Report-Period & Amount Defaulted in repayment of dues to a financial institution or bank or debenture holders; The period and amount of default to be reported.
(x) Guarantee Given –
Loan taken by others + T&C are not prejudicial Given any guarantee for loans taken by others from bank or financial institutions; Terms and conditions are prejudicial to the interest of the company.
(xi) Term Loans –
Applied for Purpose Term loans were applied for the purpose for which the loans were obtained;
(xii) Fraud –
On/By Company + Report-Nature & Amount Whether any fraud on or by the company has been noticed or reported during the year; The nature and amount involved is to be indicated.
Reasons to be stated for unfavorable or qualified answers.-
- Where, in the auditor’s report, the answer to any of the questions referred above is unfavorable or qualified,
- the auditor’s report shall also state the reasons. Where the auditor is unable to express any opinion 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 such question.
By :- CA. Praveen Tawania
Thanks for reading this article on CARO 2015 visit our site for more such updates..