Matters to be Included under CARO, 2003The CARO, 2003 has also specified the matters to be included in the auditor’s report of various companies. The auditor’s report on the account of a company to which this Order applies shall include a statement on the matters, as specified in paragraphs 4 and of CARO, 2003.Every audit report u/s 227 shall contain the matters specified in paragraphs 4 and 5.1. Inventory:a) Did management conduct physical verification at reasonable intervals?b) Is procedure = reasonable w.r.t. size of the company and the nature of its business?c) If not, what are the inadequacies?d) Are Inventory Records= adequate?e) Any material discrepancies on physical verification? Adjustment inbooks?2. Fixed assets:a) Did management conduct physical verification at reasonable intervals?b) Is procedure = reasonable w.r.t. size of the company and the nature of its business?c) If not, what are the inadequacies?d) Are Fixed Assets Records= adequate?e) Any material discrepancies on physical verification? Adjustment inbooks?f) If substantial part of fixed assets disposed off during the year, whether Going Concern impacted.3. Cost records:a) Records prescribed by the Central Government u/s 209(1) (d)?b) If so, whether such accounts and records made and maintained.4. Chit fund companies:a) Provisions of any special statute applicable to chit fund complied with?b) If not, what was the default?5. Deposits from public:a) If company accepted deposits from public, whether RBI guidelines and 58A/58AA complied with.b) If not, what was the default?c) If order passed by Company Law Board, complied?6. Internal control:a) Is Internal Control for the purchase of inventory/fixed assets and sale of goods Any repeated occurrence of major weakness in internal control.7. Statutory dues:a) Is the company regular in depositing undisputed statutory dues including PF, Investor Education and Protection Fund, ESIC, Income tax, Sales-tax, Wealth-tax, Custom Duty, Excise Duty, Cess etc with the appropriate authorities.b) If not, how much outstanding for> 6 months for due datec) If dues ≠ deposited but dispute filed at which forum?8. Frauds:a) Any fraud on or by the company noticed or reported during the year?b) If yes, nature and the amount?9. Internal Audit:a) Is Internal audit system = reasonable w.r.t. size of the company and the nature of its business?a) Applicable for10.Loans to/from Related Party u/s 301 of Companies Act11. Loan to /from Related Party u/s 301 of Companies Act?a) Who? Amount?b) Rate of Interest = prima facie prejudicial to the interest of the company?c) Repayment of principal amount and interest = regular?d) If Outstanding > Rs 1 lac, whether reasonable step taken by the company for recovery / payment of principal and interest.12. Loans against Securities (pledge of shares, debentures):a) Adequate documents and recordsmaintained?b) If not, deficiencies=?13. End use of issue proceeds:a) Short term funds ≠ Long term investmentb) Long term funds ≠Short term investmentc) If yes, the nature and amount?14. Dealing in Securities (Company):a) Adequate documents and recordsmaintained?b) Timely entries made therein?c) Whether company holds shares, debentures etc in its own name except to the extent of the exemption, if any, granted u/s 4915. Guarantee Given for loans:a) Did company give any guarantee for loans taken by others? Terms and conditions = prejudicial?16. Repayment of dues:a) Any default in repayment of duesto financial institution or bank or debenture holders?b) If yes, the period and amount of default to be reported.17. Application of IPO funds:a) Whether the management has disclosed on the end use of money raised by public issues and the same has been verified?18. End use of borrowings:a) Whether term loans were applied for the purpose for which the loans were the loans were obtained.19. Securities for debenture issued?a) Whether securities have been created in respect of debentures issued?20. Preferential allotments to Related Party:a) Any preferential allotment of shares to Section 301 parties?b) Price =prejudicial to the interest of the company?21. Loss making company:a) If company registration ≥ 5 yearsb) Accumulated losses at the end ofFY > 50% of net worth.c) Any cash losses in such/precedingfinancial year?22.Transaction covered u/s Section 301:a) Relevant transactions (Value >Rs 5 lacs) = entered in register u/s 301?b) Price = reasonable w.r.t. market prices at the relevant time?23. NIDHI/ mutual benefit fund/ societies-special aspects:a) Whether net owned funds/ deposit liability > 1:20 as on the date of balance sheet.b) Whether the company has complied with the prudential norms on income recognition and provisioning against sub-standard / default / loss assets.c) Whether the company has adequate procedures for appraisal of credit proposals / requests, assessment of credit needs and repayment capacity of the borrowers.d) Whether the repayment schedule of various loans granted by the nidhi is based on the repayment capacity of the borrower and would be conducive to recovery of the loan amount.If auditor response to any clause = unfavourable or qualified, give reason also?If auditor response to any clause = disclaimer of opinion (unable to express any opinion) give reason also?
Posted on: Tue, 10 Sep 2013 13:34:43 +0000
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