Particulars CARO, 2015 CARO, 2016 Change Remark Date of Release 10th April, 2015 To be published ------ ------ Applicable form FY on or after 1st April, 2014 FY 2015-16 onwards Applicability in respective FY Special care be in case of Audit of more than one FYs Applicable to apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act], except - 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) [hereinafter referred to as the Companies Act], except:– No Change ------ (i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); (i) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); No Change ------ (ii) an insurance company as defined under the Insurance Act,1938 (4 of 1938); (ii) an insurance company as defined the Insurance Act,1938 (4 of 1938); No Change ------ (iii) a company licensed to operate section 8 of the Companies Act; (iii) a company licensed to operate under section 8 of the Companies Act; No Change ------ (iv) a One Person Company as defined under clause (62) of section 2 of the (iv) a One Person Company as defined under clause (62) of section 2 of the No Change Read definition of company for applicability because most of the Companies
Companies Act and a small company as defined under clause (85) of section 2 of the Companies Act; and Companies Act and a Small Company as defined under clause (85) of section 2 of the Companies Act; and exclude for applicability. (v) a private limited company with a paid up capital and reserves not more than rupees fifty lakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year. (v) A private limited company, not 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 and 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 1. Private company not being a subsidiary or holding of a public company. 2. Surplus also include for overall limit of one crore. 3. Turnover replaced by total revenue as defined in Scheduled III (Including revenue from discontinuing operations), further overall limit increased to ten crore. ------
per the financial statements. Consolidated FS Every report made by the auditor under section 143. report made by the auditor under section 143. Provided the Order shall not apply to the auditor’s report on consolidated FS Not applicable to Consolidated FS Companies Act, 2013 required to every company to prepare consolidated FS if they have one or subsidiary or/and associates Matter to be Included Fixed Assets i(a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of assets; i(a) Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of assets; No Change ------ i(b) 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 with in the books of account; i(b) 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; No Change ------
No clause i(c)Whether title deeds of immovable properties are held in the name of the company. If not, provide details thereof. New clause is introduce for immovable property only Cases may be arises in which title deeds are registered in the name of holding company and used by the subsidiary company. Inventories ii(a) whether physical verification of inventory has been conducted at reasonable intervals by the management; ii(b) are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported; iii(c) whether the company is maintaining proper records of inventory and whether any material discrepancies ii(a) 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 with in the books of account; 1. No need to comment on procedure followed by the management is reasonable or not according to the size of the company. 2. no need to comment on company is maintaining proper records of inventory or not. Auditor need to collect necessary evidences to ensure that physical verification of inventory has been conducted at reasonable intervals by the management and discrepancies were noticed has been dealt with in the books of account.
Deposit 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 and the rules framed thereunder, where applicable, have been complied with? If not, the nature of contraventions should 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? 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? No change Definition of the deposit as per companies act is so wider like advance received from customers and not adjusted up to or more than 365 days become included under the definition of deposit. Various other transactions are fall under that category. Cost Records (vi) Where maintenance of cost records has been specified by the Central (vi) Whether maintenance of cost records has been specified by the Central Government No Change Companies(Cost Records and Audit) Rules, 2014
Government under (1) of section 148 of the Companies Act, whether such accounts and records have been made and maintained; sub-section (1) of section 148 of the Companies Act, 2013 and whether such accounts and records have been so made and maintained; Statutory dues (vii)(a) is the company regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, added tax, cess 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 (vii)(a) 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. No Change ------
became payable, be indicated by the auditor. (vii)(b) in case dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not constitute a dispute). (vii)(b) 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). No Change ------ (vii)(c) whether the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made No Clause Clause not included Auditor need to take written representation from management to ensure that appropriate amount required to transfer is transferred to comply provision of the Act.
thereunder has been transferred to such fund within time. Net Worth (viii) whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year; No Clause Clause not included Auditor of the company need to comment on going concern of the company. Default in Repayment (ix) 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; (viii) 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). (in case of banks and financial institutions, lender wise details to be provided) Auditor of the
Guarantee (x) whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company; No Clause Clause not included ------ Term Loan/ Money raised (xi) whether term were applied for the purpose for which the loans were obtained; (ix) 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 moneys raised by way of public issue/ follow-on offer (including debt instruments). Further details together with delays / default and subsequent rectification, if any, as may be applicable, be reported; Auditor comment on continues default as well as defaults rectified by the company (xii) whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated. (x) 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. Under the CARO, 2016 specified that fraud by its officers/ employees. ICAI issued Revised Guidance Note on Reporting on Fraud under Section 143(12).
Managerial Remuneration No Clause (ix) 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. New Clause Special take care is taken in case of private limited company. Nidhi Company No Clause (xii) 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. New Caluse ------ Related Parties Transactions No Clause (xiii) 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 New Clause Auditor of the company verify AOC-2, minutes of the board meeting and other documents to ensure that all related parties transaction are disclosed in
in the Financial Statements etc as required by the accounting standards and Companies Act, 2013. Financial Statement Preferential allotment / Private placement No Clause (xiv) 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. New Clause Companies Act, 2013 has made various new changes to allot securities of the company like offer letter requirements etc. Non-cash Transactions No clause (xv) 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. New Clause All non-cash transaction are covert this clause like Car, flats etc given by company.