Tag Archives: auditors report

Audit report rules amndt

MCA has vide its notification dated 24/3/2021 made some amendment to the Companies (Audit & Auditors), Rules, 2014. These amendments come into effect from 1st April, 2021. Salient features of these amendments are :

The para relating to specified bank notes which was introduced post demonetisation has been removed.

Some new paras have been added which has to find place in the Auditors Report from 1/4/2021 which are as follows:

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CARO 2020

MCA has notified the new CARO 2020 which will be in effect for companies whose financial year starts from 1st April, 2019. The salient features of CARO 2020 as compared to CARO 2016 is given below.

KEY HIGHLIGHTS BETWEEN CARO 2016 AND CARO 2020:-

 

 

CARO 2016

 

 

CARO 2020

1.      It is applicable to every company including a foreign company as defined in section 2 sub section 42 of Companies Act, 2013. However, MCA has relaxed the applicability of CARO 2016 to private companies by increasing the threshold limit and it shall not be applicable to the following classes of companies as follows:-

·         Banking Company.

·         Insurance Company.

·         Section 8 Company.

·         One Person Company.

·         Small Company as per section 2 (85) of Companies Act, 2013.

 

2.      It is to be noted that the following classes of companies shall not be treated as a small company:-

·         Holding or Subsidiary Company.

·         Section 8 Company.

·         A company or body corporate governed by any special act.

 

3.      In CARO 2016, there are 16 reporting clauses in paragraph 3.

 

4.      Unlike in CARO 2016 normal reporting is required with respect to fixed assets.

 

5.      In CARO 2016 there is nothing mention regarding any reporting is to be made for any proceedings have been initiated or pending under the Benami Transaction Act, 1988.

 

6.      As per CARO 2016 no reporting is required to be made with respect to working capital sanctioned by banks or financial institutions in excess of 5 Crore.

 

 

7.      CARO 2016 does not states about any reporting is to be done with respect of deemed deposits as only states about normal deposits.

 

8.      In CARO 2016 no reporting is required to be made in respect to transaction not recorded in the books of account under income tax proceedings.

 

9.      Under CARO 2016 just a normal reporting is required to be made with respect to any default is being made with respect to repayment of loan or borrowings.

 

10.  CARO 2016 does not state anything with regards to provide reporting on internal audit system.

 

11.  In CARO 2016 no reporting is required to be made in case of cash losses incurred and also on resignation of statutory auditors.

 

12.  Unlike in CARO 2016 no reporting is required to be made for any unspent CSR amount is kept with company as per Schedule VII.

 

13.  In CARO 2016, there is no need of reporting required for any qualification or adverse remarks given by the auditor.

 

 

1.      It is also applicable to every company including a foreign company as defined in section 2 sub section 42 of Companies Act, 2013.

 

2.      Once CARO 2020 come into force from the date of publication in official gazette then it shall not be applicable to the following classes of companies as follows:-

·      Banking Company.

·      Insurance Company.

·      Section 8 Company.

·      One Person Company.

·      Private Company not being a subsidiary or holding company of a public company having:-

ü  Paid up capital and reserves and surplus up to 1 Crore as on balance sheet date,

ü  Total borrowings not more than 1 Crore from bank or financial institution during the financial year and

ü  Total revenue as per schedule III up to 10 Crore during the financial year.

 

3. Whereas, in CARO 2020 there are 21 reporting clauses in paragraph 3.

 

4.  In CARO 2020 addition to normal reporting which is required with respect to fixed assets, additional reporting is also required in respect of title deeds of immovable properties and property, plant and equipment.

 

5. As per CARO 2020 a new reporting is required to be made with respect to any proceedings have been initiated or pending under the Benami Transaction Act, 1988.

 

6. Under CARO 2020 reporting that is required to be made in respect of providing any guarantee or security or granting any loans or advances to companies, LLP or to any parties.

 

7. But CARO 2020 states about reporting are to be done with respect of deemed deposits.

 

8. In CARO 2020 new reporting is to be made in respect to transaction not recorded in the books of account under income tax proceedings.

 

9.      Under CARO 2020 more comprehensive reporting is required to be made if any default is being made with respect to repayment of loan or borrowings.

 

10.  However, CARO 2020 states that reporting is to be made on in case of internal audit system.

 

11.  Also CARO 2020 states that reporting is required to be made in respect of cash losses incurred and also on resignation of statutory auditors.

 

12.  But under CARO 2020 reporting is required to be made for any unspent CSR amount is kept with company as per Schedule VII.

 

13.  Under CARO 2020 reporting is required to be made for any qualification or adverse remarks given by the auditor.

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