CARO 2003 2015 2016 2020 Comments

ISSUEDATE

June 2003 10 April,2015 29 March,2016

25th February,2020

EFFECT-IVEDATE

July 2003 Audits of FY2014-15 andonwards

Audits of FY2015-16 andonwards

Audits of FY 2019-20 and onwards

Para 3 –(clause byclause)

(i) (a) whetherthe company ismaintainingproper recordsshowing fullparticulars,includingquantitativedetails andsituation offixed assets;

(i) (a) whetherthe company ismaintainingproper recordsshowing fullparticulars,includingquantitativedetails andsituation offixed assets;

(i)(a) whetherthe company ismaintainingproper recordsshowing fullparticulars,includingquantitativedetails andsituation offixed assets;

(i)(a) (A) whether the company is maintaining properrecords showing full particulars, including quantitativedetails and situation of Property, Plant and Equipment;

(B) whether the company is maintaining proper recordsshowing full particulars of intangible assets;

Comments on Intangible assets also required now.

(b) whetherthese fixedassets havebeen physicallyverified by themanagement atreasonableintervals;whether anymaterialdiscrepancieswere noticedon suchverification andif so, whetherthe same havebeen properlydealt with inthe books of

(b) whetherthese fixedassets havebeenphysicallyverified by themanagement atreasonableintervals;whether anymaterialdiscrepancieswere noticedon suchverificationand if so,whether thesame havebeen properly

(b) whetherthese fixedassets havebeen physicallyverified by themanagement atreasonableintervals;whether anymaterialdiscrepancieswere noticedon suchverification andif so, whetherthe same havebeen properlydealt with inthe books of

(b) whether these Property, Plant and Equipment have beenphysically verified by the management at reasonableintervals; whether any material discrepancies were noticedon such verification and if so, whether the same have beenproperly dealt with in the books of account;

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account; dealt with inthe books ofaccount;

account;

(c) if asubstantial partof fixed assetshave beendisposed offduring the year,whether it hasaffected thegoing concern;

(c) whether thetitle deeds ofimmovableproperties areheld in thename of thecompany. Ifnot, provide thedetails thereof;

(c) whether the title deeds of all the immovable properties.(other than properties where the Company is the lessee andthe lease agreements are duly executed in favour of thelessee) disclosed in the financial statements are held in thename of the company. If not, provide the details thereof inthe format below;

Descr-iptionofprope-rty

Grosscarry-ingvalue

Heldinthenameof

Whet-herprom-ote r,direct-or ortheirrelati-ve orempl-oyee

Periodheldin-dicaterange,whereappro-priate

Rea-son fornotbeingheld inthenameof thecomp-any*

– – – – – *alsoindicate if indispute

(d) Whether the Company has revalued its Property, Plantand Equipment (including Right of Use assets) or intangibleassets or both during the year and, if so, whether therevaluation is based on the valuation by a RegisteredValuer; specify the amount of change, if change is 10% ormore in the aggregate of the net carrying value of each classof Property, Plant and Equipment or intangible assets;

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(e) Whether any proceedings have been initiated or arepending against the company for holding any Benamiproperty under the “Benami Transactions (Prohibition) Act,1988 and Rules made thereunder; if so, whether theCompany has appropriately disclosed the details in itsfinancial statements;

New clause inserted in CARO 2020

(ii) (a) whetherphysicalverification ofinventory hasbeen conductedat reasonableintervals by themanagement;

(ii) (a) whetherphysicalverification ofinventory hasbeenconducted atreasonableintervals by themanagement;

(ii) whetherphysicalverification ofinventory hasbeen conductedat reasonableintervals by themanagementand whetherany materialdiscrepancieswere noticedand if so,whether theyhave beenproperly dealtwith in thebooks ofaccount;

(ii) (a) whether physical verification of inventory has beenconducted at reasonable intervals by the management andwhether, in the opinion of the auditor, the coverage andprocedure of such verification by the management isappropriate; whether any discrepancies of 10% or more inthe aggregate for each class of inventory were noticed andif so, whether they have been properly dealt with in thebooks of account;

Materiality has been defined now as 10%

(b) are theprocedures ofphysicalverification ofinventoryfollowed by themanagementreasonable andadequate inrelation to thesize of thecompany andthe nature of itsbusiness. If not,

(b) are theprocedures ofphysicalverification ofinventoryfollowed bythemanagementreasonable andadequate inrelation to thesize of thecompany andthe nature of

(b) whether during any point of time of the year, theCompany has been sanctioned working capital limits inexcess of Rs. 5 crores, in aggregate, from banks or financialinstitutions on the basis of security of current assets;whether the quarterly returns or statements filed by theCompany with such banks or financial institutions are inagreement with the books of account of the Company. Ifnot, give details.

In case companies SANCTIONED WORKING CAPITALlimit is > Rs 5 Cr, IN AGGREGATE, compliance w.r.tquarterly filing of returns/ statement need be checked foralignment with Books. There is a reference to sanctionedfacilities and not actual utilisation.

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theinadequacies insuchproceduresshould bereported;

its business. Ifnot, theinadequacies insuchproceduresshould bereported;

(c) whether thecompany ismaintainingproper recordsof inventoryand whetherany materialdiscrepancieswere noticedon physicalverification andif so, whetherthe same havebeen properlydealt with inthe books ofaccount;

(c) whether thecompany ismaintainingproper recordsof inventoryand whetherany materialdiscrepancieswere noticedon physicalverificationand if so,whether thesame havebeen properlydealt with inthe books ofaccount;

(iii) (a) has thecompanygranted anyloans, securedor unsecured tocompanies,firms or otherparties coveredin the registermaintainedunder section301 of the Act.If so, give thenumber ofparties and

(iii) whetherthe companyhas grantedany loans,secured orunsecured tocompanies,firms or otherparties coveredin the registermaintainedunder section189 of theCompanies

(iii) whetherthe companyhas granted anyloans, securedor unsecured tocompanies,firms, LimitedLiabilityPartnerships orother partiescovered in theregistermaintainedunder section189 of the

(iii) whether during the year the company has madeinvestments in, provided any guarantee or security orgranted any loans or advances in the nature of loans,secured or unsecured to companies, firms, Limited LiabilityPartnerships or any other parties. If so,

(a) whether during the year the company has provided loansor provided advances in the nature of loans, or stoodguarantee, or provided security to any other entity [notapplicable to companies whose principal business is to giveloans], if so, indicate-

(A) the aggregate amount during the year, and balanceoutstanding at the balance sheet date with respect to suchloans or advances and guarantees or security to subsidiaries,

This requirement cover all kind of loans/ investment,beyond cases covered under Sec 189.

This clause expands the scope of reporting significantly.

This clause expands the scope of reporting significantly.

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amountinvolved in thetransactions;and

Act. If so,

(a) whetherreceipt or theprincipalamount andinterest arealso regular;and

CompaniesAct, 2013. Ifso,

(a) whether theterms andconditions ofthe grant ofsuch loans arenot prejudicialto thecompany’sinterest;

joint ventures and associates.

the aggregate amount during the year, and balanceoutstanding at the balance sheet date with respect to suchloans or advances and guarantees or security to parties otherthan subsidiaries, joint ventures and associates.

(b) whether therate of interestand other termsand conditionsof loans givenby thecompany,secured orunsecured, areprima facieprejudicial tothe interest ofthe company;and

(b) if overdueamount ismore thanrupees onelakh, whetherreasonablesteps havebeen taken bythe companyfor recovery ofthe principaland interest;

(b) whether theschedule ofrepayment ofprincipal andpayment ofinterest hasbeen stipulatedand whetherthe repaymentsor receipts areregular;

(b) whether the investments made, guarantees provided,security given and the terms and conditions of the grant ofall loans and advances in the nature of loans and guaranteesprovided are not prejudicial to the company’s interest;

Auditor need to go through complete documentation tounderstand the favourable / adverse impact on companybusiness.

(c) whetherreceipt of theprincipalamount andinterest are alsoregular; and

(c) if theamount isoverdue, statethe totalamountoverdue formore thanninety days,and whether

(c) in respect of loans and advances in the nature of loanswhether the schedule of repayment of principal andpayment of interest has been stipulated and whether therepayments or receipts are regular;

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reasonablesteps have beentaken by thecompany forrecovery of theprincipal andinterest;

(d) if overdueamount is morethan rupees onelakh, whetherreasonablesteps have beentaken by thecompany forrecovery of theprincipal andinterest;

(d) if the amount is overdue, state the total amount overduefor more than ninety days, and whether reasonable stepshave been taken by the company for recovery of theprincipal and interest;

(e) has thecompany takenany loans,secured orunsecured fromcompanies,firms or otherparties coveredin the registermaintainedunder section301 of the Act.If so, give thenumber ofparties and theamountinvolved in thetransactions;and

(e) whether any loan or advance in the nature of loangranted which has fallen due during the year, has beenrenewed or extended or fresh loans granted to settle theoverdues of existing loans given to the same parties; If so,specify the aggregate amount of such dues renewed orextended or settled by fresh loans and the percentage of theaggregate to the total loans or advances in the nature ofloans granted during the year. [Not applicable to companieswhose principal business is to give loans];

The auditor is also required to report that if any new loanhas been given to settle old loan or there has been anextension in existing loan, the amount and % age of suchloan to total loan has to be reported. This clause will be anissue to many corporates and detailed reporting will be seenin upcoming audit reports.

(f) whether therate of interest

(f) whether the Company has granted any loans or advancesin the nature of loans either repayable on demand or

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and other termsand conditionsof loans takenby thecompany,secured orunsecured, areprima facieprejudicial tothe interest ofthe company;

and

without specifying any terms or period of repayment; if so,specify the aggregate amount, percentage thereof to thetotal loans granted, aggregate amount of loans granted toPromoters, related parties as defined in clause (76) ofsection 2 of the Companies Act, 2013.

(g) whetherpayment of theprincipalamount andinterest are alsoregular.

(iv) is there anadequateinternal controlsystemcommensuratewith the size ofthe companyand the natureof its business,for thepurchase ofinventory andfixed assets andfor the sale ofgoods andservices.Whether thereis a continuingfailure tocorrect majorweaknesses in

(iv) is there anadequateinternal controlsystemcommensuratewith the size ofthe companyand the natureof its business,for thepurchase ofinventory andfixed assetsand for the saleof goods andservices.Whether thereis a continuingfailure tocorrect majorweaknesses in

(iv) in respectof loans,investments,guarantees, andsecuritywhetherprovisions ofsection 185 and186 of theCompaniesAct, 2013 havebeen compliedwith. If not,provide thedetails thereof.

iv) in respect of loans, investments, guarantees, and securitywhether provisions of section 185 and 186 of theCompanies Act, 2013 have been complied with. If not,provide the details thereof.

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internal controlsystem.

internal controlsystem.

v) (a) whetherthe particularsof contracts orarrangementsreferred to insection 301 ofthe Act havebeen entered inthe registerrequired to bemaintainedunder thatsection; and

(v) in case thecompany hasaccepteddeposits,whether thedirectivesissued by theReserve Bankof India andthe provisionsof sections 73to

76 or any otherrelevantprovisions ofthe CompaniesAct and therules framedthere under,whereapplicable,have beencomplied with?if not, thenature ofcontraventionsshould bestated; If anorder has beenpassed byCompany LawBoard orNationalCompany LawTribunal orReserve Bankof India or anycourt or anyother tribunal,

(v) in case, thecompany hasaccepteddeposits,whether thedirectivesissued by theReserve Bankof India and theprovisions ofsections 73 to76 or any otherrelevantprovisions ofthe CompaniesAct, 2013 andthe rulesframedthereunder,whereapplicable,have beencomplied with?If not, thenature of suchcontraventionsbe stated; If anorder has beenpassed byCompany LawBoard orNationalCompany LawTribunal orReserve Bankof India or anycourt or anyother tribunal,whether thesame has been

(v) in respect of deposits accepted by the Company oramounts which are deemed to be deposits, whether thedirectives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevantprovisions of the Companies Act, 2013 and the rules framedthereunder, where applicable, have been complied with? Ifnot, the nature of such contraventions be stated; If an orderhas been passed by Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or anycourt or any other tribunal, whether the same has beencomplied with or not?

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whether thesame has beencomplied withor not?

complied withor not?

(b) whethertransactionsmade inpursuance ofsuch contractsorarrangementshave beenmade at priceswhich arereasonablehaving regardto theprevailingmarket pricesat the relevanttime;

(Thisinformation isrequired onlyin case oftransactionsexceeding thevalue of fivelakh rupees inrespect of anyparty and inany onefinancial year).

(vi) in case thecompany hasaccepteddeposits fromthe public,whether the

(vi) wheremaintenance ofcost recordshas beenspecified bythe Central

(vi) whethermaintenance ofcost recordshas beenspecified bythe Central

(vi) whether maintenance of cost records has been specifiedby the Central Government under sub- section (1) of section148 of the Companies Act and whether such accounts andrecords have been so made and maintained.

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directivesissued by theReserve Bankof India and theprovisions ofsections 58A,58AA or anyother relevantprovisions ofthe Act and therules framedthere under,whereapplicable,have beencomplied with.If not, thenature ofcontraventionsshould bestated; If anorder has beenpassed byCompany LawBoard orNationalCompany LawTribunal orReserve Bankof India or anyCourt or anyother Tribunalwhether thesame has beencomplied withor not?

Governmentunder sub-section (1) ofsection 148 ofthe CompaniesAct, whethersuch accountsand recordshave beenmade andmaintained;

Governmentunder sub-section (1) ofsection 148 ofthe CompaniesAct, 2013 andwhether suchaccounts andrecords havebeen so madeandmaintained.

(vii) in the caseof listedcompaniesand/or othercompanieshaving a paid-

(vii) (a) is thecompanyregular indepositingundisputedstatutory dues

(vii) (a)whether thecompany isregular indepositingundisputed

(vii) (a) whether the company is regular in depositingundisputed statutory dues including Goods and Service Tax,provident fund, employees’ state insurance, income-tax,sales-tax, service tax, duty of customs, duty of excise, valueadded tax, cess and any other statutory dues to theappropriate authorities and if not, the extent of the arrears

Goods and Service Tax included

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up capital andreservesexceedingRs.50 lakhs asat thecommencementof the financialyear concerned,or having anaverage annualturnoverexceeding fivecrore rupees fora period ofthreeconsecutivefinancial thefinancial yearconcerned,whether theyearsimmediatelyprecedingcompany hasan internalaudit systemcommensuratewith its sizeand nature ofits business;

includingprovident fund,employees’state insurance,income-tax,sales-Lax,wealth tax,service tax,duty ofcustoms, dutyof excise,value addedtax, cess andany otherstatutory dueswith theappropriateauthorities andif not, theextent of thearrears ofoutstandingstatutory duesas at the lastday of thefinancial yearconcerned fora period ofmore than sixmonths fromthe date theybecamepayable, shallbe indicated bythe auditor.

statutory duesincludingprovident fund,employees’state insurance,income-tax,sales-tax,service tax,duty ofcustoms, dutyof excise, valueadded tax, cessand any otherstatutory duesto theappropriateauthorities andif not, theextent of thearrears ofoutstandingstatutory duesas on the lastday of thefinancial yearconcerned for aperiod of morethan sixmonths fromthe date theybecamepayable, shallbe indicated;

of outstanding statutory dues as on the last day of thefinancial year concerned for a period of more than sixmonths from the date they became payable, shall beindicated;

(b) in casedues of incometax or sales taxor wealth taxor service taxor duty ofcustoms or

(b) where duesof income taxor sales tax orservice tax orduty ofcustoms orduty of excise

(b) where statutory dues referred to in sub- clause (a) havenot been deposited on account of any dispute, then theamounts involved and the forum where dispute is pendingshall be mentioned. (A mere representation to theconcerned Department shall not be treated as a dispute).

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duty of exciseor value addedtax or cesshave not beendeposited onaccount of anydispute, thenthe amountsinvolved andthe forumwhere disputeis pendingshall bementioned. (Amererepresentationto theconcernedDepartmentshall notconstitute adispute).

or value addedtax have notbeen depositedon account ofany dispute,then theamountsinvolved andthe forumwhere disputeis pending shallbe mentioned.(A mererepresentationto theconcernedDepartmentshall not betreated as adispute).

(c) whether theamountrequired to betransferred toinvestoreducation andprotection fundin accordancewith therelevantprovisions ofthe CompaniesAct, 1956 ( 1of 1956) andrules madethereunder hasbeentransferred tosuch fund

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within time.

(viii) wheremaintenance ofhas been costrecordsprescribed bythe CentralGovernmentunder clause

(d) of sub-section (1) ofsection 209 ofthe Act,whether suchaccounts andrecords havebeen made andmaintained;

(viii) whetherin case of acompanywhich has beenregistered for aperiod not lessthan five years,itsaccumulatedlosses at theend of thefinancial yearare not lessthan fifty percent of its networth andwhether it hasincurred cashlosses in suchfinancial yearand in theimmediatelyprecedingfinancial year;

(viii) whetherthe companyhas defaultedin repaymentof loans orborrowing to afinancialinstitution,bank,government ordues todebentureholders? If yes,the period andthe amount ofdefault to bereported (incase of defaultsto banks,financialinstitutions,andgovernment,lender wisedetails to beprovided).

(viii) whether any transactions not recorded in the books ofaccount have been surrendered or disclosed as incomeduring the year in the tax assessments under the IncomeTax Act, 1961; if so, whether the previously unrecordedincome has been properly recorded in the books of accountduring the year?

This is a new clause for reporting in various scheme like theVoluntary Disclosure Scheme, Viwad Se Viswas etc

(ix) (a) is thecompanyregular indepositingundisputedstatutory duesincludingProvidentFund, InvestorEducation andProtectionFund,Employees’

(ix) whetherthe companyhas defaultedin repaymentof dues to afinancialinstitution orbank ordebentureholders? If yes,the period andamount ofdefault to be

(ix) whethermoneys raisedby way ofinitial publicoffer or furtherpublic offer(including debtinstruments)and term loanswere appliedfor thepurposes forwhich those are

(ix) (a) whether the company has defaulted in repayment ofloans or other borrowings or in the payment of interestthereon to any lender? If yes, the period and the amount ofdefault to be reported as per the format

Natureofborro-winginclu-ding

Name oflender*

Amo-untnotpaidondue

Whet-herprinc-ipal orinter-est

No.ofdaysdel-ayor

Rem-arks,if any

Detailed reporting is required. Also all LENDERS areincluded.

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StateInsurance,Income-tax,Sales-tax,Wealth Tax,Service Tax,Custom Duty,Excise Duty,cess and anyother statutorydues with theappropriateauthorities andif not, theextent of thearrears ofoutstandingstatutory duesas at the lastday of thefinancial yearconcerned for aperiod of morethan sixmonths fromthe date theybecamepayable, shallbe indicated bythe auditor.

reported; raised. If not,the detailstogether withdelays ordefault andsubsequentrectification, ifany, as may beapplicable, bereported;

debtsecur-ities

date unp-aid

* lenderwisedetailsto beprovidedin caseofdefaultstobanks,financialinstitut-ions andGovern-ment.

(b) in case duesof Income tax/Sales tax/Wealth tax/Service tax/Custom duty/Excise duty/cess have notbeen depositedon account ofany dispute,then the

(b) Whether the company is a declared wilful defaulter byany bank or financial institution or other lender?

Yearly confirmation from bank may be obtained for thispurpose.

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amountsinvolved andthe forumwhere disputeis pending shallbe mentioned.

(A mererepresentationto theDepartmentshall notconstitute adispute).

(c) Whether term loans were applied for the purpose forwhich the loans were obtained; if not, the amount of loan sodiverted and the purpose for which it is used may bereported.

Annual assessment of terms loans withdrawal and itsutilisation w.r.t loan facility letter / term sheets to be doneand a separate MR also needs to be obtained.

(d) whether funds raised on short term basis have beenutilised for long term purposes? If yes, the nature andamount to be indicated.

Annual assessment of Short term facilities withdrawal andits utilisation w.r.t facility letter / term sheets to be done anda separate MR also needs to be obtained.

(e) whether the Company has taken any funds from anyentity or person on account of or to meet the obligations ofits subsidiaries, associates or joint ventures? If so, detailsthereof with nature of such transactions and the amount ineach case

The Auditor also has to make additional reporting of loantaken to meet obligation of subsidiaries, associates and jointventures, as well as loan taken by pledge of shares ofSubsidiary, associates or joint venture

(f) whether the Company has raised loans during the yearon the pledge of securities held in its subsidiaries, jointventures or associate companies?

If so, give details thereof and also report if the company hasdefaulted in repayment of such loans raised.

This clause is same as CARO 2016 and the preferentialallotment clause (xiv) of CARO 2016 has been added here.

(x) whether incase of acompany

(x) whether thecompany hasgiven any

(x) whetherany fraud bythe company or

(x) (a) whether moneys raised by way of initial public offeror further public offer (including debt instruments) duringthe year were applied for the purposes for which those are

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which has beenregistered for aperiod not lessthan five years,its accumulatedlosses at theend of thefinancial yearare not lessthan fifty percent of its networth andwhether it hasincurred cashlosses in suchfinancial yearand in theimmediatelyprecedingfinancial year;

guarantee forloans taken byothers frombank orfinancialinstitutions, theterms andconditionswhereof areprejudicial tothe interest ofthe company;

any fraud onthe Companyby its officersor employeeshas beennoticed orreported duringthe year; If yes,the nature andthe amountinvolved is tobe indicated;

raised. If not, the details together with delays or default andsubsequent rectification, if any, as may be applicable, bereported;

(b) whether the Company has made any preferentialallotment or private placement of shares or convertibledebentures (fully, partially or optionally convertible) duringthe year and if so, whether the requirements of Section 42and Section 62 of the Companies Act, 2013 have beencomplied with and the funds raised have been used for thepurposes for which the funds were raised. If not, providedetails in respect of amount involved and nature of non-compliance;

(xi) whetherthe companyhas defaulted inrepayment ofdues to afinancialinstitution orbank ordebentureholders? If yes,the period and

(xi) whetherterm loanswere appliedfor the purposefor which theloans wereobtained;

(xi) whethermanagerialremunerationhas been paidor provided inaccordancewith therequisiteapprovalsmandated bythe provisions

(xi) (a) whether any fraud by the company or any fraud onthe Company has been noticed or reported during the year;If yes, the nature and the amount involved is to beindicated;

This clause is same as CARO 2016 only para b and c areadditional, these are for compliance of Sec 143 andadditional responsibility of whistle blower complaints

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amount ofdefault to bereported;

of section 197read withSchedule V tothe CompaniesAct? If not,state theamountinvolved andsteps taken bythe companyfor securingrefund of thesame;

(b) whether any report under sub-Section (12) of Section143 of the Companies Act has been filed by the auditors inForm ADT-4 as prescribed under Rule 13 of Companies(Audit and Auditors) Rules 2014 with the CentralGovernment?

(c) whether the auditor has considered whistle- blowercomplaints, if any, received during the year by theCompany?

(xii) whetheradequatedocuments andrecords aremaintained incases where thecompany hasgranted loansand advanceson the basis ofsecurity by wayof pledge ofshares,debentures andothersecurities; Ifnot, thedeficiencies to

(xii) whetherany fraud on orby thecompany hasbeen noticed orreported duringthe year; Ifyes, the natureand the amountinvolved is tobe indicated.

(xii) whetherthe NidhiCompany hascomplied withthe Net OwnedFunds toDeposits in theratio of 1: 20 tomeet out theliability andwhether theNidhiCompany ismaintaining tenper centunencumberedterm depositsas specified in

(xii) (a) whether the Nidhi Company has complied with theNet Owned Funds to Deposits in the ratio of 1:20 to meetout the liability

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be pointed out. the NidhiRules, 2014 tomeet out theliability;

(b) whether the Nidhi Company is maintaining ten per centunencumbered term deposits as specified in the NidhiRules, 2014 to meet out the liability;

(c). whether there has been any default in payment ofinterest on deposits or repayment thereof for any period andif so, the details thereof

This is additional clause. A separate letter from Nidhi Co.need to be obtained to understand default.

(xiii) whetherthe provisionsof any specialstatuteapplicable tochit fund havebeen dulycomplied with?In respect ofnidhi/ mutualbenefit fund /societies;

(a) whether thenet- ownedfunds todeposit liabilityratio is morethan 1:20 as onthe date ofbalance sheet;

(xiii) whetherall transactionswith the relatedparties are incompliancewith section177 and 188 ofCompaniesAct, 2013whereapplicable andthe details havebeen disclosedin the FinancialStatements etc.,as required bythe applicableaccountingstandards;

(xiii) whether all transactions with the related parties are incompliance with sections 177 and 188 of Companies Actwhere applicable and the details have been disclosed in theFinancial Statements etc., as required by the applicableaccounting standards;

(b) whether thecompany hascomplied withthe prudentialnorms onincome

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recognition andprovisioningagainst sub-standard/doubtful/lossassets;

(c) whether thecompany hasadequateprocedures forappraisal ofcreditproposals /requests,assessment ofcredit needsand repaymentcapacity of theborrower;

(d) whether therepaymentschedule ofvarious loansgranted by thenidhi is basedon therepaymentcapacity of theborrower;

(xiv) if thecompany isdealing ortrading inshares,securities,debentures andotherinvestments,whether proper

(xiv) whetherthe companyhas made anypreferentialallotment orprivateplacement ofshares or fullyor partlyconvertible

(xiv) (a) whether the company has an internal audit systemcommensurate with the size and nature of its business?

(b) Whether the reports of the Internal Auditors for theperiod under audit were considered by the statutory auditor?

This clause has made a comeback, it was not there inCARO 2016. The para b of the clause is new, it derivesitself from Standards on Auditing where using the work ofInternal Auditors is discussed.

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records havebeenmaintained ofthe transactionsand contractsand whethertimely entrieshave beenmade therein;also whetherthe shares,securities,debentures andotherinvestmentshave been heldby thecompany, in itsown nameexcept to theextent of theexemption, ifany, grantedunder section49 of the Act;

debenturesduring the yearunder reviewand if so, as towhether therequirement ofsection 42 ofthe CompaniesAct, 2013 havebeen compliedwith and theamount raisedhave been usedfor thepurposes forwhich thefunds wereraised. If not,provide thedetails inrespect of theamountinvolved andnature of non-compliance;

(xv) whetherthe companyhas given anyguarantee forloans taken byothers frombank orfinancialinstitutions, theterms andconditionswhereof areprejudicial tothe interest ofthe company;

(xv) whetherthe companyhas enteredinto any non-cashtransactionswith directorsor personsconnected withhim and if so,whether theprovisions ofsection 192 ofCompaniesAct, 2013 havebeen complied

(xv) whether the company has entered into any non- cashtransactions with directors or persons connected with himand if so, whether the provisions of section 192 ofCompanies Act have been complied with;

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with;

(xvi) whetherterm loanswere appliedfor the purposefor which theloans wereobtained;

(xvi) whetherthe company isrequired to beregisteredunder section45-IA of theReserve Bankof India Act,1934 and if so,whether theregistration hasbeen obtained.

(xvi) (a) whether the company is required to be registeredunder section 45-1A of the Reserve Bank of India Act,1934 and if so, whether the registration has been obtained.

(b) whether the Company has conducted any Non- BankingFinancial or Housing Finance activities without a validCertificate of Registration (CoR) from the Reserve Bank ofIndia as per the Reserve Bank of India Act 1934

The para b to d are new. The auditor is required to report onactivities carried by the company of NBFC, HFC withoutvalid certificates. The Company is a CIC or the number ofCIC in group. This has been asked to be reported afterrecent issues in NBFC,

(c) whether the Company is a Core Investment Company(CIC) as defined under the Regulations by the ReserveBank of India? If so, whether it continues to fulfil thecriteria of a CIC and In case the company is an exempted orunregistered CIC, whether it continues to fulfil suchcriteria.

(d) Whether the Group has more than one CIC as part of theGroup, If yes, indicate the number of CICs which are partof the Group.

(xvii) whetherthe funds raisedon short- termbasis have beenused for longterminvestment; If

(xvii) whether the Company has incurred cash losses in theFinancial Year and in the immediately preceding Financialyear? If so, state the amount of cash losses

This is new reporting requirements of CARO 2020,calculation of cash losses to be done. This is visible fromCash Flow but now separate reporting is also required.

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yes, the natureand amount isto be indicated;

(xviii) whetherthe companyhas made anypreferentialallotment ofshares toparties andcompaniescovered in theRegistermaintainedunder section301 of the Actand if sowhether theprice at whichshares havebeen issued isprejudicial tothe interest ofthe company;

(xviii) whether there has been any resignation of thestatutory auditors during the year? If so, whether the auditorhas taken into consideration the issues, objections orconcerns raised by the outgoing auditors?

CARO 2020 takes auditor resignation more seriously andafter recent increase in numbers of resignation and theirtimings it's a welcome move, how the auditor has taken careof issues of earlier auditor.

(xix) whethersecurity orcharge hasbeen created inrespect ofdebenturesissued;

(xix) on the basis of the financial ratios, ageing andexpected dates of realisation of financial assets andpayment of financial liabilities, other informationaccompanying the financial statements, the auditor’sknowledge of the Board of Directors and managementplans, whether the auditor is of the opinion that no materialuncertainty exists as on the date of the audit report thatcompany is capable of meeting its liabilities existing at thedate of balance sheet as and when they fall due within aperiod of one year from the balance sheet date.

CARO 2020 brings additional clause on capability of thecompany to meet its liability, its again in line with goingconcern reporting which was made stringent by SA 570lately, the above clause give more clarity of cash flows andwill give some tension to new companies and its fundmanagement. The auditors should take detail justificationfor above and do a walkthrough.

(xx) whetherthemanagementhas disclosedon the end use

xx) (a) whether, in respect of other than ongoing projects,the company has transferred unspent amount to a Fundspecified in Schedule VII to the Companies Act within aperiod of six months of the expiry of the financial year incompliance with second proviso to sub-section (5) of

The Reporting about CSR was missing and now its broughtin by CARO 2020. This clause is again an issue as somecompanies were not taking CSR in true sense and addedresponsibility has been given to auditor.

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of moneyraised bypublic issuesand the samehas beenverified;

section 135 of the said Act.

(b) whether any amount remaining unspent under sub-section (5) of section 135 of the Companies Act pursuant toany ongoing project, has been transferred to special accountin compliance with the provision of sub-section (6) ofsection 135 of the said Act.

(xxi) whetherany fraud on orby thecompany hasbeen noticed orreported duringthe year; If yes,the nature andthe amountinvolved is tobe indicated.

(xxi) whether there have been any qualifications or adverseremarks by the respective auditors in the Companies(Auditor’s Report) Order (CARO) reports of the companiesincluded in the consolidated financial statements? If yes,indicate the details of the companies and the paragraphnumbers of the CARO report containing the qualificationsor adverse remarks

The auditor has to give proper reasoning for qualification oradverse remarks in the audit report. A new paragraphintroduced by CARO 2020.

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