CARO, 2003 and CARO,
2015
-A Comparative
Analysis
Ref.: Notification dated 10/04/2015
CARO, 2015 applicable from 01th April, 2014
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Clause No.
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CARO, 2003
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Clause No.
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CARO, 2015
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1.
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It shall apply to every company
including a foreign company as defined in section 591 of the Act, except the
following :-
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(iv) a
private limited company
·
with a paid up capital and
reserves not more than fifty lakh rupees and
·
has not accepted any public deposit and
·
does not have loan
outstanding ten lakh rupees
or more from any bank or financial institution and
·
does not have a turnover
exceeding five crore rupees.
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1
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lt shall apply to every company
including a foreign company as defined in clause (42) of section 2 of the
Companies Act, 2O13 (18 of 2O13) [hereinafter referred to as the Companies
Act], except -
(iv) a One Person Company as
defined under clause (62) of section 2 of the Companies Act and a small
company as defined under clause (85) of section 2 of the Companies Act;
* a new
exemption is granted to one person company
(v) a
private limited company
·
with a paid up capital and
reserves not more than fifty lakh rupees and
·
·
does not have loan
outstanding twenty five lakh
rupees or more from any bank or financial institution and
·
does not have a turnover
exceeding five crore rupees.
* In order to be exempt from
the applicability of the CARO, the Pvt. Ltd. Company must satisfy all the
conditions at any point of time during the financial year
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2.
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Definitions.
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There are no such definitions
which are now included in the CARO 2015.
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4
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Matters to be included in the
auditor's report. - The auditor's report on the account of a company to which
this Order applies shall include a statement on the following matters, namely
:
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3
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Matters to be included in the
auditor's report. - The auditor’s report on the account of a company to which
this Order applies shall include a statement on the following matters,
namely:
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(i)
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(c) if a substantial part of fixed assets have
been disposed off during the year, whether it has affected the going concern;
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(i)
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(c) Deleted
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(iii)
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(a) has the company either granted or taken any loans,
secured or unsecured to/from companies, firms or other parties covered in the
register maintained under section 301 of the Act. If so, give the number of
parties and amount involved in the transactions.
(b) whether the rate of interest and other
terms and conditions of loans given or taken by the company, secured or
unsecured, are prima facie prejudicial to the interest of the company;
(c) whether payment of the principal amount and interest are
also regular;
(d) if overdue amount is more than one lakh,
whether reasonable steps have been taken by the company for recovery/payment of the
principal and interest;
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(iii)
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whether the company has granted any loans, secured or
unsecured to companies, firms or other parties covered in the register
maintained under section 189 of the Companies Act. If so,
* the clause
as per CARO 2015 deals only with the loans granted by the Company
Deleted
(a) whether receipt of the principal amount and interest are also
regular; and
(b) 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;
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(iv)
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is there an adequate internal control procedure
commensurate with the size of the company and the nature of its business, for
the purchase of inventory and fixed assets and for the sale of goods. Whether there is a continuing failure to
correct major weaknesses in internal control;
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(iv)
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is there an adequate internal control system
commensurate with the size of the company and the nature of its business, for
the purchase of inventory and fixed assets and for the sale of goods and services. Whether
there is a continuing failure to correct major weaknesses in internal control
system.
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(v)
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(a) whether transactions that need to be entered into a
register in pursuance of section 301 of the Act have been so entered;
(b) whether each of these transactions have
been made at prices which are reasonable having regard to the prevailing
market prices at the relevant time;
(This
information is required only in case of transactions exceeding the value of
five lakh rupees in respect of any party and in any one financial year).
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-
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Deleted
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(vi)
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in case the company has accepted
deposits from the public, whether the directives issued by the Reserve Bank
of India and the provisions of sections 58A and 58AA of the Act and the rules
framed there under, 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 whether the same has been complied with or not?
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(v)
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No Change except clause no.
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(vii)
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in the case of
listed companies and/or other companies having a paid-up capital and reserves
exceeding Rs.50 lakhs as at the commencement of the financial year concerned,
or having an average annual turnover exceeding five crore rupees for a period
of three consecutive financial years immediately preceding the financial year
concerned, whether the company has an internal audit system commensurate with
its size and nature of its business;
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-
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Deleted
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(viii)
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where maintenance of cost
records has been prescribed by the Central Government under clause (d) of sub-section (1) of
section 209 of the Act, whether such accounts and records have been
made and maintained;
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(vi)
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where maintenance of cost
records has been
specified by the Central
Government under sub-section (1) of
section 148 of the Companies Act, whether such accounts and records have
been made and maintained:
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(ix)
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(a) is the company regular in depositing
undisputed statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth
Tax, Custom Duty, Excise Duty, 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 became payable, shall be
indicated by the auditor.
(b) in case dues of sales tax/income tax
/custom tax/wealth tax/excise duty/cess have not been deposited on account of
any dispute, then the amounts involved and the forum where dispute is pending
may please be mentioned.
(A mere representation to the
Department shall not constitute the dispute).
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vii)
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(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, value 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 became payable, shall be indicated by the auditor.
(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 forum where
dispute is pending shall be mentioned. (A mere representation to the
concerned Department shall not constitute a dispute).
(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 thereunder has been transferred to such fund within
time.
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(x)
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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 financial year immediately
preceding such financial year also;
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(viii)
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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;
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(xi)
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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;
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(ix)
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No Change except clause no.
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(xii)
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whether
adequate documents and records are maintained in cases where the company has
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities; If not, the deficiencies to be
pointed out.
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-
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Deleted
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(xiii)
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whether the
provisions of any special statute applicable to chit fund have been duly
complied with? In respect of nidhi/ mutual benefit fund/societies;
(a) whether the net-owned funds to
deposit liability ratio is more than 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;
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Deleted
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(xiv)
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if the company
is dealing or trading in shares, securities, debentures and other
investments, whether proper records have been maintained of the transactions
and contracts and whether timely entries have been made therein; also whether
the shares, securities, debentures and other securities have been held by the
company, in its own name except to the extent of the exemption, if any,
granted under section 49 of the Act;
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-
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Deleted
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(xv)
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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;
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(x)
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No Change except clause no.
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(xvi)
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whether term loans were applied
for the purpose for which the loans were obtained;
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(xi)
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No Change except clause no.
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(xvii)
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whether the
funds raised on short-term basis have been used for long term investment and
vice versa; If yes, the nature and amount is to be indicated;
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-
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Deleted
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(xviii)
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whether the
company has made any preferential allotment of shares to parties and
companies covered in the Register maintained under section 301 of the Act and
if so whether the price at which shares have been issued is prejudicial to
the interest of the company;
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-
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Deleted
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(xix)
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whether
securities have been created in respect of debentures issued?
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-
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Deleted
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(xx)
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whether the
management has disclosed on the end use of money raised by public issues and
the same has been verified;
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-
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Deleted
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(xxi)
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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.
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(xii)
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No Change except clause no.
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5
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Reasons to be stated for
unfavourable or qualified answers. –
Where, in the auditor's report,
the answer to any of the questions referred to in paragraph 4 is unfavourable
or qualified, the auditor's report shall also state the reasons for such
unfavourable or qualified answer, as the case may be. 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.
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4
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No Change except clause no.
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