Complete CARO - Corporate Law. CARO in Detail. Download Preview. Description: Complete CARO, #pdf. Submitted By. COMPANIES (AUDITOR‟S REPORT) ORDER, [Issued in specified in paragraph 4 of CARO. CARO also applies to foreign companies i.e., companies. caro - Download as Word Doc .doc /.docx), PDF File .pdf), Text File .txt) or read online.

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Caro 2003 Pdf

MAOCARO, CARO, 1. Short title, application and commencement. (1 ) This order may be called the. Manufacturing and Other. Companies (Auditor's. -Deletion of certain clauses of CARO, such as clause v, vii, xii, xiii, xiv, xvii, xviii -Exemption of CARO applicability to One Person Company as per section . Andhra Pradesh Power Generation Corporation Limited – CARO Questionnaire. Page 1 of 8. Companies (Auditor's Report) Order, (CARO) Questionnaire.

Download figure as PowerPoint slide Fig. Capsicum annuum and Capsicum baccatum accessions are indicated within the dotted lines. Diversity within the phylogeographic groups. Accessions from the geographic regions that fell into the three phylogenetic clusters A, B, and C formed nine subgroups herein referred to as phylogeographic groups Table 4. The most diverse phylogeographic group with regard to all three diversity indices was the Lower site accessions that fell into phylogenetic Cluster C followed by the Upper site accessions that fell into phylogenetic Cluster B. Among those regions belonging to phylogenetic Cluster B, the greatest diversity estimated by the indices was in the Upper site followed by Central America, Guianas including Venezuela, Trinidad and Tobago, and Lesser Antilles in that order. Table 4. Genetic diversity estimates of Capsicum chinense within nine phylogeographical groups based on three diversity indices. Structure within phylogeographic groups within phylogenetic clusters. Phylogenetic relationship among regions and groups. The dendrogram Fig.

If thecompany is able to do so, the auditor may form an opinion that proper records relating towork-in-progress have been kept. However, before adopting this as an audit procedure,the auditor should satisfy himself as to the impracticability of maintenance of stockregisters of work-in-progress.

Section register covers all section and items. Under section , boardapproval is required including in the case of a relative of a director for the sale, downloador supply of any goods, material or services. Since the employee is providing services tothe company, he is a party covered in the section register. ResponseIn the case of a and b reporting is required since during the year when the party was a party, monies remained outstanding from that party.

The point of time at which theloan was granted, therefore, is not important. ResponseThe auditor should mention that fact in his report. However the auditor should add his reservation that, section parties are not identified comprehensively by the management and hence the auditorscomment is not comprehensive. What are the requirements ofsection and how would the auditor report on such loans in either of the company? The auditor should consider all relevant facts andcircumstances including that there is no loan agreement or repayment schedule and usehis professional judgement to conclude if the terms and conditions of the loan areprejudicial or not.

Merely because there is no loan agreement or a repayment schedulewould not tantamount to the loan being prejudicial to the interest of the company. ResponseA loan repayable on demand falls due when the lender makes a demand. If the lenderhas not demanded the loan, the auditor should state that fact and report that commenton payment of principal amount cannot be made, since the terms of repayment are notstipulated.

If the lender has made a demand, the auditor should comment on theregularity of payment of principal amount based on the demand. Whether there is continuing failure to correct major weaknesses in internal control system. If not, then how much to test? Even if themanagement has taken reasonable steps to correct the weakness but the weaknesscontinues, the auditor is required to report the same under this clause.

It cannot be concluded that if no major weakness wasreported during the period covered by the audit report, the internal control system is adequate. Based on the audit procedures, if the auditorconcludes that there are no major weaknesses, can he conclude that internal controls areadequate?

ResponseOne of the aspects to be borne in mind when deciding on whether the internal controlsystem is adequate is the existence of major weaknesses. However, that does not mean,if there are no major weaknesses the internal control system is adequate.

There could bea situation where the internal control system does not have a major weakness but hasseveral small defects which when judged in totality would result in a conclusion that theinternal control system is not adequate. Thus the two requirements should be looked atas distinct aspect of this clause. This weaknessesremain uncorrected when the audit report was issued after the end of the year.

ResponseThe auditor should take the decision based on facts and circumstances of each case. How is this reflected by the auditor in the main audit report and CAROreport?

The main audit report need notbe qualified if adequate disclosures are made by management in the notes to accountand necessary provision to meet the cost of non-compliance has been made in thefinancial statements. Query:A company makes a download of Rs 5,10, from a party and in the same year gets atrade discount of Rs 20, Whether reporting is required under this clause?

Would the auditor need to qualify CARO? ResponseThe intention of the clause is not to require the auditor to report whether the companyhas transacted with the parties at the lowest possible price. The reasonableness of pricecannot be detached from factors such as comfort level, reliability, delivery time, quality,etc.

Under the circumstances the auditor should not qualify CARO. If not, nature of contraventionsshould be stated. Compliance of Company Law Board Order, if any, has to bereported.

Size of internal audit IA department ii. Qualifications of people in the IA department iii. To whom does the IA report and what kinds of report are submitted. Areas covered by the IA v. If not maintained link to Section requirements on maintenance of proper books of accounts. However, in light of the amendment in the proposed Finance Act itself which has aretrospective effect from 1 June , a provision for the service tax would be required.

Whether the lessor or lessee should provide for the same is dependant on the agreementbetween them. In the case of a lessor, the said provision would also be covered under clause 4 ix a ofCARO depositing of undisputed statutory dues , when the bill becomes an Act.

However,with regards to making the provision itself, the provision should be made nevertheless assuggested in the previous paragraph in anticipation of the bill becoming an Act. Due dates will be different under various regulations and would be different from those used for IT claim purposes.

Date of deposit iii. Due date applicable for that statutory payment c Verify the supporting documentation for the charge and the deposit. ResponseProvident fund dues are considered.

However, gratuity and superannuation fund shouldnot be treated as an authority and similarly, such dues cannot be considered as Statutorydues for CARO reporting. This is primarily because of the fact that while Provident Fund isrequired to be deposited on a monthly basis as per the Provident Fund Act itself, there isno such requirement for Gratuity and Superannuation contribution, whose funding isdone mainly for tax benefit.

ResponseAny sum, which is to be regularly paid to an appropriate authority under a statute whether Central, State or Local is a statutory due for reporting under this clause. Howwill the auditor deal with this in the audit report?

ResponseThe liability of collecting and paying service tax is that of the transporter and not of thecompany. Therefore there are no CARO reporting requirements under the circumstances. However, the auditor must ensure that adequate provision is made by the company forservice tax, if the company is liable to pay to the transporter and waiver is not expectedfrom the transporter. Else, the auditor may have to qualify the main audit report, if theamounts involved are material. Co-Co makes investment and earnsdividend and interest income of Rs lakhs approximately.

The fact that Co-Co has maintained a fixed deposit as security against the loan is irrelevant. In other words, the loan amount will not be reduced by the fixed deposit amount fordetermining the applicability of CARO.

From April 1 to 30 March theturnover is Rs lakhs.

CARO 2003 in Detail

On 31st March goods worth Rs 45 lakhs are returned. Response:Though the annual turnover is less than Rs 5 crores, turnover during the year exceeded Rs 5crores. Response:a In case bank guarantees issued by the company have been invoked or devolved on the company, the amount of guarantee should be included in the amount of loan outstanding.

If bank guarantees have not been invoked or devolved, the amount of guarantee should not be included in the loan outstanding.

Response:The said loan is not covered by the definition of loan from a bank or financial institution. Whether the auditor's comments interms of the Order form part of his report and whether the board will be bound to give inits report the fullest information and explanations regarding every adverse commenttherein?

The auditor's comments in terms of the Order may be in respect of matters of fact orthey may be an expression of opinion. It is necessary that there should be noinconsistency in the facts as stated by the auditor and as explained in the board's report.

It is, therefore, suggested that wherever possible, a draft report should be submitted tothe board to verify and confirm the facts stated therein. Response:The conditions to be satisfied for being exempt from the applicability of the Order havebeen laid down in respect of the company taken as a whole.

Therefore, a branch of acompany does not qualify to be exempted from the applicability of the Order, if the Orderis applicable to the company. The branch auditor has the same reporting responsibilitiesin respect of the branch as those of the auditor appointed under section of the Acthas in respect of the company.

The comments of the branch auditor in respect of thebranch are dealt with by the auditor of the company appointed under section of theAct while finalizing his report under the Order.

In general, however, therecords relating to fixed assets should contain, inter alia, the following details: i sufficient description of the asset to make identification possible; ii classification, that is, the head under which it is shown in the accounts, e.

Auditor should satisfy that sucha verification was done and there is adequate evidence that supports that conclusion.

The factors to be taken into consideration in this regard include the number of assets, thenature of assets, the relative value of assets, difficulty in verification, situation and spreadof the assets, etc. Rotational PV is allowed at least once in 3 years , however the fact thatthe assets are not verified in the current year should be reported by the auditor.

Also, ifthe auditor is satisfied with the frequency suitable comment should be made in thereport.

Report (CARO) The ‘Basics’ - Ahmedabad Branch of Pages 1 - 50 - Text Version | FlipHTML5

A substantial sale should not affect entities ability to continuein operation for foreseeable future. There maybe cases where Going concern is an issue but no FA disposal. Sometimes GCissues could lead to significant FA disposal.

Report deficiencies c Are proper records of inventory maintained and whether material discrepancies noticed on physical verification are properly dealt with in the books of accounts. Auditor should satisfy that the management conducts the verification at regular intervals. The periodicity of the physical verification of inventories depends upon the nature of inventories, their location and the feasibility of conducting a physical verification. Therefore, would this CARO clause apply to construction companies?

Work-in-progress of construction companies is valued in accordance with AS-7 andnot AS However, the definition of inventories under AS-2 includes work-in-progressthough valuation of construction work-in-progress is excluded from AS-2 scope. The needfor a specific exclusion of construction work-in-progress arose because it fell within thedefinition of inventories under AS ResponseThe statutory auditor should form his own opinion, based on various audit procedures,including relying on the work of the internal auditor.

The auditor should not blindly relyon the work of the internal auditor and in any case that should not be the sole auditprocedure. Though the auditor can rely on the work of an internal auditor ifcircumstances so permit and in accordance with AAS-7, for specific CARO reporting hemust carry out certain additional procedures by himself.

For example, the auditor maycomplete an illustrative list of questions for evaluating internal controls. In such situations, what is the manner of reporting by the auditor? ResponseA question generally arises as to what constitutes proper record in the context of work-in-progress. A lot of companies do not use an integrated accounting package and eventhose who use such packages do not have an inventory tracking system.

Report 2003 (CARO) The ‘Basics’ - Ahmedabad Branch of ...

Consequently,book records in respect of work-in-progress are not available on line. It is understood thatin many cases it is impracticable to maintain physical record for work-in-progress. In sucha case, the auditor should consider the fact whether the company, at any point of time,can arrive or calculate the quantity and amount involved in the work-in-progress.

If thecompany is able to do so, the auditor may form an opinion that proper records relating towork-in-progress have been kept. However, before adopting this as an audit procedure,the auditor should satisfy himself as to the impracticability of maintenance of stockregisters of work-in-progress.

Section register covers all section and items. Under section , boardapproval is required including in the case of a relative of a director for the sale, downloador supply of any goods, material or services. Since the employee is providing services tothe company, he is a party covered in the section register. ResponseIn the case of a and b reporting is required since during the year when the party was a party, monies remained outstanding from that party.

The point of time at which theloan was granted, therefore, is not important. ResponseThe auditor should mention that fact in his report. However the auditor should add his reservation that, section parties are not identified comprehensively by the management and hence the auditorscomment is not comprehensive.

What are the requirements ofsection and how would the auditor report on such loans in either of the company? The auditor should consider all relevant facts andcircumstances including that there is no loan agreement or repayment schedule and usehis professional judgement to conclude if the terms and conditions of the loan areprejudicial or not.

CARO 2003 in Detail

Merely because there is no loan agreement or a repayment schedulewould not tantamount to the loan being prejudicial to the interest of the company. ResponseA loan repayable on demand falls due when the lender makes a demand. If the lenderhas not demanded the loan, the auditor should state that fact and report that commenton payment of principal amount cannot be made, since the terms of repayment are notstipulated.

If the lender has made a demand, the auditor should comment on theregularity of payment of principal amount based on the demand.

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