{"id":133,"date":"2015-06-24T12:45:10","date_gmt":"2015-06-24T12:45:10","guid":{"rendered":"http:\/\/carajput.com\/blog\/?p=133"},"modified":"2021-11-12T15:39:01","modified_gmt":"2021-11-12T10:09:01","slug":"highlights-of-caro-2015","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/","title":{"rendered":"HIGHLIGHTS OF CARO 2015"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d5aafd195eb\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d5aafd195eb\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#i\" title=\",\u00a0\">,\u00a0<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Matters_to_be_reported_Reporting_on_maintaining_verifying_and_disposing_off_the_fixed_assets\" title=\"Matters to be reported \n Reporting on maintaining, verifying and disposing off the fixed assets\">Matters to be reported \n Reporting on maintaining, verifying and disposing off the fixed assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#_Physical_Verification_and_maintenance_of_records_of_Inventories\" title=\"\u00a0Physical Verification and maintenance of records of Inventories\">\u00a0Physical Verification and maintenance of records of Inventories<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Reporting_on_repayment_of_loans_granted_by_the_Company\" title=\"Reporting on repayment of loans granted by the Company\">Reporting on repayment of loans granted by the Company<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Internal_control_System\" title=\"Internal control System\">Internal control System<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Acceptance_of_deposits\" title=\"Acceptance of deposits\">Acceptance of deposits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Cost_Records\" title=\"Cost Records\">Cost Records<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Payment_of_applicable_taxes\" title=\"Payment of applicable taxes\">Payment of applicable taxes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/highlights-of-caro-2015\/#Reasons_to_be_stated_for_unfavourable_or_qualified_answers\" title=\"Reasons to be stated for unfavourable or qualified answers\">Reasons to be stated for unfavourable or qualified answers<\/a><\/li><\/ul><\/nav><\/div>\n<h1><\/h1>\n<figure id=\"attachment_9066\" aria-describedby=\"caption-attachment-9066\" style=\"width: 963px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/10\/49.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9066\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/10\/49.png\" alt=\"www.carajput.com; Dep. on Goodwill\" width=\"963\" height=\"350\" \/><\/a><figcaption id=\"caption-attachment-9066\" class=\"wp-caption-text\"><span style=\"color: #0000ff;\"><em><strong><span style=\"text-decoration: underline;\">HIGHLIGHTS OF CARO 2015<\/span><\/strong><\/em><\/span><\/figcaption><\/figure>\n<p style=\"text-align: justify;\"><span style=\"line-height: 1.5;\">After a long wait, MCA has notified the Companies (Auditor\u2019s Report) Order, 2015 (CARO) on 10thApril, 2015. <\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"line-height: 1.5;\">There was a lot of debate amongst professionals as to whether <a href=\"https:\/\/www.caindelhiindia.com\/blog\/wide-coverage-on-companies-auditors-report-order-caro-2016\/\">CARO<\/a> will be applicable for the audit of the financial year 2014- 15.\u00a0 MCA has finally ended the debates by notifying CARO<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><strong>CARO-2015\u00a0<\/strong><\/span>will be applicable\u00a0for the financial year commencing on or after 1st\u00a0April, 2014Applicability\u00a0\u00a0\u00a0 CARO, 2015 shall apply to every company including a foreign company as defined u\/s 2(42)[3]\u00a0of Act, 2013.<\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"i\"><\/span><span style=\"color: #0000ff;\"><strong><span style=\"text-decoration: underline;\">,\u00a0<\/span><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol style=\"text-align: justify;\">\n<li>banking company<\/li>\n<li>an insurance company<\/li>\n<\/ol>\n<ul style=\"text-align: justify;\">\n<li><a href=\"https:\/\/carajput.com\/services\/section-8-company.php\">Section 8 Company<\/a><\/li>\n<\/ul>\n<ol style=\"text-align: justify;\">\n<li><a href=\"https:\/\/carajput.com\/services\/one-person-company-registration.php\">One Person Company<\/a><\/li>\n<li>Small company<\/li>\n<li><a href=\"https:\/\/carajput.com\/services\/private-limited-company-registration.php\">Private limited company<\/a><\/li>\n<\/ol>\n<p style=\"text-align: justify;\">-with a paid up capital and reserves not more than Rs 50 lakh; and which does not have loan outstanding exceeding Rs. 25 lakh from any bank or financial institution;And does not have a turnover exceeding Rs 5 crore at any point of time during the FY.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Matters_to_be_reported_Reporting_on_maintaining_verifying_and_disposing_off_the_fixed_assets\"><\/span><span style=\"color: #0000ff;\"><strong>Matters to be reported<\/strong><\/span><br \/>\n<span style=\"color: #0000ff;\"> <strong>Reporting on maintaining, verifying and disposing off the fixed assets<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">(a) whether the company is maintaining proper records showing full particulars, including quantitative\u00a0details and situation of fixed assets;<\/p>\n<p style=\"text-align: justify;\">(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;<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"_Physical_Verification_and_maintenance_of_records_of_Inventories\"><\/span><span style=\"color: #0000ff;\"><strong>\u00a0Physical Verification and maintenance of records of Inventories<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">(a) whether physical verification of inventory has been conducted at reasonable intervals by the management;<\/p>\n<p style=\"text-align: justify;\">(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;<\/p>\n<p style=\"text-align: justify;\">(c) whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Reporting_on_repayment_of_loans_granted_by_the_Company\"><\/span><span style=\"color: #0000ff;\"><strong>Reporting on repayment of loans granted by the Company<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">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,<\/p>\n<p style=\"text-align: justify;\">(a) whether receipt of the principal amount and interest are alsoregular; and<\/p>\n<p style=\"text-align: justify;\">(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;<\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Internal_control_System\"><\/span><span style=\"color: #0000ff;\"><strong>Internal control System<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\">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\u00a0and services. Whether there is a continuing failure to correct major weaknesses in internal control system.<\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Acceptance_of_deposits\"><\/span><span style=\"color: #0000ff;\"><strong>Acceptance of deposits<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\">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 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 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?<\/p>\n<h4 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Cost_Records\"><\/span><span style=\"color: #0000ff;\"><strong>Cost Records<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: justify;\">Where maintenance of cost records has been specified by central Government under sub-section (l) of section 148 of the Companies Act, whether such accounts and records have been made and maintained.<\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Payment_of_applicable_taxes\"><\/span><span style=\"color: #0000ff;\"><strong>Payment of applicable taxes<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\">(a) is the company regular in depositing undisputed statutory dues including provident fund, employees\u2019 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<\/p>\n<p style=\"text-align: justify;\">II 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.<\/p>\n<p style=\"text-align: justify;\">(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)<\/p>\n<p style=\"text-align: justify;\">(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.<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><strong>Accumulated losses<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">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<\/p>\n<p style=\"text-align: justify;\">and whether it has incurred cash losses in such financial year and in the immediately preceding financial year;<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><strong>Default in repayment of dues<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">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.<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><strong>Guarantee for loan taken<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">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.<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><strong>Applicability of term loan<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">Whether term loans were applied for the purpose for which the loans were obtained<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><strong>Reporting of fraud<\/strong><\/span><\/p>\n<p style=\"text-align: justify;\">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.<\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Reasons_to_be_stated_for_unfavourable_or_qualified_answers\"><\/span><span style=\"color: #0000ff;\"><strong>Reasons to be stated for unfavourable or qualified answers<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\">Where, in the auditor\u2019s report, the answer to any of the questions referred to in paragraph 3 is unfavorable or qualified, the auditor\u2019s report shall also state the reasons for such unfavorable or qualified answer, as the case may be.<\/p>\n<p style=\"text-align: justify;\">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.<\/p>\n<p style=\"text-align: justify;\">The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.<\/p>\n<p style=\"text-align: justify;\">Hope the information will assist you in your Professional endeavors. For query or help, contact: <a href=\"mailto:singh@carajput.com\">singh@carajput.com<\/a>\u00a0or call at \u00a0 \u00a0 \u00a0 9555555480<\/p>\n<p style=\"text-align: justify;\">\n","protected":false},"excerpt":{"rendered":"<p>After a long wait, MCA has notified the Companies (Auditor\u2019s Report) Order, 2015 (CARO) on 10thApril, 2015. There was a lot of debate amongst professionals as to whether CARO will be applicable for the audit of the financial year 2014- 15.\u00a0 MCA has finally ended the debates by notifying CARO CARO-2015\u00a0will be applicable\u00a0for the financial &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[2824,2831,2830,2828,2829,2826,2827],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/133"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=133"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/133\/revisions"}],"predecessor-version":[{"id":18716,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/133\/revisions\/18716"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}