| Comparative Chart of CARO 2016 (for public comments) Vs CARO 2015 | |||
| Title | CARO 2016 (Proposed) | CARO 2015 | Remarks |
| Applicability | Every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act.] | Every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act.] | Retained |
| Exceptions | Banking Company, Insurance Company, Section 8 Company, Small Company, One Person Company and a Private limited company, not being a subsidiary or holding of a public company, having a paid up capital and reserves and surplus not more than Rs 1 Crore as at the balance sheet date and which does not have total borrowings exceedingRs 1 Crore from any bank or financial institution at any point of time during the financial yearand which does not have a total revenue as defined in Scheduled III to CA 2013 (including revenue from discontinuing operations)exceeding Rs 10 crores during the FY as per the financial statements. | Banking Company, Insurance Company, Section 8 Company, Small Company, One Person Company and Private Companies (with a paid up capital and reserves not more than Rs.50 lacs and which does not have loan outstanding exceeding Rs.25 lacs from any bank or financial institution and does not have a turnover exceeding Rs.5 crores at any point of time during the financial year. | |
| Commencement | From the date of publication in the official gazette. (Proposed) | Notified on 10th April, 2015. Was effective for FY 2014-15 | – |
| Auditor’s Report to contain matters | Every report made by the auditor under section 143 of the Companies Act, 2013 on the accounts of every company examined by him to which this Order applies for the financial year commencing on or after 1st April, 2015, shall contain the matters specified in paragraphs 3 and 4.(given in the following paragraphs). Not to apply to auditor’s report on CFS. | Every report made by the auditor under section 143 of the Companies Act, on the accounts of every company examined by him to which this Order applies for the financial year commencing on or after 1st April, 2014, shall contain the matters specified in the paragraphs 3 and 4 (given in the following paragraphs) | |
| Matters to be included in the Auditor’s Report | |||
| Fixed Assets & immovable Properties | Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets | Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets | Retained |
| 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 | 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 | Retained | |
| Whether title deeds of immovable properties are held in the name of the company. If not, provide details thereof |
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| Inventory | Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed
and if so, how they have been dealt with in the books of account |
Whether physical verification of inventory has been conducted at reasonable intervals by the management | |
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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 | Deleted | |
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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 | Deleted & Partly Merged in the first clause pertaining to inventory | |
| Loans | Whether the company has granted any loans, secured or unsecured to companies, firms or other partiescovered by clause (76) of Section 2 of the Companies Act, 2013. If so: | 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 | |
| Whether the terms and conditions of the grant of such loans are not prejudicial to the interest of the company? |
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| Whether receipt of the principal amount and interest are regular. If not provide details thereof | Whether receipt of the principal amount and interest are also regular | ||
| If overdue amount is more than Rs 5 lacs, whether reasonable steps have been taken by the company for recovery of the principal and interest | If overdue amount is more than Rs.1 lac, whether reasonable steps have been taken by the company for recovery of the principal and interest | ||
| Internal Control | 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 | 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 | Retained |
| Compliance of Sec 185 and 186 of the Companies Act, 2013 | In respect of loans, investments and guarantees, whether provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof. |
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| Deposits | 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 such contraventions 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? | 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? | Retained |
| Cost Record | 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 so made and maintained | 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 | Retained |
| Statutory Dues | 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, cessand 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 | 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 | |
| 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 cesshave 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) | 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) | ||
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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 there under has been transferred to such fund within time | Deleted | |
| Extent of Accumulated Losses |
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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 | Deleted |
| Repayment of Dues | 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 (in case of banks and financial institutions, lender wise details to be provided). | 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 | |
| Guarantee by the Company |
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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 | Deleted |
| Moneys Raised through Public Issues & Term Loans-Application | Whether moneys raised by way of public issue/ follow-on offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not, the details together with delays / default and subsequent rectification, if any, as may be applicable, be reported | Whether term loans were applied for the purpose for which the loans were obtained | |
| Fraud | Whether any fraud by the company or any fraud on the Company by its officers/employees has been noticed or reported during the year; If yes, the nature and the amount involved be indicated. | 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 | |
| Managerial Remuneration | Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with
Schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same. |
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| Requirements by a Nidhi Company | Whether the Nidhi Company has complied with the Net Owned Fund in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% liquid assets to meet out the unencumbered liability |
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| Related Party Transactions | Whether all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc as required by the accounting standards and Companies Act, 2013. |
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| Preferential Allotment/ Private Placement | Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details thereof. |
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| Non Cash Transactions with specified person(s) | Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether provisions of Section 192 of Companies Act, 2013 have been complied with. |
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Reasons to be stated for unfavourable or qualified answers
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Where, in the auditor’s report, the answer to any of the questions referred above 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, in the auditor’s report, the answer to any of the questions referred to above is unfavourable or qualified, the auditor’s report shall also state the reasons for such unfavourable or qualified answer, as the case may be | Retained |
| Where the auditor is unable toexpress any opinion on any specified matter, his report shall indicate such fact together with the reasons as to why it is not possible for him to give hisopinion on the same. | 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. | ||