Companies Auditor Report Order, 2003

Applicability of CARO, 2003Applicable to each and every

company whether listed or not including Foreign Companies i.e. any company incorporated outside India but having a place of business in India.

Whereas it is not applicable to (a) Banking Companies, (b) Insurance Companies, ( c) Companies under section 25 of companies act, 1956 and Private companies(if).

Applicability to Private CompanyPaid Up Capital plus Free

reserves are more than 50 lakhs at any point of time during the financial year.

Loan from any financial institute during the year at any point of time is more than 25 lakhs.

Gross turnover for the year is more than 5 crore.

Matter to be Reported in CARO, 2003Fixed Asset1. Physical Verification2. Proper Records, Full disclosure with

quantitative details3. Sale of Substantial part. Inventory1. Physical Verification2. Adequate Procedure for Physical

Verification3. Proper Records with quantitative

details.

Loan to/From Related Parties1. Number of Parties And Amount

Involved2. Conditions are prima facie prejudicial

in favor of company3. Regular payment of principle and

interest.4. If outstanding installment amount to

Rs.1 Lakhs or more than reasonable steps to be taken (in case of loan given only)

Internal Control1. Adequate Internal Control as per

Nature and Size of Business. Proper Recording Of

transactions with related parties1. Whether properly recorded in a

separate register.2. Transactions are done reasonable

price as per market conditions.

Statutory Dues1. Regular deposit of undisputed dues.2. Outstanding Dues.3. If dispute on account of dues then

amount and forum where dispute is pending.

Accumulated Losses and Cash Losses

1. Any Cash Loss2. Accumulated Losses After Five Years Of

Incorporation

Default In Payment Of Loans1. Whether the company has defaulted in

payment of loans from financial institution.

Loans granted on pledge of shares of debenture

1. Adequate are maintained. Chit Funds/Nidhi’s/Mutual Funds1. Whether special statutes of chit funds are

complied with.2. Rules in respect of Nidhi and Mutual Funds

are complied with or not.

Company Dealing Shares, Debentures and other investments

1. Timely Entries2. Held in own name of company or not.3. If any granted under section 49 of the

Act. Whether the company given

guarantee1. Whether company give guarantee for

other to bank.2. Condition are favorable for company.

Term are applied for the purpose for which the loans are take.

Whether Short term loans are used for long term.

Whether any preferential allotment of shares are made to related parties.

Whether securities or charge is created in respect of debenture issued.

Whether the management disclosed the end use of money raised by public issue and the same is being verified.

Whether any type of fraud on or by the company is noticed or reported.

Thank You

Presented by:-Yash GoyalPuneet Bohara