Matters to be Included under CARO, 2003-A Checklist The CARO, 2003 has also specified the matters to be included

in the auditors report of various companies. The auditors report on the account of a company to hich this Order applies shall include a statement on the matters, as specified in para!raphs " and of CARO, 2003. #very report made by the auditor under section 22$ of Companies Act, %&'( on the accounts of every company e)amined by him to hich this Order applies for every financial year endin! on any day on after the commencement of this Order *vi+. for audit report for the year ended 3%.03.200", shall contain the matters specified in para!raphs " and '. -n this part, have discussed the all the matters to be included in the auditors report under the CARO, 2003 in a reader friendly manner. 1. Fixed assets %. 2. 3. .hether the company is maintainin! proper records sho in! full particulars, includin! /uantitative details and situation of fi)ed assets. .hether the mana!ement at reasonable intervals has physically verified these fi)ed assets. .hether any material discrepancies ere noticed on such verification and if so, hether the same have been properly dealt ith in the boo0s of account. -f a substantial part of fi)ed assets have been disposed off durin! the year, hether it has affected the !oin! concern.

". 2.

In entor! %. 2. .hether physical verification of inventory has been conducted at reasonable intervals by the mana!ement. Are the procedures of physical verification of inventory follo ed by the mana!ement reasonable and ade/uate in relation to the si+e of the company and the nature of its business1 -f not, the inade/uacies in such procedures should be reported. .hether the company is maintainin! proper records of inventory. .hether any material discrepancies ere noticed on physical verification and if so, hether the same have been properly dealt ith in the boo0s of account.

3. ". '.

3.

"oans taken#$ranted

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2as the company either !ranted or ta0en any loans, secured or unsecured to3 from companies, firms or other parties covered in the re!ister maintained under section 30% of the Act. -f so, !ive the number of parties and amount involved in the transactions. .hether the rate of interest and other terms and conditions of loans !iven or ta0en by the company, secured or unsecured, are prima facie pre4udicial to the interest of the company. .hether payment of the principal amount and interest are also re!ular. -f overdue amount is more than one la0h, hether reasonable step have been ta0en by the company for recovery 3 payment of the principal and interest.

2. 3.

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Internal control %. -s there an ade/uate internal control procedure commensurate ith si+e of the company and the nature of its business, for the purchase of inventory and fi)ed assets and for the sale of !oods1 .hether there is a continuin! failure to correct ma4or control. ea0ness in internal

2. &.

'ection 301 %. 2. 3. .hether transactions that need to be entered into a re!ister in pursuance of section 30% of the Act have been so entered. .hether each of these transactions have been made at prices hich are reasonable havin! re!ard to the prevailin! mar0et prices at the relevant time. This information is re/uired only in case of transactions e)ceedin! the value of five la0h rupees in respect of any party and in any one financial year.

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)e*osits +ro, *ublic %. -n case the company has accepted deposits from the public, hether the directives issued by the Reserve 5an0 of -ndia and the provisions of sections '6A and '6AA of the Act and rules framed there under, here applicable, have been complied ith. -f not, the nature of contraventions should be stated. -f an order has been passed by Company 7a same has been complied ith or not. 5oard hether the

2. 3. -.

"isted co,*anies

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.hether the company has as internal audit system commensurate ith its si+e and nature of its business. This is to be reported in the case of follo in! companies8 9 *i, *ii, All listed companies and 3 or, Other companies havin! a paid9up capital and reserves e)ceedin! Rs. '0 la0h as at the commencement of the financial year concerned, or Other companies havin! an avera!e annual turnover e)ceedin! five crore rupees for a period of three consecutive financial years immediately precedin! the financial year concerned.

*iii,

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Cost records %. .hether maintenance of cost records has been prescribed by the Central :overnment under clause *d, of sub9section *%, of section 20& of the Act. -f so, maintained. hether such accounts and records have been made and

2. /.

'tatutor! dues %. -s the company re!ular in depositin! undisputed statutory dues includin! ;rovident <und, -nvestor #ducation and ;rotection <und, #mployees =tate -nsurance, -ncome ta), =ales9ta), .ealth9ta), Custom >uty, #)cise >uty, Cess and any other statutory dues ith the appropriate authorities. -f not, the e)tent of the arrears of outstandin! statutory dues as at the last day of the financial year concerned for a period of more than si) months from the date they became payable, shall be indicated by the auditor. -n case dues of sales9ta) 3 income9ta) 3 custom ta)3 ealth9ta)3 e)cise duty3cess have not been deposited on accounts involved and the forum here dispute is pendin! may please be mentioned. <or this purpose, a mere representation to the >epartment shall not constitute the dispute.

2.

3.

". 10.

Accu,ulated losses#cash losses %. 2. .hether the company is a company, period not less than five years. hich has been re!istered for a

-n such a case, hether its accumulated losses at the end of the financial year are not less than fifty per cent of its of its net orth.

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.hether it has incurred cash losses in such financial year and in the financial year immediately precedin! such financial year also.

)e+ault in re*a!,ent o+ dues %. 2. .hether the company has defaulted in repayment of dues to a financial institution or ban0 or debenture holders1 -f yes, the period and amount of default to be reported.

12.

"oans and ad ances %. .hether ade/uate documents and records are maintained in cases here the company has !ranted loans and advances on the basis of security by ay of pled!e of shares, debentures and other securities1 -f not, the deficiencies to be pointed out.

2. 13.

'*ecial statute-Chit +und co,*anies %. 2. .hether the provisions of any special statute applicable to chit fund have been duly complied ith1 -f not, the nature of contraventions should be stated.

1%.

0idhi# ,utual bene+it +und# societies-s*ecial as*ects %. %820 2. .hether the net o ned funds to deposit liability ratio is more than as on the date of balance sheet.

.hether the company has complied ith the prudential norms on income reco!nition and provisionin! a!ainst sub9standard 3 default 3 loss assets. .hether the company has ade/uate procedures for appraisal of credit proposals 3 re/uests, assessment of credit needs and repayment capacity of the borro ers. .hether the repayment schedule of various loans !ranted by the nidhi is based on the repayment capacity of the borro er and ould be conducive to recovery of the loan amount.

3.

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1&.

Financin$ co,*anies- '*ecial as*ects %. 2. 3. -f the company is dealin! or tradin! in shares, securities, debentures and other investments the auditor has to consider the certain additional points. .hether proper records have been maintained of the transactions and contracts. .hether timely entries have been made therein.

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.hether the shares, securities, debentures and other securities have been held by the company, in its o n name e)cept to the e)tent of the e)emption, if any, !ranted under section "& of the Act.

1(.

1uarantee +or loans %. .hether the company has !iven any !uarantee for loans ta0en by others from ban0 or financial institutions, the terms and conditions here of are pre4udicial to the interest of the company.

1-.

2er, loans %. .hether term loans ere applied for the purpose for hich the loans ere the loans ere obtained.

1..

3sa$e o+ +unds %. 2. 3. .hether the funds raised on short9term basis have been used for lon! term investment. .hether the funds raised on lin!9term basis have been used for short term investment. -f yes, the nature and amount is to be indicated.

1/.

4re+erential allot,ents %. .hether the company has made any preferential allotment of shares to parties and companies covered in the Re!ister maintained under section 30%of the Act. -f so hether the price at hich shares have been issued is pre4udicial to the interest of the company.

2. 20.

Creation o+ securities %. issued1 .hether securities have been created in respect of debentures

21.

)isclosure o+ end use o+ +unds %. .hether the mana!ement has disclosed on the end use of money raised by public issues and the same has been verified1

22.

Frauds %. 2. .hether any fraud on or by the company has been noticed or reported durin! the year1 -f yes, the nature and the amount involved is to be indicated.

23.

Others

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.here, in the auditors report, the ans er to any of the /uestions referred to in para!raph " is unfavourable or /ualified, the auditors report shall also state the reasons for such unfavourable or /ualified ans er, as the case may be. .here the auditor is unable to e)press any opinion in ans er to a particular /uestion, his report shall indicate such fact to!ether ith the reasons hy it is not possible for him to !ive an ans er to such /uestion.

2.