Caro Expectation by MP Vijay PDF

Companies (Auditor’s
Report) Order, 2020

Notified on 25th February, 2020
BRIDGING the EXPECTATION GAP
29/02/20 M P Vijay Kumar FCA 2

INSURANCE !!
The views expressed are those of the presenter and,
therefore, do not necessarily represent the views of
either the Council or any Committee(s)/Board(s) of
the Council of the Institute of Chartered Accountants
of India (ICAI).
M P Vijay Kumar 3
INTRODUCTION
CONTEXT …..
( accounting is accountability )
( accounting is base for tax, governance, credit, investment, sustenance)
(opinion on FS is a communication: should be ONLY truthful and complete)
M P Vijay Kumar FCA 4

• “Throughout the world, there is a great
awareness among citizens in general that every
learned profession should develop a sense of
social purpose and social obligation and this
should be more so in the case of the accounting
profession, which because of the present context
in the country has assumed considerable
importance.
• The Chartered Accountant is a person on whom

every member of the society could rely and rely
strongly. His certificate would be one by way of a
seal and a hall mark of which would inspire
confidence in the minds of all concerned as
certificates by a person fully competent and
holding a charter from the Supreme Legislature of
the country for the purpose.”
M P Vijay Kumar 5
What & Why?
3 slides

Number of
clauses
Retained Clauses 7
7 (Retained) +
Retained – with Changes 7
7 (Modified)
Deleted Clauses 1
Newly Introduced 5
Re-Introduced (2003) 2
7 Newly Added
CARO 2020 21
Sub Clauses 47
• Changing needs of the business and ensure better compliance and governance.
• Less Government and More Governance
• More trust on Auditors by Government for better Governance
• Powerful tool for Auditors to express opinion
Summary of Changes
Newly Added (Clauses) Modified (Clauses) Retained (Clauses) Deleted (clause)
(7) (7) (7)
Transaction Not recorded Managerial

Fixed assets Acceptance of deposits
in Books Remuneration
Ability of Company to meet Maintenance of cost
Inventory
its Liabilities NTM records
Loans ,Investments,
CSR - Transfer of Unspent Repayment of Loans granted by
securities & guarantee’s -
Amount to Fund company
Sec 185 & 186
Statutory Auditor Application of funds
Default in repayment of dues
Resignation raised
CFS : reference to negative
Related Party
remarks in Subsidiary Reporting of frauds
Transactions
CARO
Internal Audit System
Nidhi Company Non-Cash Transactions
(CARO 2003)
Payment of statutory
Cash Loss (CARO 2003) Registration with RBI
dues
Clauses & Sub Clauses increased in CARO 2020
Clause No. No. of Sub-Clauses Clause No. No. of Sub-Clauses
(i) 5 (xii) 3
(ii) 2 (xiii) 1
(iii) 6 (xiv) 2
(iv) 1 (xv) 1
(v) 1 (xvi) 4
(vi) 1 (xvii) 1
(vii) 2 (xviii) 1
(viii) 1 (xix) 1
(ix) 6 (xx) 2
(x) 2 (xxi) 1
(xi) 3
Total Clauses (21) Total Sub Clauses (47)

Applicability
4 slides

APPLICABLE FROM APPLICABLE TO NOT APPLICABLE
Banking company
Financial year commencing on or Every company including a foreign
Insurance company
after 1st April, 2019. company as defined in section
2(42)of the Companies Act,2013. Section 8 company
Government Company One person company

Small company under section
Branch 2(85) of Companies act,2013*
Private companies(subject to
conditions)
Consolidated Financial Statements: Gate opened – report on negative remarks in subsidiaries CARO
*Small Company under the Act shall be exempt even if it falls under any other eligible category.

CARO 2015
Private Company Non-Applicability CARO 2016/ CARO 2020
Any Private Limited Not being a subsidiary /holding

Company of a public company
Any time during the financial year
a. Total loans outstanding < 100 lakhs,

a. Paid up capital, Reserves and b. Total revenue as per Schedule III including
Surplus < 50 Lakhs, revenue from discontinued operations <
b. Total Loans outstanding < 25 lakhs 1000 lakhs, and
and
c. Turnover < 500 lakhs.
As At the Balance sheet date
c. Paid up capital, Reserves and Surplus <100 lakhs

Exemptions to Private Company – No Change from CARO 2016
A private limited company, not being a subsidiary or holding company of a

public company,
a. with a paid up capital and reserves & surplus not more than rupees
one crore as at the balance sheet date
b. which does not have total borrowings exceeding rupees one crore
from any bank or financial institution at any point of time during the
financial year
c. which does not have a total revenue as defined in Scheduled III to the
Companies Act, 2013 (including revenue from discontinuing
operations) exceeding rupees ten crore during the financial year as
per the financial statements.

Terms defined
• Paid up capital includes Equity and Preference Shares and Shares forfeited, but does
not include unpaid calls and share application money.
• Reserves and surplus includes Capital Reserve and Revenue Reserve including
Revaluation Reserve ; adjusted for debit balance in the P&L Account.
• Borrowing shall include short- term, long – term, Non – fund based borrowing, bills
discounted, term loans, credit cards. Any borrowing from any Scheduled Bank,
Cooperative Bank, Foreign Bank, Financial institution (includes NBFC), to be
considered for the limit.
• Revenue is the total revenue disclosed in Schedule III of the Act, including other
income and income from discontinuing operations.

Deleted Clauses
1 slide

Deleted (Clauses)
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, quantify , examine and report the steps taken by company for securing refund
of the same.

New Clauses
7 slides

Re introduced from CARO 2003 (Clauses)
• Internal Audit System: (xiv)
(a) whether the company has an internal audit system commensurate with the size and nature of its
business; (Re-introduced from CARO 2003)
(b) whether the reports of the Internal Auditors for the period under audit were considered by the
statutory auditor; (Newly Added)
• Cash Loss: (xvii)

Whether the company has incurred cash losses in the financial year and in the immediately preceding
financial year, if so, state the amount of cash losses; (Re-introduced from CARO 2003)

Clause on Unrecorded Income (viii)
Whether any transactions not recorded in the books Focus Aspects

of account have been surrendered or disclosed as
income during the year in the tax assessments under Reconciliation with the
the Income Tax Act, 1961 (43 of 1961), if so, whether Financial Statements –
the previously unrecorded income has been current as well as previous
properly recorded in the books of account during periods (in recorded in
the year; current year).
Review of Tax Assessments

Clause on Resignation of Statutory Auditor (xviii)
Whether there has been any resignation of the statutory Focus Aspects
auditors during the year, if so, whether the auditor has taken into • ADT forms filed
consideration the issues, objections or concerns raised by the • Review of reasons
outgoing auditors; mentioned for Resignation
• Documentation of
Communication with
Outgoing Auditor
Documentation of : • Documentation of
• Concerns raised by the Outgoing Auditor – In the Audit Report, Engagement Acceptance
communication before accepting engagement, discussions / (SA 220)
communication with TCWG (by the outgoing Auditor), etc. (concerns • Initial Risk Assessment and
raised need not be in Audit Report alone). Response to Assessed Risks
• Include specifically in MRL that all material concerns/objections (SA 330)
discussed by the outgoing auditor (other than those mentioned in
KAM para) are shared by the Management/BOD/AC.

Clause on capability of meeting its liabilities (xix)
On the basis of the financial ratios, ageing and expected dates of Focus Aspects
realisation of financial assets and payment of financial liabilities, other
Opinion – On date of Audit
information accompanying the financial statements, the auditor’s Report - the ratios, Mgmt &
knowledge of the Board of Directors and management plans, whether Board Plan subsequent to the
the auditor is of the opinion that no material uncertainty exists as on B/S date but before Audit
the date of the audit report that company is capable of meeting its Report – needs to be
liabilities existing at the date of balance sheet as and when they fall considered.
due within a period of one year from the balance sheet date;
For all Liabilities that fall due
Written representation from Management on: within a period of One Year
• Plan for realization of receivables and other financial assets from B/S date.
• BOD documentation of review of Liability position (payable within
one year) and payment Plans
• Include specifically that all material events/transactions post Ex. Receivables evaluation
balance sheet date but before Report date that could impact the after the Balance sheet date
Paying Capacity in the knowledge of the Management/Board has till Audit Report (already
been communicated to the Auditor. included in audit process).

Clause on transfer of CSR unspent amount to fund (xx)
Focus Aspects
(a) whether, in respect of other than ongoing projects, the company • Applicable to Companies
has transferred unspent amount to a Fund specified in Schedule VII to for which CSR provisions
the Companies Act, within a period of six months of the expiry of the apply
financial year in compliance with second proviso to sub-section (5) of • Review of Board Report -
section 135 of the said Act; to identify reasons
• Review of Unspent
Corporate Social
Responsibility Account (on
(b) whether any amount remaining unspent under sub-section (5) of
going Project) – If
section 135 of the Companies Act, pursuant to any ongoing project,
transferred
has been transferred to special account in compliance with the
• Verify Compliance - report
provision of sub- section (6) of section 135 of the said Act;,
non - compliance w.r.t.
transfer of unspent
amount – (Ongoing
Projects & Otherwise)

Clause on CARO remarks of other auditors – CFS (xxi)
Focus Areas
• Summary of CARO
Whether there have been any qualifications or adverse remarks Reporting (modified) of all
by the respective auditors in the Companies (Auditor's Report) Companies included in
Order (CARO) reports of the companies included in the Consolidated FS
consolidated financial statements, if yes, indicate the details of • Only Reference to the
the companies and the paragraph numbers of the CARO report Clause/Para Number – no
specific reporting
containing the qualifications or adverse remarks. requirement to evaluate
the impact.

Modified Clauses
24 slides

Clause on Fixed assets (i)
(a) (A) whether the company is maintaining proper records showing full Focus Areas
particulars, including quantitative details and situation of Property, Plant
and Equipment;
• Additional Reporting on
New* (B) whether the company is maintaining proper records showing full Intangibles assets as well
particulars of intangible assets; • Additional details to be
(b) whether these Property, Plant and Equipment have been physically reported in case property not
verified by the management at reasonable intervals; whether any held in the name of Company
material discrepancies were noticed on such verification and if so, (period, in the name of RP, etc.)
whether the same have been properly dealt with in the books of • Revaluation - Verify basis and
account; report if change more than 10%
• Verify the valuation from
(c) whether the title deeds of all the immovable properties (other than
Registered Valuer was used by
properties where the company is the lessee and the lease
Company – else, report.
agreements are duly executed in favour of the lessee) disclosed in
the financial statements are held in the name of the company, if not,
provide the details thereof in the format below (format provided)

New*
Clause on Fixed assets (i)
(d) whether the company has revalued its Property, Plant and Equipment Focus Areas
(including Right of Use assets) or intangible assets or both during the year
and, if so, whether the revaluation is based on the valuation by a Registered
Valuer; specify the amount of change, if change is 10% or more in the
• Enquire on proceedings/filing
aggregate of the net carrying value of each class of Property, Plant and
against the Company – relating
to property under Benami –
Equipment or intangible assets;
Report in case of any instance
New* identified
(e) whether any proceedings have been initiated or are pending against the
company for holding any benami property under the Benami Transactions • MRL specifically mentioning
(Prohibition) Act, 1988 (45 of 1988) and rules made thereunder, if so, whether that all proceedings/filings
the company has appropriately disclosed the details in its financial statements; against the Company – that is in
the knowledge of the Company
w.r.t. Benami property have
been shared

Fixed Assets CARO 2016 GN Ref. (1/3)
§ ‘Proper records’ not defined in the order; GN guidance:
− Aggregate original cost, depreciation or amortisation to date and impairment loss, if any, under individual heads to tally
with the figures shown in books of accounts
− Not possible to specify any single form; depend upon, number of operating locations, systems of controls etc.
§ Records in the form of electronic FA register to be accepted by auditor if :
− The controls and security measures in the company are such that once finalised, the fixed assets register cannot be
altered
− FA register is in such a form that can be retrieved in a legible form
Maintain adequate documentation evidencing the evaluation of controls that seek to ensure the completeness, accuracy
and inalterability of the register
§ Physical verification is the responsibility of the management: however, the auditor may chose to observe physical
verification
§ FA to be verified at reasonable intervals - factors to be considered include the number of assets, the nature of assets, the
relative value of assets, difficulty in verification, situation and spread of the assets, etc
2
7
§ Term “immovable properties” not defined; GN Guidance:
− Land
− Benefits to arise out of land
− Things attached to the earth or permanently fastened to anything attached to the earth
§ The Order is silent as to what constitutes title deeds . GN provides that the following documents mainly constitute ‘title deeds’
of immovable property :
− Registered sale deed, transfer deed, conveyance deed etc.,

− In case of leasehold land/buildings, the registered lease agreement
§ Title deeds-mortgaged, seek confirmation from the lender or verify information online from state records
§ Disclose immovable properties which have been acquired, but the title is in the process of being transferred
2
8
§ Where title deeds have been lost, certified copies of documents , details about the FIR and a MR may be
obtained
§ In case of disputes, auditor may consider communicating with the legal counsel
§ Reconcile the title deeds with the FAR
2
9
Clause on Inventory (ii)
(a) whether physical verification of inventory has been conducted at reasonable
Focus Areas
New intervals by the management and whether, in the opinion of the auditor, the
*
coverage and procedure of such verification by the management is • New reporting - on the
appropriate; whether any discrepancies of 10% or more in the aggregate for coverage & process of
each class of inventory were noticed and if so, whether they have been verification (adequacy (in terms
properly dealt with in the books of account; of value), class of inventory,
periodicity, etc.)
(b) whether during any point of time of the year, the company has been • New reporting requirement on
New*
sanctioned working capital limits in excess of five crore rupees, in aggregate, 10% or more deviation if
from banks or financial institutions on the basis of security of current assets; identified
• Review quarterly returns /
whether the quarterly returns or statements filed by the company with such
documents filed with Banks/FI
banks or financial institutions are in agreement with the books of account of
– report if discrepancies noted
the Company, if not, give details; with books: encouraged to
prepare Quarterly FS, get the
same reviewed by auditors
quarterly.

Clause on Repayment of Loans granted by company
whether during the year the company has made investments in, provided any Focus Areas
guarantee or security or granted any loans or advances in the nature of loans,
secured or unsecured to companies, firms, Limited Liability Partnerships or any • No stipulation regarding the loan
other parties. If so, being given in cash or in kind.
• Examine agreements.
New*
(a) whether during the year the company has provided loans or provided • File Form MBP-4 – if Directors are
advances in the nature of loans, or stood guarantee, or provided security to interested.
• New Requirement – provide
any other entity [not applicable to companies whose principal business is to
details of such balance O/s at B/S
give loans], if so, indicate- date to Subsidiaries, JV ,
Associates and Others
• (A) the aggregate amount during the year, and balance outstanding at the • Check : Schedule of receipt of
balance sheet date with respect to such loans or advances and guarantees principal and interest has been
or security to subsidiaries, joint ventures and associates. stipulated at the time of sanction
• (B) the aggregate amount during the year, and balance outstanding at the and “regular”.
balance sheet date with respect to such loans or advances and guarantees
or security to parties other than subsidiaries, joint ventures and associates.

(b) whether the investments made, guarantees provided, security given and the Focus Areas
terms and conditions of the grant of all loans and advances in the nature of
loans and guarantees provided are not prejudicial to the company’s interest; • Check : Schedule of receipt of
principal and interest has been
(c) in respect of loans and advances in the nature of loans, whether the stipulated at the time of sanction
schedule of repayment of principal and payment of interest has been stipulated and “regular”.
and whether the repayments or receipts are regular;
(d) if the amount is overdue, state the total amount overdue for more than
ninety days, and whether reasonable steps have been taken by the company
for recovery of the principal and interest;

New*
(e) whether any loan or advance in the nature of loan granted which has fallen Focus Areas
due during the year, has been renewed or extended or fresh loans granted
to settle the overdues of existing loans given to the same parties, if so, • Check : All loan / advance
specify the aggregate amount of such dues renewed or extended or settled by renewals, extension, fresh
fresh loans and the percentage of the aggregate to the total loans or advances issuance – validate – report the
in the nature of loans granted during the year [not applicable to companies aggregate amount.
whose principal business is to give loans];
• Check the Agreements/Contract
New* terms – check repayment
(f) whether the company has granted any loans or advances in the nature of schedule and period – report in
loans either repayable on demand or without specifying any terms or the absence of any of the above
period of repayment, if so, specify the aggregate amount, percentage thereof
to the total loans granted, aggregate amount of loans granted to Promoters, • Report aggregate loan granted to
related parties as defined in clause (76) of section 2 of the Companies Act, Promoters/ RP
2013;

T&C- Prejudicial
Whether terms & conditions of the loans are not prejudicial to company’s interest
• “Terms and conditions” - primarily include rate of interest, security, terms and period of
repayment and restrictive covenants, if any
• Determination of “prejudicial” – includes consideration of

• ability to lend
• terms of loan
• borrower’s financial standing
• credit rating, if available
• the nature of the security
• rate of interest – refer sec 186(7) – minimum prescribed interest rate thresholds
• inquiry under sec 143(1) is also useful

Regular- repayment
Whether the schedule of repayment of principal and payment of interest has been stipulated
and whether the repayments or receipts are regular
• No loan agreement
• Report absence
• ‘Regular’ implies receipt when due

• If auditee company is a NBFC refer to Prudential Norms issued by RBI
• Non-stipulation of schedule of repayment of principal & payment of Interest

• State the fact and report

Past due reporting
If the amount is overdue, state the total amount overdue for more than 90
days, and whether reasonable steps have been taken by the company for
recovery of the principal and interest.
• verify repayments compliance with agreement
• disclose the aggregate of the total amount of overdue for more than 90 days in respect of
loans granted to such parties
• reasonable steps taken by the company

• consider the facts and circumstances of each case, including the amounts involved
• not necessary that steps to be taken must necessarily be legal steps
• ask the management to give in writing, the steps which have been taken

Clause on Default in repayment of dues (ix)
(a) whether the company has defaulted in repayment of loans or other

borrowings or in the payment of interest thereon to any lender, if yes, the Focus Areas
period and the amount of default to be reported as per the format below:- • Obtain schedule of
(table specified). repayments
New* • Check repayments are in
(b) Whether the company is a declared wilful defaulter by any bank or accordance with the terms
financial institution or other lender? and conditions of the
agreement.
(c) Whether term loans were applied for the purpose for which the loans were • Obtain balances confirmation.
obtained; if not, the amount of loan so diverted and the purpose for which it • In case of dispute between
is used may be reported. (Reintroduced) company and lender , the
auditor may give a brief nature
(d) whether funds raised on short term basis have been utilised for long term
purposes? If yes, the nature and amount to be indicated. (Reintroduced) of the dispute while reporting.

Clause on Default in repayment of dues (ix)
New*
(e) whether the Company has taken any funds from any entity or person on
Focus Areas
account of or to meet the obligations of its subsidiaries, associates or
• Obtain details of all funds
joint ventures? If so, details thereof with nature of such transactions and the
received
amount in each case
New* • Check details of all payments
(f) whether the company has raised loans during the year on the pledge of made to subsidiaries,
securities held in its subsidiaries, joint ventures or associate companies, Associates or JV in the period
if so, give details thereof and also report if the company has defaulted in – and the reason
repayment of such loans raised; • Report if the funds taken vs
paid to subsidiaries, etc. are
mapped.
• Obtain details of fund raised
by way of pledge – report if
the same is by way of shares
of subsidiaries, JV, etc.

Key Terms
• “Borrowings” may be construed as the principal amount since it has been used in the context of the
word “repayment“
• “Dues” would mean the principal and the interest
• “Default” – non payment on due date ( last date given)
• Banks/FIs/ Government – Repayment of loan/ borrowings
• Debenture holders – Dues
• Financial Institution” includes a scheduled bank, and any other financial institution defined or
notified under the Reserve Bank of India Act, 1934
• “Government” means the department of the Central Government, a State Government and its
department and a Union Territory and its department, but shall not include any entity, whether
created by a statute or otherwise
..

Check list
• Schedule of repayments of Borrowings - Agreement
• Review Debenture trust deed.
• Obtain the confirmation of the concerned bank or financial institution as to the status of the
loan account including the overdue position as at the balance sheet date
• Application for restructuring proposals to the lenders, may be in different stages of processing.
Submission of application does not mean that no default has occurred
• Report lender wise the period and amount of all defaults existing at the balance sheet date
irrespective of when those defaults have occurred.
• Disputes between the company and the lender on certain issues relating to repayments - the
auditor should consider the prevailing terms and conditions only

Clause on Reporting of frauds (xi)
(a) whether any fraud by the company or any fraud on the company has been
Focus Areas
noticed or reported during the year, if yes, the nature and the amount
involved is to be indicated; • Examine the reports of the
New* internal auditor.
(b) whether any report under sub-section (12) of section 143 of the Companies
• In case if any fraud has been
Act has been filed by the auditors in Form ADT-4 as prescribed under rule noticed and reported to Central
13 of Companies (Audit and Auditors) Rules, 2014 with the Central Govt through form ADT 4 – the
Government; same shall be reported
New* • Obtain whistle blower
(c) whether the auditor has considered whistle-blower complaints, if any, complaints and evaluate for
received during the year by the company fraud related compliants –
action taken, etc.
• Obtain written representations
from management.

Fraud on or by the company
• Auditor to report on frauds noticed or reported during the year

• Auditor to consider whether frauds reported under sec 143(12) to the CG also to be reported
here- only noticed frauds and not suspected frauds
• Fraud committed during the year and rectified during the year also to be reported
• Fraud committed by third parties / vendors on the company need NOT be reported if there is
no involvement of officers or employees of the company
• GN for CARO 2016 provides that materiality of fraud to be considered while reporting

42
Clause on Nidhi Company (xii)
(a) whether the Nidhi Company has complied with the Net Owned Funds to Highlights from GN 2016
Deposits in the ratio of 1:20 to meet out the liability; • Management to provide the
computation of the deposit
(b) whether the Nidhi Company is maintaining ten per cent. unencumbered liability and net-owned funds.
term deposits as specified in the Nidhi Rules, 2014 to meet out the Deposit Liability
liability; FD, RD and SB account accepted
New
*
from its members in accordance
(c) whether there has been any default in payment of interest on
with the directions notified by the
deposits or repayment thereof for any period and if so, the details CG.
thereof; Net owned funds
Aggregate of paid up equity share
capital and free reserves as
Obtain the repayment schedule and check for repayment of deposits, interest, reduced by accumulated losses and
etc. – Report if default is identified for any period. intangible assets appearing in the
last audited balance sheet.

Clause on Registration with RBI
(a) Whether the company is required to be registered under section 45-IA of Focus Areas
the Reserve Bank of India Act, 1934 and if so, whether the registration • Examine transaction related to
has been obtained. activities covered under RBI Act
New * and directions related to NBFC.
(b) whether the company has conducted any Non-Banking Financial or Housing
• Net owned funds as required
Finance activities without a valid Certificate of Registration (CoR) from the
for the registration as NBFC
Reserve Bank of India as per the Reserve Bank of India Act, 1934;
New* • Report if registration is
(c) whether the company is a Core Investment Company (CIC) as defined in the required under section 45IA of
regulations made by the Reserve Bank of India, if so, whether it continues to the RBI Act and the same is
obtained, if not , the reasons
fulfil the criteria of a CIC, and in case the company is an exempted or
for not obtaining.
unregistered CIC, whether it continues to fulfil such criteria;
New* • Check the products / services /
(d) whether the Group has more than one CIC as part of the Group, if yes,
activities carried out by the
indicate the number of CICs which are part of the Group; Company – check with requisite
criteria/registration as required
by RBI – report if not complied.

RBI Directives
• NBFC/ HF need to obtain the certificate of registration.

• If Registration is not obtained, the reasons should be sought from the management and documented
• Report existence or absence of registration as the case may be
• Examine the transactions of the company with relation to the activities covered under the RBI Act and directions
related to the Non-Banking Finance companies
• Examine FS to ascertain whether:

• Company’s financial assets constitute more than 50 per cent of the total assets and income from financial
assets constitute more than 50 per cent of the gross income.
• company has net owned funds as required for the registration as NBFC

“No profession can aspire to progress unless it
has a vision and sets service to the community as
its objective.
It has also to be free from restraints and allow for

the economic advancement of its entire
membership. Its resilience and practice to
respond to the changing situation and growing
demands on it will determine its continued
existence and growth.
Technical excellence in the performance of its

functions and observance of the highest in
professional ethics constitutes the foundation on
which its future can be built up”
M P Vijay Kumar46
My take on winds of change ?
• Data is connected from the source to the ledger via cloud-based applications. Accounting is morphing
into what economists call "interaction jobs", where technical knowledge is assumed and higher value is
applied to a person's ability to interact with internal and external clients, identify problems, come up
with alternative solutions, determine which are affordable at this point in time and communicate and
influence to deliver an outcome.
• The successful accountants of the future will be strong communicators, possess greater IT skills
combined with strategic vision and they will be devoted to ongoing professional development.
Globalisation is the future of accounting as more and more businesses require real-time
manufacturing and information, mobile marketing and online tools, including the cloud, to expand
their customer base internationally. Thus accounting, auditing and finance professionals with
knowledge of international standards and regulations will thrive.
• ICAI is geared to this reality and 34 overseas chapters of ICAI is a testimony apart from embracing
International accounting and assurance standards. Indian Chartered Accountants, thanks to the
rigorous training and enviable forward looking curriculum, possess right insights and foresight to
overcome challenges and make the best use of the opportunities.
M P Vijay Kumar
Thank You
reachable at ,mpv@icai.org
Follow ICAI on Social Media -

http://www.icai.org/followus
IMA - CFO FORUM 4/13/18 48

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Companies (Auditor’s

Report) Order, 2020

BRIDGING the EXPECTATION GAP

29/02/20 M P Vijay Kumar FCA 2

(opinion on FS is a communication: should be ONLY truthful and complete)

M P Vijay Kumar FCA 4

• The Chartered Accountant is a person on whom

29/02/20 M P Vijay Kumar FCA 6

Transaction Not recorded Managerial

Total Clauses (21) Total Sub Clauses (47)

29/02/20 M P Vijay Kumar FCA 9

29/02/20 M P Vijay Kumar FCA 10

Government Company One person company

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Any Private Limited Not being a subsidiary /holding

Any time during the financial year

a. Total loans outstanding < 100 lakhs,

c. Paid up capital, Reserves and Surplus <100 lakhs

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A private limited company, not being a subsidiary or holding company of a

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• Cash Loss: (xvii)

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Whether any transactions not recorded in the books Focus Aspects

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§ ‘Proper records’ not defined in the order; GN guidance:

§ Records in the form of electronic FA register to be accepted by auditor if :

§ Term “immovable properties” not defined; GN Guidance:

− Benefits to arise out of land

− Registered sale deed, transfer deed, conveyance deed etc.,

§ Reconcile the title deeds with the FAR

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• Determination of “prejudicial” – includes consideration of

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• ‘Regular’ implies receipt when due

• Non-stipulation of schedule of repayment of principal & payment of Interest

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• reasonable steps taken by the company

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(a) whether the company has defaulted in repayment of loans or other

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• Review Debenture trust deed.

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• Auditor to report on frauds noticed or reported during the year

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