MAJOR CHANGES IN CARO 2020

MAJOR CHANGES IN CARO 2020

1)     PROPERTY PLANT AND EQUIPMENT

a)      Maintaining the proper records showing full particulars of Intangible assets is also mandated along with Property, Plant and Equipment.

b)     When the title deeds of any immovable properties are not held in the name of the Company, details thereof need to be given in the following format.

Description of the Property	Gross Carrying value	Held in the name of		Period Held	Reason for not being held in the name of the Company

c)      If the Property, Plant and equipment or Intangible assets are revalued, auditor is required to verify whether such revaluation was done by Registered Valuer. If there is a change by more than 10% of net carrying value of each class of Property, Plant and equipment or Intangible assets, such amount also to be disclosed.

d)     Auditor is required to comment on whether any proceedings have been initiated or are pending against the Company for holding Benami Property.

2)     PHYSICAL VERIFICATION OF INVENTORY

a)      Auditor is required to comment, whether the coverage and procedure followed for Inventory verification is appropriate.

b)     When there are any discrepancies of 10% or more in aggregate for each class of inventory, manner in which the same has been dealt in books of accounts also need to be mentioned.

c)      When a Company has been sanctioned Working Capital loan in excess of Rs. Five Crores in aggregate from banks and financial institution, auditor is required to comment whether the Quarterly returns/statements filed by Company with such bank/financial institutions are in agreement with books of account.  If there are discrepancies, auditor need to give details thereof.

3)     LOANS AND ADVANCES

a)      Earlier, auditor was required to verify whether loans granted to parties covered in the register maintained under section 189 of the Companies Act. Now, the coverage is enlarged. Not only the loans but also Investments, guarantee, security given to any Companies, Firms, LLPs and other parties are covered.

b)     The aggregate amount of investments, loans, guarantee, security given and balance outstanding at the balance sheet date to subsidiaries, Joint Venture and Associates and to parties other than subsidiaries, Joint Ventures and Associates also need to be disclosed.

c)      If the terms and conditions of investments made, loans given, security or guarantee given are detrimental to the interest of the Company.

d)     Whether repayment of principal and interest is regular

e)      If the amount is overdue for more than 90 days, whether the Company has taken reasonable steps to recover the principal and interest.

f)      If existing loans are renewed, extended or fresh loans has been granted to settle the overdues, then the aggregate of such renewed, extended or fresh loans and also percentage of such loans to total loans need to be given.

g)     Where loans are given which are repayable either on demand or for which repayment terms are not specified, then aggregate amount of such loans and also percentage of such loans to total loans granted need to be stated. The loans given to promotors and related parties defined under section 2(76) are also need to be stated.

4)     INCOME OFFERED UNDER INCOME TAX ACT, 1961

a)     Where any transactions which are not recorded in the books of account but has been disclosed as income during the course assessments under the Income Tax Act, 1961 the fact must be stated and also how such transactions are dealt in the books of accounts of the Company during the current year under report also need to be stated.

5)     Borrowings

a)      Default in repayment of loans and advances need to be given in the following manner.

Nature of borrowing, including debt securities	Name of lender	Amount not paid on due date	Whether principal or interest	No. of days delay or unpaid	Remarks, if any

b)     If the company is declared as a wilful defaulter by any banks/financial institution or other lender the fact must be stated.

c)     whether term loans were applied for the purpose for which the loans were obtained; if not, the amount of loan so diverted and the purpose for which it is used may be reported.

d)     whether funds raised on short-term basis have been utilised for long-term purposes.

e)     whether the company has taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures, if so, details thereof with nature of such transactions and the amount in each case;

f)      whether the company has raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies, if so, give details thereof and also report if the company has defaulted in repayment of such loans raised.

6)     FRAUD REPORTING

g)     whether any report under sub-section (12) of section 143 of the Companies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government;

h)     whether the auditor has considered whistle-blower complaints, if any, received during the year by the company.

7)     NIDHI COMPANY

a)     whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability.

b)     whether there has been any default in payment of interest on deposits or repayment thereof for any period and if so, the details thereof.

8)     NEWLY ADDED CLAUSES

a)     whether the company has an internal audit system commensurate with the size and nature of its business.

c)     whether the reports of the Internal Auditors for the period under audit were considered by the statutory auditor.

d)     whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether the provisions of section 192 of Companies Act have been complied with

e)     whether the company is a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India, if so, whether it continues to fulfil the criteria of a CIC, and in case the company is an exempted or unregistered CIC, whether it continues to fulfil such criteria;

f)      whether the Group has more than one CIC as part of the Group, if yes, indicate the number of CICs which are part of the Group;

g)     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;

h)     whether there has been any resignation of the statutory auditors during the year, if so, whether the auditor has taken into consideration the issues, objections or concerns raised by the outgoing auditors;

i)      on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, the auditor’s knowledge of the Board of Directors and management plans, whether the auditor is of the opinion that no material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet  as and when they fall due within a period of one year from the balance sheet date.

j)      whether, in respect of other than ongoing projects, the company has transferred unspent amount to a Fund specified in Schedule VII to the Companies Act within a period of six months of the expiry of the financial year in compliance with second proviso to sub-section (5) of section 135 of the said Act;

k)     whether any amount remaining unspent under sub-section (5) of section 135 of the Companies Act, pursuant to any ongoing project, has been transferred to special account in compliance with the provision of sub-section (6) of section 135 of the said Act.

l)      whether there have been any qualifications or adverse remarks by the respective auditors in the Companies (Auditor's Report) Order (CARO) reports of the companies included in the consolidated financial statements, if yes, indicate the details of the companies and the paragraph numbers of the CARO report containing the qualifications or adverse remarks.