DPNC Insight

CARO 2016 Vs 2015

COMPANIES AUDITORS REPORT ORDER (CARO) 2016

- Changes in CARO 2016 as compared to CARO 2015

Applicability

Changes in CARO 2016 shall not be applicable to

Changed/
Removed/ New
Changed

Description

Remarks

A private limited company, not

Changes only in respect of
being a subsidiary or holding
applicability of CARO 2016 on
company of a public company,
Private limited company
having a paid up capital and
reserves and surplus not more than
rupees one crore as on the balance
sheet date and which does not have
total borrowings exceeding rupees
one crore from any bank or FI at any
point of time during the financial
year and which does not have a total
revenue as disclosed in Scheduled
III to the Companies Act, 2013
exceeding rupees ten crore during
the financial year

Inventory
Changed/
Removed/ New
Changed

Description

Remarks

Whether physical verification of

inventory has been conducted at
reasonable intervals by the
management and if any
discrepancies noticed are properly
dealt with or not

The requirement has been

curtailed to physical verification
and treatment of discrepancies
noticed. The auditor does not
need to report for physical
verification procedure and
records maintained by the
company for inventories

Loan Granted by Company

Changed/
Removed/ New
Changed

Description

Remarks

Whether the schedule of repayment The new CARO 2016 provides

is stipulated, whether the repayment for the term and conditions of
is regular or not.
loan provided.
Whether the term and conditions of
the grant of such loan are prejudicial The new CARO 2016 provides
to the interest of the company
for overdue payment for more
than
90
days
instead
If the amount is overdue, then state outstanding of amount above
the amount over due for more than the threshold limit of 1 lac
90 days and what steps company has
followed.

Statutory Dues
Changed/
Removed/ New
Changed

Description

Remarks

Whether the company is regular in

depositing undisputed statutory
dues
including
provident
fund,employees' state insurance,
income-tax, sales-tax, service tax,
duty of customs, duty of excise, value
added tax, cess and any other
statutory dues to the appropriate
authorities and if not, the extent of
the arrears of outstanding statutory
dues as on 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;

Same as CARO 2015 except - No

more requirement on reporting
of IEPF (Investor Education and
Protection fund)

where dues of income tax or sales tax

or service tax or duty of customs or
duty of excise or value added tax
have not been deposited on account
of any dispute, then the amounts
involved and the forum where
dispute is pending shall be
mentioned.(Amere representation
to the concerned Department shall
not be treated as a dispute).

Default in Repayment of Borrowings

Changed/
Removed/ New
Changed

Description

Remarks

Whether the company has defaulted

in repayment of loans or borrowing
to a financial institution, bank,
government or dues to debenture
holders? If
yes, the period and amount of default
to be reported (in case of defaults to
banks, financial institutions, and
government, lender-wise details to
be
provided);

Reporting also required of

default of Loan or Borrowing
taken from Government. It is
also required to report the
default lender wise.

Fund Utilization
Changed/
Removed/ New
Changed

Description

Remarks

Whether moneys raised by way of

initial public offer or further public
offer (including debt instruments)
and term loans were applied for the
purposes for which those are raised.
If not, the details together with
delays or default and subsequent
rectification, if any, as may be
applicable, be reported;

Utilization of money raised,

whether used for intended
purpose or not and why not, to
be reported.

Description

Remarks

Whether any fraud by the company

or any fraud on the company by its
officers or employees has been
noticed or reported during the year;
If yes, the nature and the amount
involved is to be indicated.

Reporting on fraud on the

company is now restricted to
fraud committed on it by the
officer or employees of the
company.

Fraud
Changed/
Removed/ New
Changed

Internal Control
Changed/
Removed/ New
Removed

Description

Remarks

Clause removed

No Clause on Internal Control

Reporting on Accumulated Losses & Cash Losses

Changed/
Removed/ New
Removed

Description

Remarks

Clause removed

No Clause on Accumulated
Losses and Cash Losses

Guarantees given by Company

Changed/
Removed/ New
Removed

Description

Remarks

Clause removed

No Clause on Guarantees given

by company.

Description

Remarks

Whether the company holds title of

immovable property held by the
company, If not provides the details
thereof

New CARO 2016 demands

additional reporting for such
immovable assets whose titles
are not owned by the company.

Heading

Description

Fixed Assets
Changed/
Removed/ New
New

New Clauses
Changed/
Removed/ New
New

Reporting on compliance of Section In respect of loans, investments,

185 & 186 of the Companies Act guarantees
and
security
2013
whether provisions of section
185 and 186 of the Companies
Act 2013 have been complied
with. If not, provide the details
thereof.

Managerial remuneration

Whether
managerial
remuneration has been paid or
provided in accordance with the
requisite approvals mandated
5

by the provisions of section 197

read with schedule V to the
Companies Act? If not, the
amount involved and steps
taken by the company for
securing refund of the same.
Changed/
Removed/ New
New

Heading

Description

Reporting on Nidhi Company

whether the Nidhi Company has

complied with the Net Owned
Funds to Deposits in the ratio of
1:20 to meet out the liability and
whether the Nidhi Company is
maintaining
ten
percent
unencumbered term deposits as
specified
in the Nidhi Rules, 2014 to meet
out the liability;

Related Party Transactions

Changed/
Removed/ New
New

Heading

Whether all transactions with

the related parties are in
compliance with section 177
and 188 of the Companies Act,
2013 where applicable and the
details have been disclosed in
the financial statements etc., as
required by the applicable
accounting standards;

Description

Reporting on compliance of Section Whether the company has made

42 and end use of funds
any preferential allotment or
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 with
and the amount raised have
been used for the purposes for
which the funds were raised. If
not, provide the details in
respect of the amount involved
and nature of non-compliance;
Whether the
entered into

company has
any non-cash
6

transactions with directors or

persons connected with him and
Reporting on Non-cash transactions if so, whether the provisions of
with Directors or persons connected section 192 of Companies Act
with him
2013 have been complied with;

Changed/Remov
ed/New

Heading

Description

New

Reporting on NBFC registration Whether the company is

requirement
required to be registered under
section 45-IA of the
Reserve Bank of India Act, 1934
and if so, whether the
registration has been
obtained.

Unchanged Clause
Sr. No.
1.

Heading
Deposits Reporting

Description
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?

2.

Cost records Reporting

where maintenance of cost

records has been specified
by the Central
Government under subsection (1) of section 148 of
the Companies Act,
whether such accounts and
records have been made and
maintained;

Reasons to be stated for Unfavorable or qualified answers

Changed/Remo
ved/New

Heading

Description

Where, in the auditor's report, the answer to any of the questions referred to in
paragraph 3 is unfavorable or qualified, the auditor's report shall also state the
reasons for such unfavorable or qualified answer, as the case may be.
Where the auditor is unable to express any opinion on any specified matter, his
report shall indicate such fact together with the reasons why it is not possible for
him to give his opinion on the same.

Non-Applicability on CFS
Changed/Removed/ Heading
New

Description

CARO 2016 is not applicable to the auditors report on consolidated financial

statements.

DISCLAIMER
The information contained herein is in summary form by Dewan P.N. Chopra & Co., from sources believed to be reliable. While
the information is believed to be accurate to the best of our knowledge, we do not make any representations or warranties,
express or implied, as to the accuracy or completeness of such information. Recipients should conduct and rely upon their own
examination, investigation and analysis and are advised to seek their own professional advice. This document is not an offer,
invitation, advice, opinion or solicitation of any kind. We accept no responsibility for any errors it may contain or for any loss,
howsoever caused or sustained, by the person who relies on it.

Website: www.dpncindia.com
LinkedIn: www.linkedin.com/company/dewan-p-n-chopra-&-coEmail: contact@dpncindia.com
Phone Number: - +91-11-24645891 / 92 / 93
Address: D 295, Defence Colony New Delhi 110024