May22 Amendments Already Included in Books

&
NOV - 2022
CA FINAL AUDIT - SM 2022 VS SM 2021
CA. Sarthak Niraj Jain
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ICAI - STUDY MATERIAL - MAY 2022 Pages Examples Illustrations/Case studies TYK - Q&A Amendments & Changes in SM 2022
ICAI Commentry on Changes
MODULE Chapters Name SM-2021 SM-2022 SM-2021 SM-2022 SM-2021 SM-2022 SM-2021 SM-2022 SJ's Commentry on SM-2022
/Improvements in SM-2022
No Content Change only Presentation & Formatting improved by ICAI
1 Chapter 1: Auditing Standards, Statements and GNs 52 52 5 5 - - 15 15 -
Chapter-2: Audit Planning, Strategy and Execution 57 54 28 28 2 2 9 9 No Content Change only Presentation & Formatting improved by ICAI -
Chapter 3: Risk Assessment and Internal Control 56 56 12 12 1 1 12 12 No Content Change only Presentation & Formatting improved by ICAI -
Chapter 4: Special Aspects of Auditing in an Automated No Content Change only Presentation & Formatting improved by ICAI
Environment
25 24 9 9 8 8 11 11 -
(1) Page 5.6 -Section 140(3) Penalty change
Maximum limit reduced from 5 lakh Rs. to 2 lakh Rs.- on account of amendment made via
Companies (Amendment) Act, 2020
(2) Page 5.34 - Section 143
Clause 4,5 & 6 added in Rule 11 of Companies Audit & Auditors Rule, 2014 on account of
amendment made via Companies (Audit and Auditor Amendment) Rules, 2021
(3) Page 5.38 - Section 143(15) Penalty change
5 lakh - listed entity & 1 lakh - other co. (Earlier Min 1 lakh & Max. 25 lakh) on account of
3 3 amendment made via Companies (Amendment) Act, 2020
(4) Page 5.44 & 5.45 - Section 147(1)
illustarion illustarion
n
1. Casual Vacanacy by Resignation
Chapter 5: Company Audit 110 110 24 24 17 17 Imprisonment & or with both words deleted & Section 142(2)- Reference of Section 143 - deleted -
i
+ 3 Case + 3 Case on account of amendment made via Companies (Amendment) Act, 2020
2. Duties 3. Punishment
Study Study (5) Page 5.61 - Section 124(7) Penalty change
a
Company - 1 lakh + 1000 Rs. per day - Max. 10 lakh (Earlier -Min. 5 lakh & Max. 25 lakh)
J
Officer in default - 25000 + 100 Rs. per day - Max. 2 lakh (Earlier -Min. 1 lakh & Max. 5 lakh)
-on account of amendment made via Companies (Amendment) Act, 2020
(6) Page 5.71 - Section 134 (8) Penalty change
k
Company - 3 lakh Rs. (Earlier -Min. 50,000 & Max. 25 lakh)
Officer in default - 50,000 (Earlier -Imprisonment-3 yrs or Min. 50K & Max. 5 lakh or both)
h a -on account of amendment made via Companies (Amendment) Act, 2020

(7) Page 5.108 - Answer 17(a)&(b) updated due to change in Sch-III
Schedule III -Amendments
t
Annexure: Schedule III to The Companies Act, 2013 47 66 - - - - - - (MCA issued notification on 24th March, 2021 to amend Sch-III of Companies Act, 2013 )
Schedule III
Chapter 6: Audit Reports 72 71 14 14 9 9
a r
10 10
(1) Content Presentation & Formatting improved by ICAI on various places
(2) Page 6.48 & 6.49 Chart Presentation improved
(1) Page 7.3 LODR Amendments made as per 5th (Amendments) Regulations, 2021
(2) Page 7.4 Point 3.2 - Regulation 3 - Applicability bullet point 1 & 2 change & Last 2 paras in bold
-
. S newly added
(3) Page 7.5 Point 4.1 - Regulation 18 - in point 3 word "she" added with "he".
(4) Page 7.8 Role of Audit Committee -Point 22 newly added 1. Applicability of LODR
A
(5) Page 7.8 Resignation of Statutory -Auditor - Presentation change (unbold) 2. Role of Audit Committee
(6) Page 7.21 Obligations -Employee, KMP etc.-Amendments made in Point (ii),(iv),(v) & (vii) and in 3. Resignation of Statutory Auditor
last Note regarding "high value debt listed entity" added 4. Obligations -Employee, KMP etc.
5 Case 5 Case
2 Chapter 7: Audit Committee and Corporate Governance 47 47 2 2
C Studies Studies
11 11 (7) Page 7.25 Point 12 Vigil Mechanism -"Whistle blower policy" word also added with vigil
mechanism
(8) Page 7.26 Point 13 Subsidiary of Listed Entity - in point (iv) "or equal to" word added in 2nd line
(9) Page 7.26 Point 13.1 Secretarial Audit and Secretarial Compliance Report - Amendment in
heading and inner content as well.
5. Subsidiary of Listed Entity
6. Secretarial Audit and Secretarial
Compliance Report
7. Risk Management Committee
8. Related Party Disclosure
(10) Page 7.28 Point 16.1 Risk Management Committee-Amenments in point (b),(d) & (i) & Points
(e),(f),(h) & (j) newly added
(11) Page 7.30 Point 18 - in 2nd point word "his" deleted & in 5th point new point added in bracket
(12) Page 7.33 Typing error in name of SA-315 done by ICAI-word "the" wrongly replace with some
(1) Page 8.7 -Responsibility of Auditor - In Point (d) Section 143(3)(j) read with Rule 11 - Sub-rule
Chapter 8: Audit of Consolidated Financial Statements 30 30 2 2 - - 9 9 (d),(e),(f) & (g) reference added (due to amendment)
Responsibility of the Auditor of the CFS
1. Form and Content of FS
2. Special Considerations in IT Env.
3. Internal Audit and Inspection
4. Internal Control in Certain Selected Areas
5. Verification of Assets
6. Verification of Capital & Liabilities
Substantial changes made by ICAI on various points - Separate Comparative PDF File will be 7. Format of Audit Report
Chapter 9: Audit of Banks 59 63 8 8 - - 13 13 provided- for SM 2021 Vs SM 2022 (deleted/added content marked as highlighted) 8. Long Form Audit Report
9. Scope of Concurrent Audit
10. Coverage of Business/Branches
11. Appointment of Concurrent
Auditors and Accountability
12. Reporting Systems
Chapter 10: Audit of Insurance Company 66 66 3 3 - - 11 11 No Content Change only Presentation & Formatting improved by ICAI -
(1) Page 11.31 -Point 8.3 in point (a) Text deleted after word "Division II"
Chapter 11: Audit of NBFC 37 38 - - - - 10 10 (2) Some Place -Presentation, Formatting & Grammer also improved by ICAI
-
CA FINAL AUDIT - SM 2022 VS SM 2021
CA. Sarthak Niraj Jain
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ICAI - STUDY MATERIAL - MAY 2022 Pages Examples Illustrations/Case studies TYK - Q&A Amendments & Changes in SM 2022
ICAI Commentry on Changes
MODULE Chapters Name SM-2021 SM-2022 SM-2021 SM-2022 SM-2021 SM-2022 SM-2021 SM-2022 SJ's Commentry on SM-2022
/Improvements in SM-2022
(a) Tax Audit
(1) Turnover limit & Clauses changed as per Finance Act, 2021 - changes made by ICAI in Content as
well Questions & Answers due to change in Section 44AB & 3CD Clauses
(a) Turnover limit change from 5 Crores to 10 Crores (with conditions)
(b) 60 Tax Audit Limit - Rectification in exclusion - 44AD,44ADA & 44AE Sections added (in SM-2021
44AE, 44BB, 44BBB mistakly written)
(c) Page 12.29 - Clause -7-Previous Year & Assessment Year -changed- PY-2021-22 & AY-2022-23)
(d) Page 12.30 - Clause 8 - Section 44 AB - For the word "5 Crores Rs" the word "10 Crores Rs" has
been subsituted
(e) Page 12.30 - Clause 8A - Section No -115BAC/115BAD added after section 115BAB
(f) Page 12.41 - Clause 17 - 4th Point added in table
(g) Page 12.42 - Clause 18 - in point (ca) reference of Section 115BAA deleted and 115BAC/115BAD 1. Tax audit under Section 44AB
Chapter 12: Audit under Fiscal Laws 169 108 2 2+12 14+4 4 21 9 added with change in AY-2021-22 2. Form No. 3CD
(h) Page 12.44 - Clause 18 (ca,cb &cd) - Amended
(i) Page 12.74 - Clause 29B-Section 56(2)(x)- Point (b) For the word "Amount equal to 5%" the word
"Amount equal to 10%" has been subsituted
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(j) Page 12.81 - Clause 30C-Reporting under Clause 30C has been kept in abeyance till 31st March
i
2022 ( as per circular dated 25th March, 2021)
(k) Page 12.86 - Clause 32(a)-in Table point 4,5 & 6 reference of Section 115BAC/BAD added
a
alongwith footnote
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(l) Page 12.95 - Clause 36-Omitted by the Income tax Rules, 2021
(m) Page 12.103 - Clause 44-Reporting under Clause 44 has been kept in abeyance till 31st March
2022 ( as per circular dated 25th March, 2021)
k
(n) Page 12.103 - Revision of Tax Audit Report- Para revised due to Amendment in Rule 6G
3 Chapter 13: Audit of Public Sector Undertakings 36 35 2 2 - - 8 8 No Content Change only Presentation & Formatting improved by ICAI -
Chapter 14: Liabilities of Auditor 39 39 5 5 - - 9
h
9
a Page 14.19 - Point 4 Section 35- in Para -2-© word "Registration" replaced with "filing" -
t
Chapter 15: Internal Audit, Management and Operational 53 51 16 16 3+3 3+3 11 11 No Content Change only Presentation & Formatting improved by ICAI -
r
Audit
Chapter 16: Due Diligence, Investigation and Forensic Audit 76 74 10+17+0 10+17+0 - - 20 20 Page 16.73-Answer 8 - Refer Para 5 and 6.6 of unit -2 (Answer ref. updated in red color ) -
S a (a) Peer Review

(1) Page 17.2 -1-Introduction - Definition of Peer review in 2nd para - deleted & Peer Review
Statement - Revisied in 2021 (earlier revised in April 2020)
.
(2) Page 17.4 -2-Objective of Peer Review- " Peer review is directed towards" para modified
(3) Page 17.5 & 17.6 -3-Scope of Peer Review - Amendments in Point (ii) & (iv) of definition of
"Technical, Ethical & Professional Standards" also Students may note that para first 3 line also
C A modifited.
(4) Page 17.7 - 4 Applicability - Level 1 & 2 Selection Criteria amended & Point (2) -Special case
review also modified
(5) Page 17.9 - 5 Peer Review Board-in Para Meeting Requirement - for the word "every three
months" word "every calendar quarter" added
1. Scope of Peer Review
2. Applicability
(6) Page 17.9 - 5.1 Eligibility to be a Reviewer - Point 1 (a) & (b) modified & (d) - deleted , Point 2 3. Peer Review Board
Chapter 17: Peer Review and Quality Review 48 45 5+0 5+0 - - 12 12 (a) & (b) modified , Point 3 (iv) modified & (v) newly added & Point 4 also modifed 4. Eligibility to be a Reviewer
(7) Page 17.13 - 6.2 - Obligations of the Peer Reviewer- Point (ii) modified & (iii) newly added 5. Obligations of the Peer Reviewer
(8) Page 17.14 - 7.1 - Selection of Practicing unit & appointment of Reviewer- Point (ii) - Modified 6. Selection of Practice Unit &
(9) Page 17.14 - 7.2 - Planning -Point (i) -(a),(b) & (c) - deleted & (d) modified, appointment of Reviewer
Point (ii) word "May" added after UDIN directorate and. 7. Planning
Point (iii) (a),(c) & (d) modified 8. Execution
(10) Page 17.15 - 7.3 - Execution - Point (i) & (iii)-(b) modified & in Note given below point 4 - 9. Reporting
deleted for appendix 10. Peer Review Certificate
(11) Page 17.17 - 7.4 - Reporting - Point (i) (a) & (b) modified
(12) Page 17.19 - 7.5 - Peer Review Certificate - Point (a) -for the word "next due date for review"
word "validity period" added
(13) Page 17.20 - Appendix: Flow Charts - deleted due to amendment in process
(b) Quality Review

(1) No Content Change only Presentation & Formatting improved by ICAI
(2) Page 17.44 -Answer of Question 12 Provided (earlier not given and ref.also wrong given)
Professional Ethics
(1) Page 18.13 to 18.17 -Point 2.3 Non-Compliance with Laws and Regulations (NOCLAR) - Full point Non-Compliance with Laws and
Chapter 18: Professional Ethics 161 163 19 19 38 38 16 16 newly added & also Presentation & Formatting & Grammetical improved by ICAI on some places. Regulations (NOCLAR)
(3) TYK- 15 Question & Solution - both modified - word "Compilation engagement for historical
financial information" - added in both
Download from www.fast.edu.in CA. Sarthak Niraj Jain
CA FINAL
ADVANCED AUDITING &
PROFESSIONAL ETHICS
BY CA.SARTHAK JAIN
AUDIT AMENDMENT NOTES FOR
MAY 2022
Page
Unit Index Audit Amendment Notes 2022 No.
1 Full Audit DC 3.1 Amendment Notes For May 2022 1 31
Company Audit 1 14
Audit Committee & Corporate Governance Separate Notes in Nov22 Folder 15 28
Professional Ethics 29 31
2 Special Audit DC 5.0 Amendment Notes For May 2022 32 53
Audit of Non-Banking Financial Company 32
Peer Review 33 36
Quality Review 37 38
Investigation 39
Audit of Banks 40 47
Audit Under Fiscal Laws - Tax Audit 48 53

WE DID IT! AGAIN CA FINAL JULY 21
STARS OF OUR GALAXY
Ruth Clare Dsilva
5
1 2AIR
16
Sakhshi Airen
a k 17
Ja i n AIR
19
AIR
ShaanShah
Shaan Shah
AIR
Shubham
r t
Shaan Shahh
Mittal
AIR
Rohit
ShaanChipper
Shah
AIR
Nidhi Shaan
SandeepShah
Devidan
22
Sa 29 30 31
AIR
Charu
.
Shaan Goyal
Shah
A
AIR
Srijan
ShaanMandora
Shah
AIR
Akshit
ShaanAgrawal
Shah Grish
Shaan
AIR
Bhandari
Shah
C 32
AIR
Tanay
ShaanAgarwal
Shah
37
AIR
Sharad
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Shah
38
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BhavyaShah
Shaan Shah
46
Shaan
AIR
AagamShah
Shah
46 46 47 48
AIR AIR AIR AIR
ChiragShah
Shaan Kelar Hemant Somani
Shaan Shah Pranay
ShaanSamariya
Shah Khushi
ShaanAgrawal
Shah
1
UNIT
SECTION 139 (3) SECTION 140 REMOVAL/RESIGNATION OF AUDITOR
ROTATION OF AUDITOR PARTNER/ JOINT (FOR BOTH GOVT. & NON-GOVT. COMPANIES)
AUDITOR
in
Removal
Members of a company may
resolve to provide that REMOVAL BEFORE
a
RESIGNATION NON REAPPOINTMENT REMOVAL BY TRIBUNAL
SECTION 140 (2) & (3) SECTION 140 (4) (OTHER THAN EXPIRY OF TERM 140 (5)
DUE TO ROTATION) 140 (1)
J
In the audit firm
The audit shall be
appointed by it
conducted
Auditor to file Special notice (Prior to original Removal requires Tribunal either
statement meeting & not permitted in special resolution
k
The audit partner and adjourned meeting) required to and previous
within 30 days from the
his team shall be rotated By more than one date of resignation to appoint another person as approval of CG*
a
auditor (i.e. Joint company & ROC with auditor in AGM or to expressly On Application
At such intervals as may Auditor) reasons provide to not appoint previous Suo application made by any
h
be resolved by the auditor Auditor will be motu made to it person
Members given opportunity by CG concerned
t
In Form ADT-3 Notice forwarded to of being heard
Section 139 (4) : CG may be rules prescribe manner in
r
(Rule 8) auditor as well
which companies shall rotate their auditors v/s 139(2)
No specific rule prescribed Satisfied that auditor acted
S.140 -(3) Penalty
a
Section 139(9) Retiring auditor may be reappointed at Permission to be
AGM if : (subject to does
If the auditor not
S.139(1)) Auditors representation fraudulently or is in colluded in frauds with
In case of Govt.
A) He iscomply he shall befor re-appointment
not disqualified to be included/ read out taken from CG company / officer/ directors
Company the auditor to
B) He punishable
has not given written
fine notice of his unwillingness to within 30 days of
S
with also file such statement in AGM amongst
be reappointed,
` 50,000 and
or remuneration BOD meeting in
C) Special resolution has not been is passed to appoint with C&AG members
of auditor (whichever is However if Tribunal risk ADT-2 (Rule 7) When
.
another auditor or providing expressely to not When application made
less) + `him,
appoint 500 per daymeeting.
in that after abuse of power by application
by any person
Section
the 139(10) Max. `no2 auditor
first day.-When Lacs is appointed in AGM: auditor then it can take made to it
Existing auditorfrom
to continue to be auditor of the company S.140 (3) Penalty Company to hold by CG concerned or suo motu
(Relevant Nov2021) away representation
A
Section 139(11) Recommendation of Audit Committee If the auditor does not GM within 60 days
(w.e.f.21-12-20) rights of auditor
(if to be constituted) comply he shall be of receipt of CG
Audit Committee recommendations to be considered in all punishable with fine approval, for Within 15 days from
` 50,000 or remuneration
C
cases of appointment of auditor under this section If copy of representation passing special receipt of such Order
of auditor (whichever is application order, company to
less) + ` 500 per day after not sent to members, resolution auditor to vacate his change
the first day. Max. ` 2 Lacs then to file with ROC office & CG may
also auditor
Company can also plan appoint another
SM Update-2022 auditor in his place
rotation of joint auditors In case of specified
SQC-1 requires all firms
*SJ Exclusive :- IFSC company, if no
such that all auditor to not conducting audit of listed
communication is
retire is same period companies to change audit Form ADT-2 requires details of special resolution passed, made by CG in 60 Such auditor (firm every partner involved) will
partner once in 7 years hence practically SH to first pass SR to remove auditor
Rule 6 days then assumed not be appointed as auditor in any company
(Effective from 01-04-2017) which will be subject to approval of CG. approved by CG for 5 years and will liable for penalty u/s 447
COMPANY AUDIT DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 51

1
SECTION 143 AND RULE 10A, 11, 12, 13
POWERS & DUTIES OF AUDITOR
Specific Inquiries Duties of Auditor
Powers of Auditor Section 143 (1)
Section 143 (1) (Exception Reporting.
Exceptions may or may Report to Members Specific Reporting Requirements Govt. Company
n
not effect FS T & F View) Section 143 (2) Section 143 (3) Section 143 (5), (6) & (7)
i
Access to BOA &
Vouchers at any place Auditor to report The auditor s report shall also state: C&AG shall direct auditor the manner in
(a) Secured loans &
which the accounts of the company are
a
Right to Information advances. Whether on the accounts a) Auditor has obtained all the information and explanations, if
& Explanation as properly secured, examined and not, effect on FS? required to be audited by the auditor (Section
necessary for the whether prejudicial? on every F.S. to b) Proper BOA have been kept as per requirement of Law? 143 (5)) alongwith report on directions given
J
performance of his (b) Book Entries Do not be laid before b) Proper returns from branches not visited by him received? & its effect on audit & FS
duties represent any the company in c) Whether branch auditors report has been received? Auditor shall submit a copy of report to the
transaction but only GM d) BS and P&L as per BOA and returns ? C&AG
accounting adjustment Report to cover e) Compliance with AS/Ind AS C&AG shall within 60 days from the date of
k
Holding Company Audit: (Journal entries, off f) The observations or comments of the auditors on financial receipt of audit report have a right to:
provisions of this
Right to access to the setting entries etc.) transactions or matters which have any adverse effect on (a) Conduct a Supplementary audit of F.S.
Act, SAs, AS, and functioning of company
records of all its
a
Whether prejudicial? other matters to (b) Comment upon or Supplement such audit
subsidiaries and associate (c) Other than Bank/ g) Whether any Director disqualified u/s 164 (2)? report (Section 143 (6))
companies in so far as it be included in (Refer Next Page)
Investments Co. Comment of CG + Audit report to be sent to
relates to the audit report h) Any Qualification, Reservation or Adverse remark relating to
h
Assets in securities every entitled person and to be placed before
consolidation of F.S. with sold at less than cost? including order maintenance of accounts and other matters connected. the AGM (Section 143 (6))
t
that of its subsidiaries and (d) Loans given Whether made under i) Whether company has adequate Internal Financial Control with
associate companies Section 143 (11) C&AG may by order, cause test audit to be
shown as deposits? reference to F.S. in place and operating effectiveness of such
r
To the best of his conducted of the accounts of such company
(e) Personal expenses controls. The report of auditor shall state about existence of
information to IFC w.r.t. FS and its operating effectiveness (Refer GN Next u/s 143(7) No time limit to order such audit
Reasons for debited to revenue?
Reservations report, whether Page)
a
(f) Whether cash received Branch Audit
Section 143 (4) for shares allotted F.S. give True & j) Additional Matters prescribed under Rule 11:
Fair view of (a) Impact of pending Litigation on company s Financial Section 143 (8)
cash, if not whether
disclosed state of affairs position disclosed?
S
Auditor to also state (SIII, shares issued for of the company (b) Company has made provision for material foreseeable Conducted by: Company auditor or any
reasons for negative other than cash in last as at the end of losses on long term contracts including derivative other person qualified to be auditor,
comments or qualification
.
5 years to be disclosed) F.Y. contracts? (Foreign Branch Foreign CA
in report (c) Any delay in transferring amount to IEPF? (equivalent) also permitted) and so
(d) Removed appointed u/s 139.
(g) Audit Trail in Accounting System - Companies that use accounting (e) Management representation of advancing money/ Powers and Duties: Same as that of
A
receiving money to/as an Intermediate party (wef 1-4-
software for maintenance of books of accounts should use a software / 2021) company auditor except report to be
system that: Auditor to obtain a representation from mgt that to the sent to company auditor (Section 143
a) Has feature of recording audit trail / logs and best of their knowledge and belief other than as disclosed (1) to (4) and (12) applies)
C
b) Same should be operating throughout the year and has not been in notes to the FS the management has not:
tempered and a) advanced funds (advance, loan or any form or kind) to
another intermediaries, person to invest it elsewhere, in SAs and CARO Section 143 (9),(10),(11)
c) Trail is preserved by the company as per requirement of retention other party, the ultimate beneficiary
of books (S.128 8 years) b) received funds from any person, to invest it with any
(Auditor to check whether above exists) other person (i.e. company is intermediary) Auditor to comply with all SAs Prescribed
k) Section 197(16): - Whether remuneration paid to any (Applicable from 1-4- Based on audit procedures performed for audit nothing has by CG, recommended by ICAI and
2022) director is in excess of the limit laid down under this section and give come to his notice to believe that representation received examined by NFRA (Section 143 (9) & (10))
such other details as may be prescribed by mgt. above is materially misstated
(f) Dividends: Dividends declared or paid during the year are in Auditor to report on specified matters as
As per Advisory issued by ICAI: - The aforesaid reporting requirement for
auditors of public companies need to be covered in auditor s report under compliance with S.123 of CA, 2013 CG has ordered u/s 143 (11) (i.e. CARO) in
the Section Report on Other Legal and Regulatory Requirements . consultation with NFRA.
18 POWERS & DUTIES OF AUDITOR, OTHER SERVICES OF AUDITOR, PENALTY & COST AUDIT
2
FRAUD REPORTING
SECTION 143 (12) & RULE 13
Notwithstanding this section, if auditor in course of performance of his duties has reason
to believe that offence of fraud is being or has been committed In the company by its
officers or employees, auditor shall report as under:
n
ICAI has issued Guidance Note on Reporting on Fraud under Section 143
i
(12), which answers the following issues however, the GN has been removed
Frauds other than those to be Fraud involving or expected to involve amount of from syllabus.
a
reported to CG ` 1 crore or above, to be reported to CG Persons covered for reporting on fraud u/s 143(12);
Thresholds and manner of reporting;
J
Auditor s responsibility for consideration of fraud in audit of F.S.;
Reporting on suspected offence involving frauds identified/noted
Company bound to Auditor to First Auditor to Report AC else Board during the audit/limited review of Interim F.S./results, other attest
Auditor to report disclose certain services and permitted non-attest services;
immediately, within 2 days of knowledge of fraud
k
report CG
to Audit specified details in Reporting on frauds detected by management/other person and
within 60 already reported u/s 143(12) by such other person;
Committee else Board s Report When days
a
board within 2 days Seeking reply within 45 days Reporting on suspected offence involving fraud in case of Consolidated
auditor reported F.S.;
of knowledge of frauds are not Reporting of suspected offence involving fraud relates to period prior to
h
fraud reported to CG as: Reply not received within commencement of this Act;
Reply received within time
t
Nature of fraud time When does auditor commence reporting u/s 143(12) (i.e. Based on
with description, suspicion/reasons to believe/knowledge/on determination of offence?
r
Report the following
Approximate Forward report Forward Report Can auditor apply concept of materiality for reporting on frauds?
matters:
amount. + + Should auditor report u/s 143(12) in case of corruption, bribery, money
a
Nature of fraud Parties involved, Reply/Observation Note containing details of laundering and non compliance with other laws & regulations ?
with description if remedial action + report which fails to get
Approximate not taken; and Comments to CG within 15 any reply/observation
S
amount Remedial actions days of receipt of such to CG within 15 days of
Parties involved taken reply/observation expiry of 45 days
Penalty for failure to report frauds

(Section 143(15)
Listed company 5 Lakh /
A .
Report to CG:
To: Secretary, MCA
C
Other Cos. 1 Lakh.
In: Sealed cover
By: Reg. post with AD or Speed-Post, Provisions also applicable
followed by email confirmation to a cost auditor and
On: Auditor s letter-head having his secretarial auditor
address, email, contact (telephone or (Section 143 (14))
mobile) with seal and membership No contravention of duty
number of auditor if fraud
FORM : ADT 4 reporting done in good
faith (Section 143 (13))
1 10 POWERS & DUTIES OF AUDITOR, OTHER SERVICES OF AUDITOR, PENALTY & COST AUDIT
3
SECTION 147
PENALTIES
Section 147(2) Auditor
in
For (For contravention of section 139,143,144 or 145)
Section 147(1) contravention Section 147(1)
Company with section Officer in Default Contravenes knowingly or wilfully
a
Other
139 to 146 (to deceive the Company/
Shareholder/Creditor/Tax
J
Authorities) ` 25,000
` 25,000
to to
k
` 5,00,000 ` 10,000 ` 50,000 ` 5,00,000 or
to To ` 25,00,000 or 4 times of the
a
` 1,00,000 8 times of the remuneration remuneration of auditor
(whichever is less) (whichever is less)
Section 147(4) Recovery
r t h AND/OR
Imprisonment up to 1 Year
a
CG may specify any body, authority or officer for
prompt recovery of dues from guilty auditor Section 447
Section 147(3) Auditor convicted v/s 147(2)
Section 147(5) Liability of Audit Firm

. Not affecting
S Other
In case the auditor is convicted u/s 147(2), he shall be
liable to :
A
public interest Refund the
and less than remuneration recieved Pay for DAMAGES to
For audit conducted by an audit firm, if lower of 1% of
C
turnover & 10L Penalty - 1 to 3 times of
audit partners Proved Guilty then the
responsibilities of the partners and the amount involved in fraud
+ Statutory bodies
Company Members Creditors
firm will be jointly and severally. Imprisonment - 6 months or authorities
However Criminal liability other than to 10 years
fine will be only of Guilty Partner Penalty - 0 50L
& / or For the LOSS arising out of incorrect or misleading statements
(Section 147 (5)) of particulars in his audit report
Imprisonment -
In case of public interest
0 5 years
minimum 3 years.
1 12 POWERS & DUTIES OF AUDITOR, OTHER SERVICES OF AUDITOR, PENALTY & COST AUDIT
4
SECTION 128
BOOKS OF ACCOUNTS ETC. TO BE KEPT BY THE COMPANY
CONTINUED...
Proper Books of Account in

relation to Branch of the Person who can INSPECT Person responsible for
n
Period of maintenance of books of accounts
Company (Section 128 (3) and (4)) Maintenance
and
The books of account and other books and papers
Minimum 8
Financial
Company
Existence < 8
a i
Investigation
Ordered/
Managing
Director
J
(a) maintained by the company Required by or Any other
Years years
Proper (b) other Law Whole Time person of
books of Proper Director in company
k
account summarised charge charged by the
relating to returns All such For such period or Board
In India
the periodically preceding as may be Chief Financial
a
transactions Outside India years prescribed Officer
affected
h
Shall be open for
inspection at the
t
At the Copies of such Financial Information Penalty
r
branch office Must be sent shall be maintained and produced for Inspection MD, Finance WTD, CFO or other person in-charge
in India or by the Registered Office or contravenes such provisions, punishable with fine
Outside branch office which shall not be less than ` 50,000 but which may
a
any other place in
India India
By any director subject to extend to ` 5,00,000
S
To the
Can be kept Rule 4 of the Companies (Accounts) Rules,2014
Company & By any director
at that
.
kept where
Branch
books are
Office
maintained
A
During business hours
The summarized returns Any other financial The company shall The Information
The summarized return
shall be kept and information required by produce such required shall be
of books of account
maintained the director financial information sought for by the
The Inspection in respect of Subsidiary

C
company (and not associate) shall be done
only by the person authorised in this behalf by
a resolution of the Board of Directors
Shall be sent to
registered office
At registered office of the
company
The director shall furnish
request to the company
setting out the full details
of particulars of
Information and period
Within 15 days from
receipt of such
request
Director Himself and
not by
Members have no power to inspect books of for which information is Power of attorney Agent or
And kept open for
account At quarterly intervals required holder representative
inspection by directors
1 16
16 BOOKS OF ACCOUNTS & FINANCIAL STATEMENTS
5
Financial Statement in relation to a company includes
i n
(a)
Balance
(b)
Profit and Loss account
(c)
Cash flow statement
(d)
A Statement of Changes
J a (e)
Any explanatory note annexed to or forming
k
Sheet or Income and Expenditure account for the financial year in Equity part of any document specified in (a) to( d)
a
Financial Statement with respect to One Person Company, Small In case of a company not required to prepare Consolidated Financial Statements under
Company, Start-up Company and Dormant Company may not the Accounting Standards, it shall be sufficient if the company complies with provisions
h
include Cash Flow Statement. on Consolidated Financial Statements provided in Schedule III (which require specific
t
information about group companies)-Rule-6
r
Non-compliance
Notification awaited for this Exemption from preparation of Consolidated Financial
S. 129A with AS
Section Statements (Rule-6)
a
The Company shall
disclose in its F.S.
A company which is an intermediate holding company is exempted from preparation of the deviation,
S
CG may specify classes of
consolidated financial statements if following conditions are satisfied reasons and the
unlisted companies
financial effects, if
. (3) any, arising from

(1) (2) such deviation
Is wholly owned subsidiary or It is a company whose securities Its ultimate or any
A
To prepare To obtain BOD File a copy intermediate Section 129(5)
is partly owned subsidiary of are not listed or not in the
financial approval & with ROC another company process of listing on any stock holding company
CG can grant
results on complete limited within 30 files consolidated
C
exchange exemption from
periodical review of such days of financial
Section 129 in
basis & periodical financial completion statements with
And all its members have been intimated in public interest
format results of period the registrar
writing (with proof of such intimation)
Penalty :
Which are in Imprisonment up
As may be And they do not object to non compliance with to 1 year (and/or)
No need to intimate if it is a
prescribed preparation of Consolidated Accounting Fine ` 50,000 to
100% Subsidiary
Financial Statements Standards ` 5,00,000
1 18
18 BOOKS OF ACCOUNTS & FINANCIAL STATEMENTS
6
n
COMPANIES ACT 2013- RELATED DEFINITION Section 2 (87)
i
Small Company: Restriction on number of layers for certain class of holding
Means a company, other than a public company,
companies (w.e.f. 20-09-2017)
a
Paid-up share capital of which does not exceed 2 crore rupees or such higher amount as may
be prescribed which shall not be more than 10 crore rupees; and
Turnover of which as per its last profit and loss account does not exceed 20 crore rupees or
J
No company, other than a company belonging to a class specified in sub-rule (2), shall have
such higher amount as may be prescribed which shall not be more than 100 crore rupees. more than two layers of subsidiaries
Provided that nothing in this clause shall apply to
(A) a holding company or a Subsidiary company; Provided one layer which consists of wholly owned subsidiary or subsidiaries shall not be
(B) a company registered under Section 8; taken into account
k
(C) a company or body corporate governed by any Special Act
Exceptions:
Dormant Company (Section 455):
a
Where a company is formed and registered under this Act for a future project or to hold an asset Provided that the provisions of this sub-rule shall not affect a company from acquiring a
or intellectual property and has no significant accounting transaction, such a company or an company incorporated outside India with subsidiaries beyond two layers as per the laws of
inactive company may make an application to the Registrar in such manner as may be prescribed such country
h
for obtaining the status of a dormant company.
t
Associate Company (Section 2 (27)) :
The provisions of this rule shall not apply to the following classes of companies, namely:
r
Associate company in relation to another company, means a company in which that other
company has a significant influence, but which is not a subsidiary company of the company (a) a banking company;
having such influence and includes a joint venture company. (b) a non-banking financial company;
a
"Significant Influence" means control of at least 20%, of total share capital, or of business (c) an insurance company;
decisions under an agreement; (d) a government company
S
Note - No separate definition for Joint Venture company in the Act
Transitional Provisions:
.
"Joint Venture" means a joint arrangement where parties having joint control have rights Every company, other than a company referred to in above, existing on or before the
to net assets of the arrangement commencement of these rules, which has number of layers of subsidiaries in excess of the
layers specified -
A
(i) Shall file, with the Registrar a return in Form CRL-1 disclosing the details specified
Control (Section 2 (27):
Control shall include the therein, within a period of 150 days from the date of publication of these rules in the
right to appoint majority of the directors or to control the management or policy decisions Official Gazette;
C
exercisable by a person/s (ii) Shall not, after the date of commencement of these rules, have any additional layer of
control by virtue of their shareholding or management rights or shareholders subsidiaries over and above the layers existing on such date; and
agreements or voting agreements or in any other manner (iii) Shall not, in case one or more layers are reduced will increase it beyond permissible
limits
Subsidiary Company (Section 2 (87))
Subsidiary Company or Subsidiary in relation to any other company (that is to say the holding
company), means a company in which the holding company
Controls the composition of the Board of Directors(Control includes power to appoint / Fine: May extend to 10,000 rupees and where the contravention is a continuing one, with a
remove all or majority of directors); or further fine which may extend to 1,000 rupees for every day after the first during which
Exercises or controls more than one-half of the total voting power either at its own or such contravention continues
together with one or more of its subsidiary companies
19 COMPANY AUDIT DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 19 1

7
NATIONAL FINANCIAL REPORTING AUTHORITY (NFRA) RULES 2018
Rule-9 Rule-13 Rule-16
Punishement in case of non compliance Financial reporting
n
Overseeing the quality of
advocacy & education
i
service & suggesting measures
for improvement
If " A or Any officer of a or An or Any other
Authority Shall take suitable measures for the promotion of
a
Company company auditor person
awareness & significance of:
[1] Improvement by Auditor
J
Accounting Auditing Auditor's Audit
NFRA - may direct an auditor to: Contravenes any provision of these rules standard Standard responsibilities quality
Take measures for improvement in audit
quality including :
k
Company And such other mater through
(i) Change in audit process
(ii) Quality control and & Or Auditor of such other
a
(iii) Audit reports Every officer company Work
who in default Education Training Seminars Conference
And specify detailed plan with time limit shops
h
Shall be punishable as per the provision of Sec.450 of the Act
And publicity
t
[2] Report to NFRA
Sec. 450 Punishable : fine upto 10,000 and
Rule-10
r
It shall be the duty of auditor to make required Company &
improvements send report to NFRA explaining Every officer Further fine: if continuing one Power to Investigate
a
how it has complied directions made by NFRA. which may extend to Rs.1000 per
day after the first during which the Where the Authority has:
contravention continue
S
[3] Monitor A:- Received any reference from CG, for investigation into any
General penalty under Companies Act Section 450 matter; or
NFRA shall monitor the improvement made by 10000 + 1000 per day in case of continuing fault, would
.
auditor & take such action as it may deems fit apply, subject to a maximum of 2 lakh (for companies) and B:- Decided on the basis of its compliance or oversight activity; or
50,000 for officer in default or any other person.
C:- Decided to undertake suo-motu,
A
[4] Overseeing by QRB it shall forward the matter to its Division dealing with
enforcement for carrying out investigation and other action
NFRA may refer cases to QRB for over seeing
C
the quality services of auditors of companies or
Report To CG On the commencement of these rules
body corporate
or Evidence " When NFRA has evidence to belive that:
Call such information from them as it may (a) Companies referred in Rule -3 "No institute or body shall initiate or
Not Complied " Any company or body corporate has not continue proceeding against auditors, when NFRA initiate proceeding
deems fit
complied with requirements under the
[5] Assistance of expert Acts or Rules
(b) Companies referred other than Rule -3 "
Fraud " Which involves or may involve fraud When action in respect of cases of professional or other misconduct
NFRA may take assistance of expert
$ Amount " Amount to Rs. 1 crore or more against auditors of companies or body corporate, other than referred in
For its oversight and monitoring activities Rule-3, shall continue to proceeded with by ICAI, as per CA Act, 1949.
Report " It shall report its finding to CG
8
SECTION 133 SECTION 134
CENTRAL GOVERNMENT TO PRESCRIBE FINANCIAL STATEMENTS,
n
ACCOUNTING STANDARDS
BOARDS REPORT ETC.
CG to prescribe, as recommended by ICAI, in

consultation with NFRA. Financial Statements and
Consolidated Financial Statements i
In case of One Person Company the financial statements shall be
signed by only one director.
a
Then submitted to auditor for his report, which shall be attached to
every financial statement.
J
Presently Companies (AS) Rules, 2006 and Companies SM Update
(Ind-AS) Rules, 2015 have been prescribed. PENALTY: Section 134(8) 2022
(i) Company - If a company is in default in complying with the
provisions of this section, the company shall be liable to a penalty of
k
Shall be approved by Board
` 3,00,000 &
Definition of Small and Medium Sized (ii) Officer in Default - Every officer of the company who is in default
a
Company (SMC) shall be liable to a penalty of ` 50,000
(Relevant from May-2022 exams) And Signed by
h
A signed copy of every financial statement, including
t
Certain AS are exempted in part of in totally for SMC. Revised or
consolidated financial statement, if any
definition of SMC as per Companies (AS) Rules, 2006 is-
r
Chairperson
SMC means a company: 2 Directors
(i) whose equity or debt securities are not listed or are not in (if authorised by
a
the process of listing on any stock exchange, whether in the Board of Shall be
India or outside India; Directors), at any
(ii) which is not a bank, financial institution or an insurance
S
or or
company;
(iii) whose turnover (excluding other income) does not exceed One Being Managing Director
.
Issued Circulated Published
250 crore rupees in the immediately preceding accounting
year; +
(iv) which does not have borrowings (including public
A
deposits) in excess of 50 crore rupees at any time during Chief Executive Officer (CEO)
the immediately preceding accounting year; and (if appointed) Along with copy of each of
(v) which is not a holding or subsidiary company of a
C
company which is not a small and medium-sized company. +
Explanation.- For the purposes of this clause, a company shall Chief Financial Officer (CFO) Any Notes
qualify as a Small and Medium Sized Company, if the (if appointed) annexed or The
and and The Boards
conditions mentioned therein are satisfied as at the end of the forming part of Auditors
relevant accounting period. However, companies that are non- Report
+ Financial Report
SMC and not classifiable as SMC will not be treated as SMC till
Statements
they remain within the limits for 2 consecutive financial years. Company Secretary
(if appointed)
1 28
28 BOARD S REPORT, CSR, FILING AND CIRCULATION OF F.S. AND INTERNAL AUDIT
9
SECTION 134 (3) (C )
DIRECTOR RESPONSIBILITY STATEMENT
(Not covered in ICAI module of Audit)
n
Director Responsibility Statement shall state that [Section 134(5)]
(a)
Compliances with
Accounting
(b)
The directors had selected
(c)
(d)
The directors
a i (e)
The directors in case of
(f)
The directors had
J
The directors had taken proper and had prepared
Standards in such Accounting Policies and Listed Company devised Proper System
sufficient care for annual
preparation of applied them consistently accounts on
annual accounts
k
To ensure compliance
Had laid down Internal
with the provisions of
a
Along with Financial Controls
And made proper judgements For applicable laws
proper and estimates The Preventing Going
h
explanations maintenance For and Concern
relating to
t
of adequate Safeguarding Detecting Basis To be followed by the
material accounting of Assets Frauds and And such system were
That are Reasonable and company and such
r
departures records other adequate and operating
Prudent so as to give a True & controls are adequate and
Irregularities effectively
Fair view of state of affairs operating effectively
a
and P or L.
Matters to be Included in Board s Report
S
(Not in ICAI SM / Amendment update of Nov 21) (Relevant for May 2022)
.
Rule to Companies (Accounts) Rules, 2014, Rule 8(5) clauses inserted, effective
01-04-2021 IBC Related
The term Internal Financial Control referred here means the (xi) the details of application made or any proceeding pending under the Insolvency and
A
policies and procedures adopted by the company for ensuring the Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end
orderly and efficient conduct of its business including of the financial year.
(xii) the details of difference between amount of the valuation done at the time of one
C
time settlement and the valuation done while taking loan from the Banks or Financial
Institutions along with the reasons thereof.
The The Accuracy Rule3(1) of CAR, 2014 - Manner of Books of Account to be Kept in Electronic Mode
The Timely
Adherence prevention and Provided that for the financial year commencing on or after the 1st day of April, 2022,
The Preparation
to and Completeness every company which uses accounting software for maintaining its books of account,
Safeguarding of Reliable
company s detection of of the shall use only such accounting software which has a feature of recording audit trail of
of its Assets Financial
policies Frauds and Accounting each and every transaction, creating an edit log of each change made in books of
Information
Errors Records account along with the date when such changes were made and ensuring that the audit
trail cannot be disabled. BOD to confirm on the same.

10
SECTION 135
CORPORATE SOCIAL RESPONSIBILITY AND
COMPANIES (CSR POLICY) RULES, 2014
PART-I APPLICABILITY
(1) Turnover includes realisation from sale of goods &
n
services but excludes other income (i.e. Net sales of
i
Companies to constitute CSR Companies Goods & Services)
Exemption Role of Committee
Committee (Accounts)Rules,2014 (2) Networth means the aggregate value of:
Every company
The Companies that
were earlier covered
and subsequently
To formulate &
recommend to the
Rule 9
Disclosure about
CSR Policy
J a Paid up share capital
Reserve made out of profits
Less: Unrealised profits or
revaluation reserves
xxx
xx
(xx) xx
k
not covered in these Board xxx
limits Less: Accumulated losses (xx)
a
Foreign company based on The disclosure of Deferred expenditures (xx)
their financial statements contents of CSR Misc. expenditure not written off (xx)
h
for Indian Operations CSR Policy indicating policy in the NET WORTH xxx
Board s Report and
t
For consecutive activities to be (3) Net Profit means net profit as per its FS prepared as Per
period of 3 years undertaken as specified Company s the provisions of the Act i.e. as per SPL read with section
r
under schedule VII website, if any 198 of Act.
Having (in immediately preceding F.Y.)
(4) Net Profit of foreign companies is NP as per SPL made u/s
a
381 for Indian operation read with section 198.
Shall be as per
(5) CSR Committee of 3 or more directors including 1
annexure attached
S
independent director.(if no requirement to have ID then
OR OR That is to be to the Companies
Turnover committee of 2 or more directors)
Net Worth Net Profit Shall be exempted approved by the (Corporate Social
.
> The CSR policies and Plans as approved by Board is to be
> > Board Responsibility
1000 Crore placed on the website and included in the Board Report
500 Crore 5 Crore Policy)Rules,2014
along with ensuring compliance.
A
SJ Note on CSR Amendments MCA has announced FAQs for CSR on 25-08-2021 available at
MCA portal (Recommended study for knowledge building)
However CSR committee not

mandatory if amount of CSR to
be spent is < 50 lacs. BOD to
C
Various amendments relating CSR spends relating
to trasnfer of shortfall, carry forward of excess
spends, penalty for short spends, relaxation from
forming a CSR committee and COVID related
Section 135 shall not
apply for a period of
5 years from the
commencement of
business of a
Clarified that spending of CSR funds for creating health
infrastructure for COVID care , establishment of medical oxygen
generation and storage plants , manufacturing and supply of
Oxygen concentrators, ventilators, cylinders and other medical
equipment for countering COVID-19 , setting up of makeshift
then perform CSR duties eligible CSR spends Specified IFSC hospitals or temporary COVID-Care facilities, or similar such
company activities are eligible CSR activities
1 32
11
SECTION 137
COPY OF FINANCIAL STATEMENT TO BE FILED WITH REGISTRAR
(Not covered in ICAI module of Audit)
When Financial Statements are adopted in

When Financial Statements are not adopted in AGM When AGM not held Filing by OPC
in
AGM
a
A copy of Financial Statements including Where AGM of a company for A one person company shall file a copy of FS duly
consolidated financial statement if any Where FS are not adopted at Where FS are not adopted at any year has not been held adopted by its member
AGM but adopted at
J
AGM or adjourned AGM
adjourned AGM
Within 180 days from the closure of the financial
k
Along with all the documents with are required The FS along with the year
to be or attached to such financial statement required documents duly
under this act Duly adopted at the AGM Such un-adopted FS along adopted FS along with the
a
signed along with statement
with the required documents required documents of facts and reasons for not Filing by Companies having Subsidiaries
holding the AGM shall
Shall be filed with the Registrar
Within 30 days of the date of AGM

Shall be filed with the
Registrar
r t h
Shall be filed with the
Registrar
Within 30 days of the last
date before which AGM
should have been held
A company shall, along with its FS, attach the
accounts of its subsidiary or subsidiaries
As per Rule 3 of the companies

(filing of documents and forms in
Extensible Business Reporting Language)
Within 30 days of the date of
AGM
S a Within 30 days of the date of

such adjourned AGM
Within 30 days of the date of
such adjourned AGM
which have been incorporated outside India and
which have not established their place of business
in India
.
Company
Rules, 2015 Earlier Penalty ` 10,000 + 1000 per day for
The registrar shall take them (a) Compnay -fine ` 1,000 for every day during continuing failure [max 2 lacs]
Penalty
A
in his record as Provisional which the failure continues Max.` 10 Lacs,
The following class of companies shall file their The MD and CEO or directors
till adaption in adjustment and
financial statement and other documents under Penalty of ` 10,000 - max ` 50,000
AGM (b) The MD and CEO or directors Penalty of:
C
this section with the registrar in e-form (1) Imprisonment upto 6 months or
AOC 4/AOC-4 CFS XBRL using the XBRL (2) Fine Min ` 1 lac but Max.` 5 Lacs, or
taxonomy (3) Both.
(1) All companies listed with (2) All companies having (3) All companies which were hereto (4) Exemption
any stock exchange (s) in Paid up capital covered under the companies (Filing of (a) Banking company (b) Insurance company
India and their Indian or > ` 5 crore Or Turnover documents and forms in Extensible (c) Power sector company (d) NBFC
Subsidiaries > ` 100 crore Business Reporting Language) Rules, 2011 are exempted from XBRL filing
1 36
13
DIVIDENDS & TRANSFER TO RESERVES
(7) Section 126

(5) Payment of (8) Section 127 (9) Section 124 Unpaid Dividend Account
Right of Dividend, Right Shares, and Bonus Shares to be held
Dividend in Abeyance Punishment for failure to distribute dividends
Where any instrument of transfer of shares has been delivered Dividend not claimed in 30 days from date of
n
Dividends are to any company for registration and the transfer of such Where a dividend has been declared by a
payable in Cash declaration, to be within 7 days deposited in scheduled
i
shares has not been registered by the company,the company company but has not been paid or the warrant bank to be called the Unpaid Dividend Account else in
or Cheque or shall : in respect these of has not been posted within
Warrant by case of delay interest @ 12% pa shall be payable to the
30 days from the date of declaration to any
a
Electronic mode members.
Transfer the dividend in relation to shareholder entitled to the payment Within 90 days of such transfer a statement containing
Keep in Abeyance in
such shares to the unpaid relation to such shares the names, their last known addresses and the unpaid
J
Dividend shall dividend account (Section 124) Any offer of right dividend to be paid to each person and place it on the
be payable unless the company is authorized website of the company.
only to a shares under Section Every director of the
by the registered holder of such
registered 62 (1) (a) company shall if he is Company shall Amount so transferred if unpaid for 7 years from the
share in writing to pay such
k
share holder or dividend to the transferee Any issue of fully paid knowingly part to the also be liable to date of transfer to Unpaid Dividend Account shall be
to his order or specified in such instrument of bonus shares under default transferred alongwith interest, if any to IEPF. Claimant of
pay simple
to his banker transfer Section 123(5) Be punishable with can even subsequently claim his share after complying
a
interest at the
imprisonment up-to 2 with prescribed procedures. Statement of amounts to be
years rate of 18% p.a. credited to IEPF shall be filed in From DIV .5 (Rule 4)
(6) Section 123(3) Declaration of Interim Dividend
during the SM Update
h
Liable for a Fine which Penalty - 124(7)- In case of failure
period such 2022
shall not be less than Rs (i) Company- ` 100,000 and in case of continuing failure,
t
1000 every day during default
Restriction Procedure with a further penalty of ` 500 for each day after the
Meaning Declaration which such default continues
r
first during which such failure continues, subject to a
continues maximum of ` 10,00,000 (Earlier 5L to 25L)
According to (ii) Officer in Default -` 25,000 and in case of continuing
a
According to section In case the company
section 2(35)
Exceptions failure, with a further penalty of ` 100 for each day
123(3) The BOD of a has incurred loss No offence shall be deemed to be committed after the first during which such failure continues,
Dividend company may declare during the current The BOD subject to a maximum of ` 2,00,000 (Earlier 1L to 5L)
S
includes any interim dividend financial year up to may declare
interim during any financial interim Where the dividend could not be paid by
the end of the quarter
dividend year dividend and reason of the operation of any law;
.
immediately FAST ka Guru Gyan
preceding the dates the amount
of dividend Where a shareholder has given directions Interim dividend can be declared by the BOD if AOA
Or at any time during the period from of declaration of permits, unlike final dividend which is proposed by
including to the company regarding the payment of
A
closure of F.Y. till holding of AGM interim dividend BOD & declared by shareholders
interim the dividend and those directions cannot
be complied and communicated to him; Members can not enhance the rate of dividends as
dividend proposed by directors
shall be
C
Where there is a dispute regarding the Section 8 companies can not declare dividends
Out of profits Out of profits Such interim dividend deposited in Dividends can be paid only out of free reserves and
shall not be declared right to receive the divided; not from the capital reserves/statutory reserves/
of the generated in a separate
financial year F.Y. till the at a rate higher than bank CRR etc.
Out of the average dividends Where the dividend has been lawfully If dividend was declared and not paid until 1 year
in which quarter account
the declared by the adjusted by the company againts any sum from the date of declaration the director will be
interim preceding within 5 days
surplus in company during due to it from the shareholder; disqualified under section 164 (2)
dividend is the date of from the
the P & L immediately Preference share holders has only preference in
sought to be declaration date of Where, for any other reason, the failure dividends, not a right to claim dividend even if they
account preceding 3 financial
declared (i.e. of the declaration was not due to any default on the part of are cumulative preference share holders
current year interim years
the company. Dividend & dividend distribution tax is to be
profits) dividend debited to P&L appropriation account
14
CODE OF ETHICS
te
upd2a2! Non-Compliance with Laws and Regulations (NOCLAR) (Important for May-22)
2 0
[1] Introduction & Scope [2] Some important facts about NOCLAR
n
Introduction- Non-compliance with laws and regulations (“non-compliance”) (a) During Course of Providing a Service :
i
comprises of acts of omission or commission, intentional or unintentional, NOCLAR will be applicable if a professional accountant encounters, or is made
a
which are contrary to the prevailing laws or regulations committed by: aware of, non-compliance or suspected non-compliance. He is not required to
J
a client/professional accountant’s employing organisation; investigate, nor responsible for ensuring compete compliance.
TCWG of a client or employing organisation;
k
management of a client/ employing organisation; or (b) Expertise of Laws not Required :
other individuals working for or under the direction of a client/ employing A professional accountant is expected to apply knowledge and expertise, and
organisation
However, NOCLAR under Revised Code of Et8t address the personal
h a exercise professional judgment. However, he is not expected to have a level
of knowledge of laws and regulations greater than that which is required to
r t
misconduct unrelated to the business activities of the client/ employing organisation undertake the engagement.
S a
Scope- As per IESBA, following examples would be covered in NOCLAR:-
Fraud, corruption and bribery

(c) Certain Matters Expressly out of Purview:
Matters that are clearly inconsequential, or relating to personal misconduct
pertaining to business activities of the client not covered.
Securities markets and trading
A . (d) Disclosure, which is Contrary to Law not Required:
As per IESBA Code, disclosure of the matter to an appropriate authority would

Data protection
Environmental protection
Public health and safety

C
Tax and pension liabilities and payments
be precluded if doing so would be contrary to law or regulation.
CODE OF ETHICS DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 69
29
CODE OF ETHICS
Non-Compliance with Laws and Regulations (NOCLAR) (Important for May-22)
[3] Non-Compliance with Laws and Regulations vs SA-250
[4] Applicability of NOCLAR in India
S. No. SA-250 NOCLAR
n
(a) SA 250 is applicable only NOCLAR is applicable on professional > The IESBA COEs makes NOCLAR applicable to:
i
Applicability on Audit, and not on other accountants in service, and in practice a all assignments (in case of members in practice), and
Assurance engagements. (it applies on Audit as well as other
a
professional seriveces) b to all employers (in case of members in service).
J
(b) SA 250 talks of auditor’s NOCLAR, while being alike to SA 250 till > However, in the ICAI Code, as of now”
Responsibility responsibilities for laws this point, is further ahead of it in that it a Institute has restricted applicability of NOCLAR to Audits assignment
having direct effect & other takes into account non-compliance that
k
laws that do not have a causes substantial harm resulting in of listed entities (in case of members in practice) and
direct effect on the b For the members in service applicability has been restricted to
a
determination of the
amounts and disclosures employees of listed entities only.
h
in the FSs, but compliance
t
with which may be fun- [5] Responding to NOCLAR - Summary Chart
r
damental to the operating
aspects of the business.
a
In case of In case of Steps to be taken
(c) SA 250 does not NOCLAR is related to affect of Audit Engagement
Employment for responding
non-compliance on investors, creditors,
Stakeholders
S
employees as also the general public
Responsibilities Obtaining an understanding
(d) This provision is not As per NOCLAR, in exceptional circumstanc- Responsibility of the matter
.
of Professional
Breach existent in SA 250 es, CA might become aware of an imminent of Senior Accountant Addressing the matter
Professional
of law breach of a law or regulation that would cause
A
Accountant Seeking Advice
in Service
considered whether it would be appropriate to Determining whether
C
discuss the matter with MGT or TCWG & exercise further action is needed
professional judgment and determine whether to Responsibilities Determining whether to
disclose the matter immediately to an appro- of Professional disclose the matter to an
priate authority in order to prevent or mitigate Accountant other Appropriate Authority
than Senior
the consequences of such imminent breach. If Imminent Breach
Professional
disclosure is made, that disclosure is permitted. Accountant Documentation
70 AB AUDIT HOGA SABSE SCORING BY CA. SARTHAK NIRAJ JAIN
30
CODE OF ETHICS
[6] Documentation Requirements in NOCLAR Important Notes
Revised Code over and above require the professional accountant to
follow the additional documents requirements as under:
i n
How MGT /
TCWG have
The course of action the
accountant considered, the
How the accountant
that the
J a
k
responded judgments made and the
responsibility of
decisions that were taken,
to the
a
public interest has
having regard to the reasonable
matter.
and informed third party test.
This documentation is in addition to complying with the documentation

requirements under applicable auditing standards.
r t h
S a
A .
C
CODE OF ETHICS DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 71
31
2
UNIT
AUDIT OF NON-BANKING FINANCIAL COMPANY
H
1. Applicability of
Ind AS on NBFCs
(i)
Listed and unlisted NBFCs :-
Net worth of ` 500 crore or more ASSETS
and
n
H/S/JV/A companies of such NBFCs;
i
• (f) Cost of material consumed
(ii) and small enterprises
All other listed NBFCs, unlisted NBFCs (i) Cash and cash equivalents
a
•
Net worth of ` 250 crore or more but less than (ii) Bank balance other than (a) above
than micro enterprises and small enterprise
` 500 crore
J
and (iv) Receivables
H/S/JV/A companies of such NBFCs; (v) Deposits
Net worth calculated on 31st March 2016 (1) Trade Receivables Total Expenses (IV)
or (2) OtherReceivables
k
(v) Loans and tax (V= III - IV)
a
(vi) Investments
(vii) Other Financial assets (b) Provisions Tax Expense (VIII):
(1) Current tax
h
(2) Deferred tax
Update (a) Inventories
t
Division II & III 2022 (b) Current tax assets (net) (3) EQUITY
r
(c) Deferred tax assets (net) (a) Equity share capital
(a) NBFCs allowed to present items of the BS in order of (b) Other equity
(d) Investment property
a
their liquidity not allowed
NBFCs (f) Property, Plant and Equipment
S
current and
.
(b) An NBFC is required to separately disclose by way of loss (specify items and amounts)
(i) Goodwill
a note any item of ‘other income’ or ‘other expendi-
ture’ which exceeds
A
Division II, on the other hand, requires disclosure for (i) Interest income SUB-TOTAL (A)
anyitem of income or expenditure which exceeds (ii) Dividend income
or ` (iii) Rental income loss (specify items and amounts)
C
LIABILITES AND EQUITY (iv) Fee and commission income
LIABILITIES
(c) NBFCs are required to separately disclose under SUB-TOTAL (B)
, the debts due from an LLP in which its Other Comprehensive Income (A+B)
Total Comprehensive Income for the period
(ii) Payables (viii) Sale of services
other Comprehensive Income for the period)
(I) Trade Payables
income’ on the •
loss and small enterprises Basic (`) & Diluted (`)
Total Income (III = I + II)
(e) Separate disclosure of trade receivable which have • Expenses Basic (`) & Diluted (`)
than micro enterprises and small enterprises (a) Finance costs
(II) Other Payables (b) Fees and commission expense Basic (`) & Diluted (`)
to statutory reserves have to be separately disclose in
11 | | Connect with FAST at
See point
32
PEER REVIEW
(As Per revised STATEMENT ON PEER REVIEW, Revised in 2021 )
Update
2022 PRACTICING UNIT (P.U.) (INCLUDING BRANCHES)
a 5
1 OBJECTIVES b Update SUBJECT TO REVIEW LEVEL -I
Primary object is
To ensure adherence to requirements & to
2022 LEVEL -I Once in 3 years
Means a means the Statutory Audit of – net worth >100 crores OR
member as (UDIN) means a with quality control AMC or MF turnover 250 crores or above
Statement from The which standards,
expression is It is primarily directed towards India/ abroad
The Peer SEBI (Lodr), 2015
n
Review Board (the Board) was established Accountant for
Means the
i
4 trusts which are covered under
in March, 2002 and the AREAS NOT TO BE EXAMINED IN PEER REVIEW
selected or such other period or
a
any period as may be prescribed Public/ Bank/PFIs/by way of
by the for
i ii iii >50 >250 crores or networth >5 crores
Means
A J Consultancy
J
before various
to prepare tax
returns or
*Statutory Central Audit of –
Accountants or a Member in
in an individual name or a
B I Update
2022
a k v LEVEL -II Once in 4 years
h
trade name or such
2
i. iv (1) Statutory/Concurrent/
vi
t
that are applicable for
C DEFINITIONS H as an expert Internal /System/ Tax audit/
Departmental review of
the PUs more than
r
ii. witness; expert opinion on determined by the
of the Companies Act; 2013 by points of principle, such (a) PSU
a
Means an the Central Government
iii. to assist the client in vii (b) Any Bank
D of the Companies Act or the applicability of
(c) Any Insurance company
S
to determine 2013 by the Central Government certain laws, on the
or other services not
Standards issued by the ICA for due basis of facts (2) Statutory audit of NBFCs - not covered under (1) (2)
E F
.
provided by the
Standards, Statements, Guidance Notes, statements;
client; and
as
A
v.
Means a framework or
as applicable Means a member who statements and
may selected for Peer Review,
C
is an
either as a vi. of the various relevant which involve provision of some kind of assurance apply to the Board for the
and for the conduct
the which are
whether the same were Board shall act upon the same
for a assistant as per the applicable in the context of the
from the date of (iv) The Board
the
receipt of such request
SCOPE OF PEER REVIEW (ii) The Board, the date of receipt
3
(v) The Board may, with the
which approval of the Council,
requires a modify any of the above
(vi) Board or PU may request
12
Q.1 Write a short note on Technical, ethical and professional standards as per statement Q.2 Q.3
See point See point See point
33
PEER REVIEW
Update
PEER REVIEW BOARD 2022 ELIGIBILITY TO BE A REVIEWER
5A 8 A PEER REVIEWER SHALL
i ii iii iv v
Be a member In case a member has moved from industry

The term of prescribed by Board at while
The Board shall submit a
with he should have at least of audit
n
report to the Council prior to the date of appointment as a
experience in industry and at least
i
audit
a
The Update
2022 FOR BEING A REVIEWER OF PRACTICE UNIT, MEMBER SHOULD NOT HAVE
Chairman and the
i
J
Vice-Chairman of i ii iii iv v vi
the Board
ii vi of the Board unless there are
of the Board but
Any Been of or Not to accept any
k
by the Council of competent court of an
or, in his by the interest in
absence, the or
a
council or Disciplinary
iii v (b) within partners/ personnel

appoinment
h
Casual vacancies
iv
t
on the Board shall
8A PEER REVIEW OF AUDITORS
r
Council.
(c) The Board shall PEER REVIEW OF ATTEST FUNCTION HAS A SPECIAL SIGNIFICANCE.
ICAI
-A Member of the
or the of the However,
S a No disturbance:-
CONFIDENTIALITY
A .
2
6
(a) Shall
any
by all those involved in the
(b) Reviewer
or
, namely,
C 1
in the
with
>
or any about the process of Review
3
or in
performance of any who are for the conduct of

Dynamic Environment: -
and
related to the
>
See point See point

34
PEER REVIEW
Cooperate to
Update
10 REVIEW PROCESS START complete in
90 days
END
7 OBLIGATIONS 2022 (I) INFORMATION TO BE FURNISHED BY PRACTICE UNIT:
A
SELECTION a b c
OF P.U. & Details of any
assistants taken
APPOINTMENT
in
in the form approved the PU or any of its by any
OF PRACTICE UNITS
OF REVIEWER partners or
OF PEER REVIEWER by the PU within 7 days so that
to any record/
(II) IINFORMATION TO BE FURNISHED BY PEER REVIEW BOARD
a
Shall
or Update Panel of three reviewers can be B
J
record examined by him, as a or further 2022
PLANNING
to the reviewer shall be recommended
Complete the review within
(III) SELECTION OF SAMPLE BY PEER REVIEWER
k
a b c d
is
a
recorded otherwise than in a
Update Select sample of Seek Plan for
2022 assurance service to be from to be completed within
h
in a if reviewed within of from date of
and for
r
i
t ii iii iv
9
QUALIFIED ASSISTANT
C
EXECUTION
S a Visit will be
conducted at
Carry out
of review based on
for
Review of Records
.
any other to ensure compliance with
Update place should technical, ethical, professional standards with technical,
2022 not extend ethical, professional
A
beyond 7 to The of assurance service standards
Assistant The number of involved in
days based on
C
The D
REPORTING
Update
2022
i ii iii iv
State the Address report of compliance with (b) Response to Prelimi- v

> submit peer review report to Board with
of to PRB ): Discuss/communicate Unit shall, within 5 days on
of the date of receipt of
> submit to Board with see
ensure compliance
with technical, ethical, or non-complaint with reference submissions or represen- next
to Preliminary Report and how Response dealt with
professional standards submit copy of Reports of PU
14
See point
See point See point
35
12
PEER REVIEW
Update
2022 CERTIFICATE WORKING PAPERS OF PR
12
On receipt of peer review report, the Board shall – 13 The Reviewer shall document all his
a copy
Inform
if called for by the Board
submission of
Evaluate whether
n
Check whether P&P All documents
compliance of TPE
standards & well
communicated
conclusions + report
a i
covid, ICAI has
i i period will be
iI
14
FOLLOW ON AUDIT
J
and conclusions to validity of peer review In case of a , The
concerned persons about Finally, the reviewer Board shall order for a
policies and procedures
It is the responsibility
k
may consider the of the PU to complete the from the date of issue of
a
where such P&P do not exist determine: & submit all
iii If the Board so decides, the period
necessary documents of one year may be
h
compliance of such P&P shall
the date of
from the date of issue of the
t
expiry of the previous
Decide number of assurance

11
a 17 r
COLLECTION OF EVIDENCE
BY PEER REVIEWER
15
•
INHERENT LIMITATIONS OF REVIEW
The reviewer conducts the review in accordance • As there are
APPROACH OF
.
THE REVIEWER S A Peer Reviewer collects evidence •
with the
which happens
C A It includes
and other records of the

18. DIFFERENCE BETWEEN PEER REVIEW AND QUALITY REVIEW
1
In contrast, a
quality review
is
i Quality Review Board (QRB) is
& is
to act as a
He observes the
to be considered procedures/ processes followed in 2 ii
3 Peer review is a part to
INDEPENDENCE OF PU
16 ICAI iii QRB carries out
Does the PU have policy to ensure Does the PU Does the PU Does the PU Peer review
He enquires and iv
these with is a r are
(i) (ii) policies and the expected (iii) policies and (iv) not is to
inspected for
standards of professional from the responsible person and the purpose but to v Serious errors detected in quality
behaviour of review

- See point 13.
Q.11 See point
Q.12 See point See point
36
QUALITY REVIEW
3 REVIEW ENCOMPASSES
SJ TIPS
1 • are free from MM
vered in place at AFUR
INTRODUCTION •
only Statutor
y Audit are co AFUR
• Presently by QRB
under review with Technical standards, Guidance & L&R
a Quality R and QC at
•
m plies with standards, L &
co
n
Discussion
b
i
•
and its personnel
J a 4
AS PER THE QRB, THE TERM
and
and
ii.
for quality within

2 SCOPE & OBJECTIVES OF QUALITY REVIEW
Quality review is
a k “TECHNICAL STANDARDS” INCLUDES
h
(a) and
t
(b)
d Each person is
to comply with it
1
a
It is r
Hence certain aspects of selected statutory audits & other areas of
to
Companies Act, 2013;
of the
S
in which a
2 to provide -
A . SCOPE & OBJECTIVE OF QUALITY REVIEW: INCLUDES

under the relevant statute;
C
by the ICAI;
issued by
and
a c d
b
whether the “OTHER RELEVANT GUIDANCE” INCLUDE:
has ensured whether the the
compliance with the has ensured has
in India & implemented a
with at The The
other
reference to the on account- issued by
and as
and the
the ICAI;
Update
2022 16
Q.1 - See point Q.3
Q.2 - See point See point -
37
QUALITY REVIEW
E. INDEPENDENCE F. QA INDEPENDENCE & EXPERTS TR should adhere to the while preparing his report apply to the
AND QUALIFICATION reports
OF TECHNICAL TR shall
Shall be CA. not have been associated with TR shall himself
REVIEWERS the AFUR and the concerned
He should not be a
A E
member of current
QRB/ICAI’s Central
sign the last
Should not have TR shall be required to segregate his observa-
-
TR
B F
in
into those material and nonmaterial;
no direct interface under
either with the not himself
H.
under review or the Board. be empanelled as a TR will have access to or take abstracts of TR should build in a review process to be able to
a
or
them for
have working with with the the records and docs but C the Technical
in electronic form-SA 230; and
other law taken/ Reviewers
J
pending TR shall provide and (TR) TR shall include a suitable para in the review
guidance/ advice to D H report on the in
should not have

with the
G. CONFIDENTIALITY i k
I. STAGE WISE APPROACH OF QUALITY REVIEW GROUP’S PROCESS
a
h
to conduct warranted
details
t
i ii iii iv ii Where there are between the vii following broad
There should be Technical Reviewer.
r
last 3 F.Y. and/or Technical Reviewers They are of the TR and the views of the
interest of all those iii TR, of his on-site review -
should ensure that required to send Where the prepared as per applicable FRF: -
of
a
pertaining to review process. of the review report of the TR -
statement of > on his truth and
involved with the
review process TR would submit fairness of the FSs; auditor has not obtained
S
or any of the network review documents etc. in reasonable assurance about material mat-
assignments is each one of their for certain special circumstances and request the ters like financial statements as a whole are
Technical Reviewers, his/her
.
should not have been of paramount assistants in a free from material misstatements whether
are kept in strict prescribed > Report should be issued on - v respect of
s signed all the joint auditors should be
A
> The report should be addressed to the Chair-
or rendered services to person
it G (A) EVALUATING THE PROFESSIONAL JUDGMENT EXERCISED BY THE AUDITOR IN QUALITY REVIEW of other joint auditor is required on any In other cases of non-compliances to various
> The TR, from the requirements :-which are not so material in
C
may decide to area was allocated to them nature as
“professional judgment”,
audit and due
to > TR shall also report
to the AFUR nature :-
on the in future or has
laid down u/s 141(3) vi submit
that were
iv on the be taken on record and the
straight jacketed known to the auditor up to the date of the
2013 of the closed.
following:
principle
v. He does not based rather than rule based. non-compliance
• The TR would need to appreciate that the stated in the Terms of
professional judgment also interact with TR and request
region exercise of professional judgment in any
- him to explain/present his evidences that
decisions that are not otherwise supported by the facts certain circumstances including:
stances that are known to the auditor as at the
19 CA FINAL AUDIT : QUALITY REVIEW Visit FAST e-Store | www.elearn.fast.edu.in 95225 64050
Q.7 Q.8 Reviewers, based on the conclusions drawn from the quality review, shall issue a
(SM-22)(MTP-N-18)-Hint: See point ‘8(A)’ (next page) (MTP-M-18) - Hint: See point ‘8(B)’(next page)
38
INVESTIGATION
14 INVESTIGATION FOR VALUATION OF SHARES IN PRIVATE COMPANIES
15
INVESTIGATION ON BEHALF 16 INVESTIGATION ON BEHALF OF BANK PROPOSING TO ADVANCE LOAN TO A COMPANY
The necessity for shares of a as the shares of a OF AN INDIVIDUAL OR FIRM
private company PROPOSING TO BUY A BUSINESS
Purpose for
of repayment of loan
Preference shares
-
for business integrity
,
revalued on the basis of the
of are
&
i n
a
on its
of any by
its past
J
arise. of company
is the
number of shares comprising the transferability, average rate of
k
to arrive at the value for one share.
A C E
a
If to customers whose
of each item, Value of
h
its gross value.
support. Its’ an
t
1. value of each inventory be
to
investment.
r
inventories &
2. it at a
more. Whether recent
Value changes.
a
in the value & whether given
therefore following
S
4. The F
The of
.
company are
There is any on the shares a Whether
A
in respect of which without using
1. for
of the in the future.
C
,
which the company amount thereof which are in for
If on the assets have been
ter of in the register of or those on which a

I
4. to
company is a public company,
,
5. of
In case of repayment of
on the shares for the purpose of the
purchase appears to be
25 | 2022
Q.11 Mr. Clean who proposes to buy the proprietary business of Mr. Perfect,
39
AUDIT OF BANKS
Update
Custody of large volume monetary items auditor

needs to address
Engagement in a large volume and variety • • Bank • • and
and Its Environment • • Verify
Wide spread use of • including Internal Control Assessed Risks • - • Controls over key data available are
Indebtedness • • ture and environment use of various • Ensure in case of
• Overall Audit Strategy system restarts
wide network • and •
in
• Risk • • Verify a/c master
Memorandum under • Ensure system prevents balance cannot be
• • Determine Audit various systems and related products/
Engagements Materiality • Data integrity and
a
• • data security • being • Verify • Verify all general ledger
• Consider
Risks of Material • Business generated/periodicity codes
• Verify
and •
J
• Planning Misstatements (SA-315)
• • Risk of Fraud • disaster control plans and process
•
• • made are •
• •
Regulatory requirements related to general ledge tallies
•
6
k
• to
- •
1 7
processes
ment for
arise
Legal Framework
for Banks in India
AUDIT OF
h a Update
t
and
i
BANKS 5
r
of
a d
• Long form audit report (LFAR)
ii -
a
SLR require-
& resultant
3 4 ments
is containing as well as
S
iii Extensive and true
conducted as per
It is in
.
iv Statutory and regulatory
?
v
•
A
of new
guidelines
vi and
C
– adequate for audit?
made
and LFAR for

Update
•
to Format of
•
• Details regarding
ACB
of India in
usually concept of mandatory

• of client LFAR
• Auditor of RRB - by Board's views
are listed on recognized RBI
involve Consider of submission of
requirements u/s 133 various interest
Statutory Central Auditors and
48
40
AUDIT OF BANKS
Internal Audit Update

e 9
• Central audit and
in as required
(a) General Update
some level of I an III

from one to
frequently drawer an
n
reasonably good Central verify sent
i
dates in of
Work of one to be always auditor compliance report
• It is responsible for II IV
of of statutory
Risk-Based customer `
a
of auditor
Internal Audit
over to cover
by an issue
J
forms
• It is also responsible for and of
limit of
k
do not
appointment of concur
and are or
a
in case it exceeds a
take
Require send
be in
of concurrent Update
to cover any
r t h validity
determined
a
of two or to immediate to recover be adjusted only
basis of
S
test
is and counted to all irregular Statements to
.
in full by be sent regularly & Margins
•
assessment of business and be taken preferably received
against
A
properly between if any entries are not in respect sundry
by day & of
• taken from in sundry
interest
C
in various no
Monitor of
Update of
• Assessment of
systems &
overdue over Net credit
totals necessary requiring balance in of
only margin be in adjustment to be considered as
• Making an assessment of carefully to analyze
level and and returned
prevalent against review of Examine
risk areas and assess level by or drawing power
before reviewed in respect
accompanied by at least can be
It may be
cover any examine
• Drawing up of risk matrix
decline
49 |
41
AUDIT OF BANKS
Update
Update
is
are o/s appropriate and /recoverability
by treasury review of investment policy
in terms of are appropriately sup p
ported by loan documents
investment
i n
a
are reconciled
A B
J
money at about ADVANCES
of internal C OF ADVANCES
k
investment ADVANCES
investments are
D Update Update
a
I Investments
h
Examine and
Verify
covenants or and verify
E
t
master data of loan statements
r laid down &
r
regarding registered
of investment from G F and/or
disposal complied Review
a
tagged under single of
and to Examine advances are
is duly approved by according to
S
Examine all large
note Examine
.
requiring adjustments regarding
? Examine accounts surrender value
A
but not yet in case insurer
? Examine
of borrowers examined
C
end is
Examine from
or and outstanding credited been maintained for
interest Examine system
own Examine
Examine list of
in restructured a/cs to been
Examine validity
on Examine
guidelines in Examine
Examine
for
on sale from
Call loans received from system deeds for review/

Verify
of interest
50
42
AUDIT OF BANKS
Update
a Fixed Assets f
e
for
is d
n
also required to be made at
A F Update
i
under
& provision by its
&
as per extant I
requirements
under
J a
k
guidelines formulated
sundry of a/c
for G in
a
respect of it implies it is system of
B being made in
broadly
• Verify
h
and account being upgraded as SALE OF FIXED
• Control over
t
incurred on given b
norms to be
r
downgraded of sale deed followed by
• and and of
a
including non
• for in respect of requirements
Update
C ensuring availability of
S
by payment of in respect of
overdue amount
.
only
accounts in respect of sale of assets
In case of requirements of
guaranteed advances
A
any properly
D or
Government Update
same
reported in LFAR
i
ii
C originally sold relied upon
•
•
Verify
Verify
of newly
• •
•
pay
system of
acquired permises
iii • Verify • verify
assets a WR guidelines given
E Update bill etc
• Examine
listed in granted by a been
i L treated as
of
lease premium in case of
ii
become irregular improvements to of
iii permises
51 |
43
AUDIT OF BANKS
Update
Update
entries
• Capital consists mainly of
in
all or any
segments been relates to
a
• Capital consists of
of
J
to provide a stable
resource tao arising from
or of
a k
capital funds for I
CRAR =
and capital funds of
–
availability of
and
in
r t h Framework
CRAR of 9%
(D) Basel III framework
Update
a details of
old o/s entries in suspense a/c
S
reasons for delay in
-
Normal
A . require a
signed to
understand
de- management
C
stamps consumed plausible adverse
economic condi nomic stress
risk management and
and
and disclo
Update
outstanding
relevant
•
as compared
verify
of • SR of
lower of NBV
52
44
AUDIT OF BANKS
Update
• •
• and non-
•
and
"Verify in ` •
requirements of regular
n
•
been considered for
i
made between for
disclosure • Verify in case of
for debit of customers
required foreclosure penalty deducted from
a
is made guarantees in
ranging from 7 days at based on
Verify on sample basis
J
is
are also an important Verify on from f
k a Update e
•
at regular intervals for a predetermined over
a
Verify some of
RBI credit and of
h
•
d
t
designated in foreign currencies Verify on sample basis LC Register
•
maintained
r
• amount of LC
•
at rate list of and payments made under
Deposits would be of
are of
S a outstanding
would also provide
over
adequate internal
•
and copies of
.
guarantees are issued under
evidence about and • for
unused
(a) Current and
A
verify • guarantee register •
Verify on a sample basis
for
in
C
relevant guarantee registers
respect of
contracts
• Verify guarantees
for all current income
guarantee
on a test •
(e) General if in
not
Procedure obtaining
• Update
account is under
i ii v
Verify on a sample basis some of
and measures is iii vi
revived/closed during
formulated and put in
iv
53 |
45
AUDIT OF BANKS
SCOPE OF CONCURRENT 13. CONCURRENT AUDIT
Update
2022
2 AUDIT IN BANKS
1 The detailed should In case the branch is
Ensure of accounts
BACK DROP be clearly and uniformly determined for the
registers including is proper.
It is a done in accordance with Early
of the Board of Directors (ACB). i. and inter bank accounts,
as the Ensure that the branch gives ii.
and iii. etc.
Cash. Foreign exchange.
Deposits. Carry out of , discount,
n
It is House-keeping. Ensure are dealt commission and exchange.
Advances.
i
Concept is to verify the Other items. properly Check the
Investment. of
of statements, returns, the to as to the
a
in clearing have been adjusted.
by cash through close.
J
It is a
payment involving of inward and outward remit-
tances
Update
2022 4
COVERAGE OF BUSINESS/
BRANCHES
(i) The scope of work to be
Ensure that
in respect of
a k Check
under LC.
Check and
h
whether the debit and credits are
the
5 Check whether
t
coverage of business/ branch has acted
TYPES OF
r
for
3 with the
Ensure that the ACTIVITIES TO BE purchase sale of foreign currency and neces-
a
of the branch are COVERED sary
CONCURRENT AUDIT due prior approval of the ACB. Ensure that
SYSTEM IN COMMERCIAL (ii) Banks may, however, ensure that
Ensure that the branch is currencies are
S
BANKS regarding
Ensure that
It is to be regarded as part of a them as per their currencies is
are covered BRs SGL forms, delivery of scrips, documen-
.
to ensure Ensure of the
under concurrent audit.
and which helps in (iii) Ensure that the sale of purchase
A
at branches. under concurrent audit shall at rates
It is, therefore, necessary be balances.
for the of the unit and must include
Ensure that loans and advances
C
of
to the implemen- have been
Ensure that and documents have been received and
The bank should
Ensure that and , such as receipt of
Check the
and , instalments,
Whether there is any of the loans and whether there are
to correct the lacunae. and
Whether the LC issued by the branch are and they are
Percentage check of
the whether they have been in register.
Ensure of of exchange.
opened
whether has been
current
Verify whether the
Verify that i have been promptly by the branch, have been

Write a short note on Reversal of Income under Bank Audit. See point See point
See point See point
See point See point
46
AUDIT OF BANKS
Update 6 APPOINTMENT, REMUNERATION OF AUDITORS ADDITIONAL QUESTIONS
2022 REPORTING SYSTEM AND AUDIT COMMITTEE: -
`
is ` `
The to consider whether concurrent
accounts. `
or the
See Point
See point -
in
ACB of the bank shall decide the
Generally, tenure advances to Dot Com Companies.
basis. However, no See Point availing cash credit limit from U bank of ` 25 crores. The limit availed remained less
a
branch/business unit for a period of
than `
Explain the scope of concurrent audit of a bank with reference to Reserve
J
to RBI & ICAI.
Bank of India guidelines opened another bank branch adjoining to company premises. The company is having
See point ` 25,00 crores remain all over the
view
and
such as coverage of areas,
of banks keeping in
respect.
See point
a k company seeks your opinion.
C
Each bank should auditor should discuss the
t h
ABC Chartered Accountants have been appointed as concurrent auditors for
r
audit team for Agra branch of the bank and have been instructed by your
with other banks depends upon the payment made to that bank.
a
The
by st
in a special note and the concurrent auditors are to be during the concurrent audit.
S
given immediately to the bank’s See point
should be
.
A containing in audit plan.
features brought out during
bank. The bank has recognised on accrual basis income from dividends on
A
concurrent audit should be Whenever
they should
There should be immediately be
C
of the In the course of audit of Skip bank Ltd., you found that the bank had sold certain of its
concurrent audit to ACB and and accrual basis if the same has been declared by the Corporate Body in its
/report of the audit system Follow up concurrent area of checking.
should be placed before ACB. audit should be given See Point
of the report the on accrual basis is not in order.
D
issues which have to be considered in the audit of advances. In the course of statutory Branch audit of KS Bank Ltd, you observe that some
audit borrower accounts have been regularised before Balance sheet date by payment of
One of the of the audit
and also of of Hint: See Point - See Point

concurrent auditors.
56
47
AUDIT UNDER FISCAL LAWS - TAX AUDIT
Audit under the Income-tax Act, 1961 i

A. The Income-tax Act, 1961 contains several provisions
for i
and other assessees to require
No No,
& AO
i. Assessee carrying on any where ii
n
means to get audited the accounts of assessee then he has to
exceeds ` `
i
OR
ii. Assessee carrying on where gross ` ii
a
OR
iii. Assessee carrying on referred to and
A. Applicability
J
OR No
Assessee carrying covered u/s 44AD (where the limit of No .
and
k
Note: • S.44AD and S.44ADA only
• Sec 44AD is
iii
a
• Sec. 44AD Individual and partnership
v. - Assessee carrying on
•
h
Update H.U.Fs.
In case of a
t
and i. Professional receipt =
` 1 crore to ` + from
r
Update
- when made during the year Business turnover = exceeds the limit of `
requirement in respect of such
Where
a
Where oth
exceeds ii. Professional receipt = No
Note: - in + profession does not exceed
< 5% exceeds ` `
S
Business turnover = of ` 50 lakhs.
#
/ 50 Lakh*
.
Update Lakhs*
B. Audit D. Forms and /Reports Update
Revised
iii. – turnover = 7 crores
conducted – turnover = 2 crores
` `1000
of the Income Tax Audit – turnover = .
A
u/s 44 AD declares
u/s
and Report (TAR) atleast
288 of the Income
(i) Assessee
C
i. Required to get or profession to get his accounts audited
and any
person to
auditor under Audit Report in and to furnish the report of
or * For and for
Not required to get allowed. professionals • An is from such
C. Due date for requirements.
(ii) The revised TAR needs
filing of report Audit Report in
of
relevant assessment
year (electronically The report of of the tax auditor and that of the assessee he should keep
only) in respect of in in view the
and furnish it & Report
care should he even though the records, documents,
and also the relevant should state that form of audit report may not have
is which necessitates the due
cross reference to such items the same is not
at the appropriate places. conformity with the amended law.
80
• Turnover made during the year ` `
` ` 5 lakhs.
See point
48
• The term for the purposes of this • There is of the
.
• otherwise than that allowed in a cash memo/sales invoice a Act.
from • to
5
•
deducted from
TURNOVER REMOVAL OF
• He on the ground that he has
or is likely to give an
n
•
AUDITOR • No other
i
• the removal of
a
even if the returns are from the sales made in the earlier year/s.
• • the
to him
J
investment will .
• An incoming auditor should
thereof . as auditor
•
k
of trades in losses and mark to market gain/losses of outstanding
a
I
assignments
h
audit
A
An
APPOINTMENT
4
r t
a
or of
a an assessee or OF TAX AUDITOR II means tax audit
S
an employee conducted
appointed under
.
the same
auditor. management of ADDITIONAL
VI POINTS Update
A
tax auditor. TAX AUDIT III Audit u/s of IT
(Do not apply to a sick unit)

the
for carrying out the statutory audit under

C
CEILING LIMIT
more than 60 tax audit

• Where a statutory auditor has not
or where the report of the statutory
auditor to give his report in Form

V
IV
or various other statues
Audit of
•
audit assignment also; audit of one or
• There is no statutory audit
maintain a record construed as
the
Hint: See point
81 |
- `
See point Hint: See point Hint: See point
49
FORM - 3CD
1 to 8 State Whether the assessee has 9 10 11 12

1: Name of the assessee. Update
2: Address. /
Method of
PAN names of partners/ profession (If more
Note: - loss account includes any employed
Whether the assessee is of
List of BoA maintained &
• If the assessee has address. If maintained in Details of if
the . any other profession)
indicate the Details of such change
in
If there is any any from the method
the and BoA generated. Any
same. If there is any
change in nature of made to P&L
5: Status.
maintained more than one thereof
Previous year.
a
7: Assessment year. please furnish.
of the preceding year List of BoA and nature of
Indicate the relevant clause of • it as per
changes.
J
17
a kUpdate
18 19
20
Any sum paid to an employee
or commission, whether such sum was
h
Amount -
Where Note:
t
consid- of Details of from
Item falling within scope of Update • Where value adopted for
in trade – Rate employees for various funds referred in
r
. < (cc) .
Sales Actual cost/
capital assets. during the
a
Nature of fund
Details of property • Sum received
(for only). to P&L and amount actually Due date
Amount at which
S
• F Actual amount paid
the asset is of year.
accepted. Value adopted or assessed or • The amount Actual date of payment to
converted into stock due to
< 2 crores
.
in trade. Any other item of income. Note:
Whether provisions of 120% instead •
• claiming and
or considered. • The
As an auditor appointed
A
-
you verify and report on the
C
following :
21 25 amendmends
22
Amount Amounts u/s Any amount of persons partly in cash and party
made to persons
. Hint: See clause
It lays down that an Deemed gains arising out of sale of asset on (ii) The assesse has paid rent
which allowance was claimed under sec- of ` 5 lakhs for premises to his
Disallowance / of ee clause
Provision for payment of in accordance with the acquired as per the provisions is sold within
not for the purpose of instances of capital receipt

Amount of amount
-
Hint: See clause

Hint: See clause
82
See clause
See point
50
FORM - 3CD
26 27 28 29
29 A
Amount of • • Advance received on capital asset
received any • Details of any amount
required to report the nature of such or
referred to in if income and the amount involved any amount due thereon
Paid during the year. treatment in the P&L a/c and
n
treatment of Update
provides that where
i
and was – credit in the accounts.
maintain otherwise than through an
provides
a
account payee cheque.
income of the . in his working
paper – company (i) ` •
J
of any the
Impost etc. is passed through the P&L) •
• the shares and repayments of HUNDI
` 50,000 Income tax under other sources. loan otherwise than a/c payee
k
• ` 50,000/- • where the cheque
Treatment in P&L a/c. under
•
a
other sources. Venture capital undertaking from
Note : / company. Note :
credited or
h
• due date
P&L a/c
and not
r t
Whether the assessee has incurred •
S a Update
Whether the assessee has entered into an received an advance for

If an
assessee has forfeited
If an assessee
has not forfeited the amount
.
associated enterprise of the Indian capital asset and the same the amount without
is outstanding for 5 years right of forfeiture as per
Permanent
A
(i) Under
foreign company in (i)
(ii) ` (i) ` India :
-
C
(iii) Whether the with of interest or of similar nature incurred: • interest or of similar (ii) ` in the previous If the assessee
the associated enterprise is (ii) The requirement If the assessee contends that the amount has
as per the provisions crore rupees which is the arrangement has forfeited the amount
during the previous year (in `) forfeiture of such amount. without right to forfeit auditor needs to look at all facts
(iv) has (iii) Amount (in ` • and in case there is no
since the lender is a non-resident. Note :
interest or of similar nature as per (i)
-
outstanding for a that even though the contract
(v) `) of (iv) Details of associated enterprise permits forfeiture on some
interest income on such excess money there is no
(v • the interest shall not requirement to report such
should report such for- the assessee has not yet
feiture with appropriate forfeited the advance and other
sums received.
`
` `
Aggregate Fair Market Value = `
See clause '21' See clause
83 |
`
deal with this See clause

51
FORM - 3CD
Update
assessee) of the lender or depositor; - 1 or
n
Amount of loan or deposit ; sum is received; 2
i
Whether the loan or deposit was ; with the assessee) of the payee; Nature of loss/ allowance (in rupees)
during the previous year; Amount of the assessee) of the
Amount as returned* (in rupees) Please furnish
or
a
in the account at cheque or or use of in (if 5 the following
received;
Whether the loan o deposit was taken or accepted
J
account; previous year; of the or 6
cheque or a • under
or use of Whether the was made
which is not an cheque or which
cheque or cheque or or use of advance is received;
vi. In case the loan or deposit was through a .
k
whether the same was year. • Amounts
an or an account or any is 7 Amounts as assessed (give reference to relevant
cheque or In case the order)
a
cheque or or use 8 Remarks
the same was taken or accepted of IT Act, 1961
-
h
Note
the previous year. •
t
appeal pending then take assessed. under
r
• the relevant
provision of IT
Non
in aggregate from a
made in an amount
S a
aggregate to a person in a day or in respect of a single Whether the assessee is required to as per provisions of or
Whether
in terms of
of the company has
.
Income Tax Acts 1961 are not if of -
Whether the assessee has incurred only
where such receipt is or of payment / receipt.
A
(a) The .
Total amount on which .
Total Whether the assessee has referred
Amount of tax deducted / collected out of (vi). to in
(c)
(d)
(iii) Amount of receipt (in ` );
(iv) Date of receipt;
in aggregate
from a person in a day or in respect of a single
-
C
(iii) Amount of payment (in `);
(iv) Date of payment;
in an amount
Amount of
Whether the assessee has furnished the
TAN. Type of from.

out of (vi) and (viii)
In case of a
referred to in
(e) aggregate to a person in a day or in respect of a Due date for furnishing.
one event or required Note:
the assessee is : 2020-21

recorded in during the previous year:—
during the previous year:—
- Amount along with date of payment.
(ii) Amount of receipt (in `); (ii) Amount of payment (in `);
84
`
See clause
52
FORM - 3CD
Update LIST OF ICDS

Whether any cost audit Whether any
In the case of of
was carried yes, u/s 72A Details regarding
the principal items of
give the if any –
of
requirement of on any S.N. Preced-
disclosing DDT is
in
removed.) / Total turnover of - -
the Assessee
items.
a
In the case of - -
turnover
J
- -
turnover
Opening stock. Whether any audit was Please furnish the 4 Stock-in-trade/ - - Assets.
k
Whether the assesee has received any amount in the nature of conducted demand raised or turnover
% of yield. dividend as referred to in other than IT 5. - -
a
the details if any of -
(i) ` on audited as required u/s 44AB
Opening stock. Purchase.
(ii)
h
Qty. manufactured. Sales.
Note: Since
t
under this required in respect of any year
r
7 . The
a
(a) or
Update
S
Whether the assessee is required to furnish state- • • year or years.
ment in under `
.
- powers conferred under
needs to disclose the following
(a) T
• -
.
A
i.
.
.
(i)
. -
C
(ii)
system of ac-
. (iii) assessee. -
(iv) •
which are not reported •
The auditor would need to go (c)
•
report under this clause
head
• of assessee or in respect of any class of or
income. from the this regard.
Hint : See point
•
*Note : has `
Hint : See clause
85 |
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&

h a -on account of amendment made via Companies (Amendment) Act, 2020

Chapter 6: Audit Reports 72 71 14 14 9 9

Chapter 14: Liabilities of Auditor 39 39 5 5 - - 9

S a (a) Peer Review

(b) Quality Review

1 Full Audit DC 3.1 Amendment Notes For May 2022 1 31

Audit Committee & Corporate Governance Separate Notes in Nov22 Folder 15 28

2 Special Audit DC 5.0 Amendment Notes For May 2022 32 53

Audit of Non-Banking Financial Company 32

Audit Under Fiscal Laws - Tax Audit 48 53

Ruth Clare Dsilva

COMPANY AUDIT DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 51

Penalty for failure to report frauds

Section 147(2) Auditor

Section 147(4) Recovery

Section 147(5) Liability of Audit Firm

For audit conducted by an audit firm, if lower of 1% of

Proper Books of Account in

The Inspection in respect of Subsidiary

. (3) any, arising from

19 COMPANY AUDIT DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 19 1

Rule-9 Rule-13 Rule-16

Punishement in case of non compliance Financial reporting

CG to prescribe, as recommended by ICAI, in

(Not covered in ICAI module of Audit)

31 COMPANY AUDIT DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 31 1

However CSR committee not

(Not covered in ICAI module of Audit)

When Financial Statements are adopted in

Within 180 days from the closure of the financial

Within 30 days of the date of AGM

As per Rule 3 of the companies

S a Within 30 days of the date of

(7) Section 126

TCWG of a client or employing organisation;

However, NOCLAR under Revised Code of Et8t address the personal

h a exercise professional judgment. However, he is not expected to have a level

of knowledge of laws and regulations greater than that which is required to

Fraud, corruption and bribery

Matters that are clearly inconsequential, or relating to personal misconduct

pertaining to business activities of the client not covered.

Securities markets and trading

A . (d) Disclosure, which is Contrary to Law not Required:

As per IESBA Code, disclosure of the matter to an appropriate authority would

Public health and safety

CODE OF ETHICS DRONE CHARTS BY CA. SARTHAK NIRAJ JAIN 69

This documentation is in addition to complying with the documentation

NBFCs (f) Property, Plant and Equipment

11 | | Connect with FAST at

a k v LEVEL -II Once in 4 years

(vi) Board or PU may request

Be a member In case a member has moved from industry

iii v (b) within partners/ personnel

performance of any who are for the conduct of

13 | | Connect with FAST at

See point See point

7 OBLIGATIONS 2022 (I) INFORMATION TO BE FURNISHED BY PRACTICE UNIT: