CARO 2015 learning table

1. TITLE Companies (Auditor’s Report) Order 2015

2. APPLICABILITY Applies to every company [Including a foreign company u/s 2(42) of Companies Act 2013]
However CARO 2015 would not apply on the following:-
Banking Company Banking company as defined u/s 5(c) of Banking Regulation Act 1949
Insurance Company Insurance company as defined under Insurance Act 1938
Section 8 Company Section 8 Company as defined under Companies Act
OPC/Small Company OPC as defined u/s 2(62) and Small Company as defined u/s 2(85) of Companies Act
Pvt. Ltd. Co. Private Limited Company if it satisfy all of these 3 condition throughout the FY
PUC + Reserves ≤ Rs. 50 Lakhs; and
Loan Outstanding from Bank or Financial Institution ≤ Rs. 25 Lakhs; and
Turnover ≤ Rs. 5 Crore

3. EFFECTIVE DATE Effective w.e.f. on the date of its publication in the Official Gazette.

4 Every report made by the auditor u/s 143 of Companies Act 2013, on the accounts of every company examined by him to whom this Order applies for the
FY 2014-15 onwards, shall contain the matters specified in paragraphs 3 and 4.
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The auditor’s report on the account of a company to which this Order applies shall include a statement on the following matters, namely:—
(1) Fixed Asset Proper Records
Whether the company is maintaining proper records
Whether such proper records are showing full particulars of fixed assets (including quantitative
details and situation)
Whether fixed assets have been physically verified by the management at reasonable intervals
Whether any material discrepancies were noticed on such verification
Whether such discrepancies, if noticed, have been properly dealt with in the books of account
(2) Inventory Physical
Whether physical verification of inventory has been conducted at reasonable intervals by the
Whether the procedures followed by the management for physical verification of inventory are
reasonable and adequate in relation to the size of the company and the nature of its business
If not, report the inadequacies in such procedures
Proper Records
Whether the company is maintaining proper records of inventory
Whether any material discrepancies were noticed on physical verification
If so, whether such discrepancies have been properly dealt with in the books of account
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(3) Related Party
Comments on
Whether the company has granted any loans (secured or unsecured) to companies, firms or other
parties covered in the register maintained u/s 189 of the Companies Act.
If so, whether receipt of the principal amount and interest are regular
If overdue amount is > Rs. 1 Lakhs, whether reasonable steps have been taken by the company for
recovery of the principal and interest

(4) Internal Control Adequacy and Maintenance
Is there an adequate internal control system commensurate with the size of the company and the
nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and
Whether there is a continuing failure to correct major weaknesses in internal control system.

(5) Deposits Compliance
In case the company has accepted deposits, whether the directives issued by the RBI and the
provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules
framed there under, where applicable, have been complied with?
If not, State the nature of contraventions
If an order has been passed by CLB or NCLT or RBI or any court or any other tribunal, whether the
same has been complied with or not?

(6) Cost Records Maintenance
Where maintenance of cost records has been specified by the CG u/s 148(1) of Companies Act,
Whether such accounts and records have been made and maintained
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(7) Statutory Dues Undisputed Dues
Whether the company is regular in depositing undisputed statutory dues including PF / ESI / I. Tax /
Sales-Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / VAT / Cess and any other
statutory dues with the appropriate authorities
If not, then indicate the extent of arrears of outstanding statutory dues as at the last day of FY
concerned for a period of > 6 months from the date they became payable
Disputed Dues
Mention the amount any T. Tax / Sales Tax / Wealth Tax / Service Tax / Customs Duty / Excise Duty
/ VAT or Cess which have not been deposited on account of any dispute
Also mention the forum where dispute is pending.
(NOTE: A mere representation to the concerned Department shall not constitute a dispute).
Whether the amount required to be transferred to IEPF in accordance with Companies Act 1956 and
related rules has been transferred to such fund within time.

(8) Losses Incurred Accumulated Losses
In case of a company which has been registered for a period ≥ 5 years, whether its accumulated
losses at the end of the FY are ≥ 50% of its net worth
Cash Losses
Whether it has incurred cash losses in such FY and in the immediately preceding FY

(9) Debt Repayment Default
Whether the company has defaulted in repayment of dues to a financial institution or bank or
debenture holders?
If yes, the period and amount of default to be reported
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(10) Guarantee Given Terms & Conditions
Whether the company has given any guarantee for loans taken by others from bank or financial
Whether the terms and conditions whereof are prejudicial to the interest of the company

(11) Term Loan Utilization
Whether term loans were applied for the purpose for which the loans were obtained

(12) Fraud Fraud on/by Company
Whether any fraud on or by the company has been noticed or reported during the year
If yes, indicate the nature and the amount involved
(1) Where, in the auditor’s report, the answer to any of the questions referred to in paragraph 3 is unfavourable or qualified, the auditor’s report shall also
state the reasons for such unfavourable or qualified answer, as the case may be.
(2) Where the auditor is unable to express any opinion in answer to a particular question, his report shall indicate such fact together with the reasons why
it is not possible for him to give an answer to such question. 

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