In this article we have discussed Applicability of CARO 2016.Companies Auditor’s Report Order is applicable as per subsection of section 143 of companies act 2013.This statement is required to be accompanied with auditor report as per section 143(11) to applicable companies.CARO 2016 will not be applicable for consolidated financial statements.
Applicability of CARO 2016
Following companies are not covered under Applicability of CARO 2016:
- One Company defined as per section 2(262).
- Insurance Companies as defined under insurance act.
- Banking companies as defined under banking regulation act.
- Private companies not being a holding or subsidiary company of a public company:
- Having paid up capital,reserves and surplus less than Rs.1 crore.
- Having total borrowing from any bank or financial institution less than Rs.1 crore at any point of time during the financial year and
- Have total revenue as defined in schedule III less than Rs.10 crore during the financial year.
- Small Companies.
- Companies registered under section section 8.
- Investments and Loans : Whether provisions of section 185 and 186 have been complied with.
- Managerial remuneration : Whether provision of section 197 have been complied with and requisite proposal approvals has been taken for payment of remuneration.
- Fixed assets : Whether immovable property title deeds are held in name of company or not.
- Non cash transactions : Whether non cash transaction has been entered with directors or any person related to them and provision of section 192 has been complied with.
- Related party transactions: Whether provisions of section 177 and section 188 and accounting standard had been complied with.
- Private placement/Preferential allotment: Whether any private/preferential allotment of shares or partly or partly or fully paid debenture has been made during the year under review and whether provisions of section 42 has been complied with.
- Fraud reporting : Whether fraud by the company or fraud on the company has been committed during the year under review.Amount and nature of fraud is required to be reported.
- Default in payment of dues : Whether company has committed default in payment of dues to financial institution or bank or debenture holder. Amount and period of default is required to be mentioned.
- Inventory : Whether any discrepancy is noticed during physical verification and whether physical verification is conducted regularly.How material discrepancies have been dealt in the books of account.
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