KNOW EVERYTHING ABOUT CARO 2020
CARO 2020 is a new concept for issue of audit reports in case of statutory audits of companies under the Companies Act, 2013. CARO 2020 has included additional reporting requirements after consultations with the National Financial Reporting Authority (NFRA). NFRA is an independent regulatory body for regulating the audit and accounting profession in India. The aim of CARO 2020 is to enhance the overall quality of reporting by the company auditors.
Detailed Reporting Under Each Clause
1. Details of tangible and intangible assets
Whether the records maintained by the company display the complete particulars on the details, quantity and situation of tangible and intangible assets. Whether the management has carried out physical verification of the assets at different intervals reasonable with the size of the company. Whether the material discrepancies, if any, noticed on physical verification have been accounted for in the books of accounts. Whether the title deeds pertaining to the immovable properties (except properties which are leased by the company with duly executed lease agreements in the company's favour) disclosed in the financial statements are held in the name of the company.
2. Details of inventory and working capital
Whether the management has carried out physical verification of inventory at reasonable intervals.
If any discrepancies of 10% or more in the aggregate for each class of inventory were noticed and if so, whether they have been properly dealt with in the books of accounts.
Has the company, during any point of time of the year, sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets.
Are the quarterly returns or statements filed by the company with financial institutions or banks in agreement with the books of account of the Company. In case of non-agreement, to provide details of such non-agreement.
3. Details of investments, any guarantee or security or advances or loans given
If the company has during the year made any investments in, given any guarantee or security or granted any loans or advances which are characterized as loans, unsecured or secured, to LLPs, firms or companies or any other person. If the company has provided advances or provided loans which are characterized as loans, or given guarantee, or given security to any other entity (other than a company carrying on a business of providing loans), the below information should be furnished:-
The total amount given during the year, and the balances due as at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures and associates. The total amount during the year, and the balance due on the balance sheet date of such loans or advances and guarantees or security to persons other than associates, subsidiaries and joint ventures. In the case of investments made, guarantee or security provided, loans or advances granted (as mentioned above), the report should indicate:-
Whether the investments made, guarantees provided, security given and the terms and conditions of the grant of all loans and advances in the nature of loans and guarantees provided are not prejudicial to the company's interest.
In respect of loans and advances in the nature of loans, whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular. If the amount is overdue, state the total amount overdue for more than ninety days, and whether reasonable steps have been taken by the company for recovery of the principal and interest.
In case any loan or advance in the nature of a loan is given which was due for repayment during the year and has been renewed or extended or fresh loans granted to settle the overdue of existing loans given to the same parties.
4. Compliance in respect of a loan to directors If the company has given any loans to directors or any other person in whom the director is interested, or made any investments, whether the company has made compliance with the provisions governing such loans, investments and guarantees.
5. Compliance in respect of deposits accepted In case the company has accepted deposits or deemed deposits, whether the company has followed the directives of the RBI as under: - Compliance with the provisions prescribed for accepting deposits under section 73 to 76 of the Companies Act, 2013. - The nature of contraventions, if the above provisions are not followed. - Compliance with any order passed by any court or tribunal. - Reporting of any non-compliance with the provisions of Companies Act, 2013.
6. Maintenance of costing records
In case the company is required to maintain cost records, whether the records have been maintained during the year and non-compliance if any.
7. Deposit of statutory liabilities Whether the company has Regularly deposited statutory dues.
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