J K Varghese & Co

MCA has issued Companies (Auditor’s Report) Order, 2016 (‘CARO, 2016’) effective from FY 2015-16.

The order states that every Auditors’ Report shall contain the prescribed matters under CARO, 2016 for financial years commencing on or after April 1, 2015.

Major changes:-

• Exempted Private Limited company
  • 2005 order a private limited company with a paid up capital and reserves not more than rupees fifty lakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year.
  • 2006 order A private limited company, not being a subsidiary or holding company of a public company, having a paid up capital and reserves and surplus not more than rupees one crore as on the balance sheet date and which does not have total borrowing exceeding rupees one crore from any bank or financial institution at any point of time during the financial year and which does not have a total revenue as disclosed in Scheduled III to the companies Act, 2013 (including revenue from discontinuing operations ) exceeding rupees ten crore during the financial year as per the financial; statements.
• Whether the title deeds of immovable properties are held in the name of the company. If not, provide the details thereof;
• Regarding loans given:
  • 2005 order whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. If so, (a) whether receipt of the principal amount and interest are also regular; and (b) if overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;
  • 2006 order 
    • Whether the company has granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the companies Act, 2013. If so,
    • Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest;
    • 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 then ninety days, and whether reasonable steps have been taken by the company for recovery of the principal and interest;

• Other major changes 
  • Whether the company has defaulted in repayment of loans or borrowing to a financial institution, bank, government or dues to debenture holders? If yes, the period and the amount of default to be reported (in case of defaults to banks, financial institutions, and government, lender wise details to be provided).
• • Whether moneys raised by way of initial public offer or further public offer (including debt instruments) and terms loans were applied for the purposes for which those are raised. If not, the details together with delays or default and subsequent rectification, If any, as may be applicable, be reported;
  • Whether any fraud on the Company by its officers or employees has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated;
  • Whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not, state the refund of the same;
  • Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1:20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability;
  • Whether all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards;
  • Whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of section 42 of the Companies Act, 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised. If not, provide the details in respect of the amount involved and nature of non-compliance;
  • Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether the provisions of section 192 of Companies Act, 2013 have been complied with;
  • Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and if so, whether the registration has been obtained.
• Full order see the attached PDF file.