CARO 2016 Vs CARO 2020 By CA Rinkesh Shah



Analysis of CARO, 2016 vs CARO, 2020
CARO 2016 CARO 2020 Difference
Clause
No.
Matter Clause
No.
Matter
  Issue date of CARO, 2016 is 29th March, 2016.   Issue date of CARO, 2020 is 25th February, 2020.  
  The effective date of its applicability is for Audits of F.Y. 2015-16 and onwards.   The effective date of its applicability is for Audits of F.Y. 2019-20 and onwards.  
  There were 16 Reporting Clauses   There were 21 Reporting Clauses  
  It requires reporting on all Fixed Assets   There is a new reporting requirements that pays attention to Property, Plant, Equipment and intangible assets.  
i (c) Whether the title deeds of immovable properties are held in the name of the company. If not, provide the details. i (c) Whether the title deeds of all the immovable properties  (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the company, if not, provide the details. Clarification is to be given for Non Disclosure of Properties taken on Lease by the Lessee, which was not a reporting requirement in CARO, 2016
- - i (d) Whether the company has revalued its PPE (including Right of Use assets) or intangible assets or both during the year and, if so, whether the revaluation is based on  the valuation by a Registered Valuer; specify the amount of change, if change is 10% or more in the aggregate of the net carrying value of each class of PPE or intangible assets. New Sub Clause inserted
- - i (e) Whether any proceedings have been initiated or are pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder, if so, whether the company has appropriately disclosed the details in its financial statements. New Sub Clause inserted
ii Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, whether they have been properly dealt with in the books of account; ii (a) Whether physical verification of inventory has been  conducted at reasonable intervals by the management and whether, in the opinion of the auditor, the coverage and procedure of such verification by the management is appropriate; whether 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 account. We have to  comment on coverage and procedure adopted. Also Materiality has been defined as 10% or more in Inventory.
- - ii (b) Whether during any point of time of the year, the company has been 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; whether the quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company, if not, give details. New Sub Clause inserted
iii 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. iii Whether during the year the company has made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties, if so,-  
- - (a) whether during the year the company has provided loans or provided advances in the nature of loans, or stood guarantee, or provided security to any other entity [not applicable to companies whose principal business is to give loans], if so, indicate- New Sub Clause inserted
- - A The aggregate amount during the year, and balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures and associates. New Sub Clause inserted
- - B The aggregate amount during the year, and balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to parties other than subsidiaries, joint ventures and associates. New Sub Clause inserted
(a) Whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest. (b) 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. Investment, Guarantee & Security given has been now required to be reported under CARO, 2020.
- - (e) Whether any loan or advance in the nature of loan granted which has fallen due during the year, has been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties, if so, specify the aggregate amount of such dues renewed or extended or settled by  fresh loans and the percentage of the aggregate to the total loans or advances in the nature of loans granted during the year [not applicable to companies whose principal business is to give loans]; New Sub Clause inserted
- - (f) Whether the company has granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment, if so, specify the aggregate amount, percentage thereof to the total loans granted, aggregate amount of loans granted to Promoters, related parties as defined in clause (76) of section 2 of the Companies Act, 2013. New Sub Clause inserted
v In case, the company has accepted deposits, whether the directives issued  by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions  of  the  Companies  Act,  2013  and  the  rules  framed  thereunder,  where applicable, have been complied with? If not, the nature of such contraventions be stated; If an order has been  passed by  Company  Law Board  or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not? v In respect of deposits accepted by the company or amounts which are deemed to be deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made thereunder, where applicable, have been complied with, if not, the nature of such contraventions  be  stated;  if  an  order  has  been  passed  by  Company  Law  Board  or National  Company  Law  Tribunal  or  Reserve  Bank  of  India  or  any  court  or  any  other tribunal, whether the same has been complied with or not. Reporting on Deemed Deposits is required to be reported under CARO, 2020.
- - viii Whether any transactions not recorded in the books of account have been surrendered of disclosed as income during the year in the tax assessments under the Income Tax Act, 1961, if so, whether the previously unrecorded income has been properly recorded in the books of account during the year. New Clause inserted
viii 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). ix (a) Whether the company has defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender, if yes, the period and the amount of default to be reported in the format given. Word Any Lender has been substituted in place of financial institution, bank, Government or dues to debenture holders
- - ix (b) Whether the company is a declared wilful defaulter by any bank or financial institution or other lender. New Sub Clause inserted
- - ix (c) Whether term loans were applied for the purpose for which the loans were obtained; if not, the amount of loan so diverted and the purpose for which it is used may be reported. Term Loan removed from Old Clause
(ix) and added here in form of Sub Clause
- - ix (d) Whether funds raised on short term basis have been  utilised for long term purposes, if yes, the nature and amount to be indicated. New Sub Clause inserted
- - ix (e) Whether the company has taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures, if so, details thereof with nature of such transactions and the amount in each case; New Sub Clause inserted
- - ix (f) Whether the company has raised loans during the year on the pledge of securities held in its subsidiaries, joint  ventures or associate companies, if so,  give details  thereof and also report if the company has defaulted in repayment of such loans raised; New Sub Clause inserted
ix Whether money raised by way of initial public offer or further public offer (including debt instruments) and term 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; x (a) Whether money raised by way of initial public offer or further public offer (including debt  instruments) during  the year 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. Term Loan removed from here and covered in Para ix (c)
x Whether any fraud by the company or 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. xi (a) Whether any fraud by the company or any fraud on the company has been noticed or reported during the year, if yes, the nature and the amount involved is to be indicated. Word by its officers or employees has bee removed
- - xi (b) Whether any report under sub-section (12) of Section 143 of the Companies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government. New Sub Clause inserted
- - xi (c) Whether the auditor has considered whistle-blower complaints, if any, received during the year by the company. New Sub Clause inserted
xi 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 amount involved and steps taken by the company for securing refund of the same. - - Clause Deleted
xii (a) Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability. xii (a) Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability; No Change
xii (b) Whether  the  Nidhi  Company  is  maintaining  ten  per  cent.  unencumbered  term deposits as specified in the Nidhi Rules, 2014 to meet out the liability; xii (b) Whether the Nidhi Company is maintaining ten per cent. unencumbered  term deposits as specified in the Nidhi Rules, 2014 to meet out the liability; No Change
- - xii (c) Whether there has been any default in payment of interest on deposits or repayment thereof for any period and if so, the details thereof. New Sub Clause inserted
- - xiv (a) Whether the company has an internal audit system commensurate with the size and nature of its business. New Sub Clause inserted
- - xiv (b) Whether the reports of the Internal Auditors for the period under audit were considered by the statutory auditor. New Sub Clause inserted
- - xvi (b) Whethe the company has conducted any Non-Banking Financial of Housing Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act 1934. New Sub Clause inserted
- - xvi (c) Whether the company is a Core Investment Company (CIC) as defined in the regulations made by  the Reserve Bank of India, if so, whether it continues to fulfil the criteria of a CIC, and in case the company is an exempted or unregistered CIC, whether it continues
to fulfil such criteria.
New Sub Clause inserted
- - xvi (d) Whether the Group has more than one CIC as part of the Group, if yes, indicate the number of CICs which are part of the Group. New Sub Clause inserted
- - xvii Whether the company has incurred cash losses in the financial year and in the immediately preceding financial year, if so, state the amount of cash losses. New Sub Clause inserted
- - xviii Whether there has been any resignation of the statutory auditors during the year, if so, whether  the  auditor has taken into consideration the issues, objections or concerns raised by the outgoing auditors. New Sub Clause inserted
- - xix On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, the auditor’s knowledge of the Board  of Directors and management plans, whether the auditor is of the opinion that no material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. New Sub Clause inserted
- - xx (a) Whether, in respect of other than ongoing projects, the  company has transferred unspent amount to a Fund specified in Schedule VII to the Companies Act within a period of six months of the expiry of the financial year in compliance with second proviso to sub-section (5) of section 135 of the said Act. New Sub Clause inserted
- - xx (b) Whether any amount remaining unspent under sub section (5) of section 135 of the Companies Act, pursuant to any ongoing project, has been transferred to special account in compliance with the provision of  sub section (6) of section 135 of the said Act. New Sub Clause inserted
- - xxi Whether there have been any qualifications or adverse  remarks by the respective auditors in the Companies  (Auditor’s Report) Order (CARO) reports of the companies included in the consolidated financial statements, if yes, indicate the details of the companies and the paragraph numbers of the CARO report containing the qualifications or adverse remarks. New Sub Clause inserted
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