Changes in CARO, 2020

                           Changes in CARO,  2020


                     

I. Non - current assets

  • Verification of the title deeds of the immovable properties and it’s disclosure in the financial statements
  • Specific format for maintaining the details of the fixed assets (PPE).
  • In case of revaluation of Property, Plant and Equipment or intangible assets, whether the revaluation is based on the valuation made by a Registered Valuer, if the change is 10% or more of the net carrying value.

II. Inventory

  • In case of working capital loan based on current assets in excess of 5 crore rupees is sanctioned from the financial institutions, the quarterly returns or statements filed by the company are in agreement with the books of accounts, if not, give details.

III. Investments, loans or advances by company
  • In case of any investments, provision of loans or advances in the nature of loans, or stood guarantee, or provided security, indicate the aggregate amount during the year, and balance outstanding at the balance sheet date                                                                                                   a. to subsidiaries, joint ventures and associates                                                                               b. to parties other than subsidiaries, joint ventures and associates
  • In case of provision of loans or advances in the nature of loans repayable on demand, without the any terms or period of payment, then specify the amount of such loans or advances given to the promoters, related parties
IV. Loan to Directors and Investment by the Company: No change

V.  Deposits accepted by the company: No change

VI. Maintenance of cost records: No change

VII. Statutory dues: No change

VIII. Disclosure of undisclosed transactions (New clause)
  • In case of any transactions not recorded in the books of account have been surrendered or disclosed as income during the year in the tax assessments, whether the previously unrecorded income has been properly recorded in the books of account.
IX. Loans or other borrowings 
  • Specific format for reporting the details of the default in repayment of loans or other borrowings (lender wise).
  • Various reporting clauses of sec 143 is inserted as a part of this clause in respect of term loans, short term loans, funds raised to meet the obligations of subsidiaries.
X. Money raised by IPOs, FPOs 
  • Merged clause (xiv) of CARO 2016  – compliance in relation to preferential allotment or private placement of shares
XI. Fraud 
  • Any report in ADT-4 in relation to fraud is filed by auditor to the central government u/s 143(12) and any complaints from whistle-blowers is considered by the auditor while submitting such report
XII. Nidhi company: No Change

XIII. Related party transactions: No Change

XIV. Internal Audit System (New Clause)
  • whether the company has an internal audit system commensurate with the size and nature of its business whether the reports of the Internal Auditors for the period under audit were considered by the statutory auditor;
XV. Non-cash transactions: No Change

XVI. RBI registration: No Change

XVII. Cash losses (New Clause)
  • State the amount of cash losses, in case of cash losses incurred in the financial year and in the immediately preceding financial year.
XVIII. Consideration of outgoing auditor (New Clause)
  • In case of 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;
XIX. Material uncertainty in relation to realization of financial assets and payment of financial liabilities (New Clause)
  • 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;
XX. Compliance of CSR (New Clause)
  • The company has transferred unspent amount in respect of other than ongoing projects and ongoing projects to specified funds/accounts as per sec 135(5) and (6) respectively.
New concept:

135(5): if the unspent amount does not relate to an ongoing CSR project, such unspent amount should be directly transferred to the fund mentioned in Schedule VII of the Act, within 6 (six) months from the end of the relevant financial year

135(6): any unspent amount from the total allocated amount for CSR remains, pursuant to any ongoing CSR project in accordance with its CSR policy, the company is then required to transfer such unspent amount to a special account called Unspent Corporate Social Responsibility Account within a period of thirty (30) days from the end of the financial year. 

The amount that has been carry forwarded to the Unspent CSR Account must be spent in consonance with the CSR policy within the stipulated time period of three (3) financial years from the date of such transfer. On failure to do the same, the company should transfer this unspent amount to a fund specified under Schedule VII of the Act.

XXI. Qualifications or adverse remarks in the consolidated financial statements (New Clause)

  • In case of any qualifications or adverse remarks by the auditors in the CARO reports of the companies included in the consolidated financial statements, if yes, indicate the details of the companies and the clauses of the CARO report containing the qualifications or adverse remarks.

Comments

Post a Comment

Popular posts from this blog

Discounting of Security Deposit

                    Discounting of Security Deposit There are two types of deposits available 1. Interest free deposits 2. Deposits having interest. As per Ind AS 109, Interest free security deposits are discounted to bring it to the present value..The whole Ind AS speaks about Fair value. Evaluation: A company receives a security deposit as per the terms of agreement and repays the same when the agreement is ended/terminated i.e. after 5 years. For the period of 5 years the company has the company and as per the time value of money the amount repaid after 5 years is not the same amount which is received now. It involves time factor. In order to bring it to the fair value, security deposit is discounted using the Incremental borrowing rate. The difference between the discounted amount and the amount received will be accounted as income received in advance. Such amount will be transferred to p&l (in...
Read more

Upfront Fee adjustment in IGAAP & IND AS

We will discuss about the accounting treatment of upfront fee/loan processing fee paid. IGAAP: Accounting standard 16 : Borrowing costs Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds/amount. Borrowing costs may include:  (a) interest and commitment charges on bank borrowings and other short-term and long-term borrowings;  (b) amortization of discounts or premiums relating to borrowings;  (c) amortization of ancillary costs incurred in connection with the arrangement of borrowings;  (d) finance charges in respect of assets acquired under finance leases or under other similar arrangements; and  (e) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs Upfront fee/processing fee are  recognized as an expense in the period in which they are incurred. However, to the exte...
Read more

Offsetting of Income and Expenses - Ind AS

  Offsetting of Income & Expenditure: Facts of the case: Company RIGG has entered into a contract with the customer to construct and handover the Building. However, based on the requirement of the customer there is an addition in scope of work and the costs incurred along with service charge are reimbursed from the customer. RIGG subcontracts the work to the third party and recovers the cost along with service charge from the customer. Can the revenue and expenditure related to additional scope of work be netted off in P&L account?   Extracts of the standard: As per Ind AS 1: As per para 32, An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an Ind AS. As per Para 33, An entity reports separately both assets and liabilities, and income and expenses. Offsetting in the statement of profit and loss or balance sheet, except when offsetting reflects the substance of the transaction or other event, det...
Read more