COMPANIES (AUDITOR’S REPORT) ORDER, 2016
It shall apply to every company including a foreign company* except:–
1. Banking company as defined under Banking Regulation Act, 1949;
2. Insurance company as defined under the Insurance Act,1938;
3. a company licensed to operate under section 8 of the Companies Act;
4. One Person Company and small companies**.
5. Private Limited companies(not being subsidiary/holding of a public company) having:-
a. Paid-up capital + reserves not more than 1 crore and,
b. Loans from bank or any financial institution not exceeding 1 crore and,
c. Turnover Total Revenue as per Schedule III not exceeding 10 crores.
Auditor's report to contain matters specified in paragraphs 3 and
4
Every report made by the auditor under section 143
of the Companies Act, 2013 on the accounts of every company examined by him to
which this Order applies for the financial year commencing on or after 1st
April, 2015, shall contain the matters specified in paragraphs 3 & 4
Matters to be included in the auditor's report
1.
FIXED ASSETS
a) a)
Whether the company is maintaining proper
records showing full particulars, including quantitative details and situation
of fixed assets;
b) Whether
these fixed assets have been physically verified by the management at
reasonable intervals; whether any material discrepancies were noticed on such
verification and if so, whether the same have been properly dealt with in the
books of account;
c) Whether
title deeds of immovable properties are held in the name of the company. If
not, provide details thereof
2. INVENTORIES
Whether
physical verification of inventory has been conducted at reasonable intervals
by the management and whether any material discrepancies were noticed and if
so, how they have been dealt with in the books of account;
3. LOANS U/S 189
Whether the company has granted any loans,
secured or unsecured to companies, firms or other parties covered by clause
(76) of Section 2 of the Companies Act, 2013. If so,
a) Whether the
terms and conditions of the grant of such loans are not prejudicial to the
company’s interest;
b) Whether
receipt of the principal amount and interest are regular. If not provide
details thereof; and
c) If overdue
amount is more than rupees five lakhs, whether reasonable steps have been taken
by the company for recovery of the principal and interest.
4. SECTION 185 & 186
In respect of loans, investments and
guarantees, whether provisions of Section 185 and 186 of the Companies Act,
2013 have been complied with. If not, provide details thereof.
5. DEPOSITS
In case the company has accepted
deposits,
a) 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 there under, where applicable, have been complied with?
b) If not, the
nature of such contraventions be stated;
c) 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?
6 . COST RECORDS
whether maintenance
of cost records has been specified by the Central Government under sub-section
(1) of section 148 of the Companies Act, 2013 and whether such accounts and
records have been so made and maintained;
7. STATUTORY
DUES
a) whether the
company is regular in depositing undisputed statutory dues including provident
fund, employees' state insurance, income-tax, sales-Lax, , service tax, duty of
customs, duty of excise, value added tax, and any other statutory dues with the
appropriate authorities and
b) if not, the
extent of the arrears of outstanding statutory dues as at the last day of the
financial year concerned for a period of more than six months from the date
they became payable, shall be indicated by the auditor.
c)
where dues of income tax or sales
tax or service tax or duty of customs or duty of excise or value added tax have
not been deposited on account of any dispute, then the amounts involved and the
forum where dispute is pending shall be mentioned.
8. DEFAULT
IN PAYMENT
a)
Whether the
company has defaulted in repayment of dues to a financial institution or bank
or debenture holders?
b) If yes, the period and amount of default to be reported.
9. TERM
LOAN & PUBLIC ISSUE
a) Whether
moneys raised by way of public issue/ follow-on offer (including debt
instruments) and term loans were applied for the purposes for which those are
raised.
b) If not, the
details together with delays / default and subsequent rectification, if any, as
may be applicable, be reported;
10. FRAUD
a) Whether any
fraud by the company or any fraud on the Company by its officers/ employees has
been noticed or reported during the year;
b) If
yes, the nature and the amount involved be indicated.
11. MANAGERIAL
REMUNERATION
a) Whether
managerial remuneration has been paid / provided in accordance with the
requisite approvals mandated by the provisions of section 197 read with
schedule V to the Companies Act?
b) If
not, state the amount involved and steps taken by the company for securing
refund of the same.
12. NIDHI
COMPANY
a) Whether the Nidhi Company has
complied with the Net Owned Fund in the ratio of 1: 20 to meet out the
liability and
b) Whether the Nidhi Company is
maintaining 10% liquid assets to meet out the unencumbered liability.
13. COMPLIANCE
WITH SECTION 177& 188
a. Whether all transactions with the
related parties are in compliance with Section 188 and 177 of Companies Act,
2013 where applicable, and
b. The details have been disclosed
in the Financial Statements etc as required by the accounting standards and
Companies Act, 2013.
14. PREFERENTIAL
ALLOTMENT/PRIVATE PLACEMENT
Whether the company has made any preferential
allotment / private placement of shares or fully or partly convertible
debentures during the year under review and if so,
a) Whether the
requirement of Section 42 of the Companies Act, 2013 have been complied, &
b) The amount
raised has been used for the purposes for which the funds were raised.
c)
If not, provide details thereof.
15. NON-CASH
TRANSACTIONS
a) Whether the company has entered
into any non-cash transactions with directors or persons connected with him and
if so,
b) Whether provisions of Section 192
of Companies Act, 2013 have been complied with.
Reasons to be stated for unfavorable or qualified answers.-
A.
Where, in the auditor's report,
the answer to any of the questions referred to in paragraph 3 is unfavorable or
qualified, the auditor's report shall also state the basis for such unfavorable
or qualified answer, as the case may be.
B.
Where the auditor is unable to
express any opinion on any specified matter, his report shall indicate such
fact together with the reasons as to why it is not possible for him to give his
opinion on the same.
Foreign Company*
Any foreign co., situated
outside India, has a place of business in India whether by itself or through an
agent, physically or through electronic mode & conducts any business
activity in India in any other manner.(sec 2(42) of companies act, 2013)
Small Company**
Paid up capital < 50 lacs; turnover < 2 crores; excluding- holding or
subsidiary, section 8 co, co. or body corporate governed by any special act.
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