Professional Documents
Culture Documents
Agenda
1. Background
2. Focus of CARO
3. CARO Paragraphs
Auditing Process
1. Pre Commencement Work
(AAS 1,26)
3. Audit Planning
(AAS 2,3,8,12,15,16,17)
5. Audit Report
(AAS 27,28)
RAJKUMAR S. ADUKIA
Loss to investing public due to use of such dubious means Recommendation in 227(4A) is similar to recommendation in section 619(3) by CAG in case of government companies
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History of 227(4A)
No general or special order between 15-10-1965 to 1975 Between 1975 to 1987 MAOCARO 1975 Between 1988 to 30-6-2003 MAOCARO 1988 Between 1-7-2003 to till date CARO 2003 MAOCARO 1975 Central Government issued the Manufacturing and Other Companies (Auditors report) order, 1975 applied to all manufacturing, service, trading and finance companies. Auditor to report on 22 items MAOCARO 1988
CARO 2003 issued originally on 12th Jedune 2003 & Amended on 25th November 2004 paragraph 4 has RAJKUMAR 21 sub and 37 S. paragraphs ADUKIA
CARO 2003 is wider compared to MAOCARO 1988 Issues in Corporate governance Streamlining of reporting,deleting Redundant Paragraphs Emphasis on Internal control,Internal Audit Reporting on fraud Widening the scope of reporting
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(xiv)Dealing or trading in shares & securities (xv) Guarantee for loans taken by others (xvi)Application of Term Loan
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Documentation
References
Companies Act(section 293), AS 10, 24,and 26 and AAS 16
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Documentation
Evidence of physical verification List of location & inventory Management representation regarding Verification procedure
References
AS 2, AAS 34
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References
Companies Act(section 227,297,299,301) Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 (Paragraph 6A)
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Documentation
Internal control questionnaire, flowchart Management representation on steps taken to correct major weaknesses Internal audit reports
References
AAS 6
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Paragraph 4(v)-Contracts
Questions
Details of contracts/arrangements referred in section 301 entered in register Transactions made at reasonable prices with regard to prevailing market prices
Documentation
List of companies, firms, parties covered u/s 301 Copy of Form 24AA Details of statement of contracts u/s 301 Prevailing market prices of similar items management representation on reasonableness of prices
References
Companies Act(section 301), AS 18, AAS 23
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Paragraph 4(vi)-Deposits
Questions
Compliance with RBI directives , section 58A,58AA & other relevant provisions of the Act Details of nature of contraventions Compliance with orders of CLB, NCLT, RBI or any Court
Documentation
Return filed with ROC Checklist for rules u/s 58A & 58AA Copy of order of CLB, NCLT, RBI or any Court Management representation for compliance with RBI directives
References
Companies Act(section 58A & 58AA)
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Documentation
Existence of internal audit department Its organisational chart Internal audit reports
References
AAS 7
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Documentation
List of records maintained u/s 209 (1)(d)
Reference
Companies Act(section 209)
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Documentation
List of statutory dues with details and evidence of payment Management representation regarding completeness of information List of disputed dues Schedule of contingent liability
Reference
Companies Act(section 205C), RAJKUMAR S.Income ADUKIA tax (section 44AB)
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Paragraph 4(x)-Sickness
Questions
For a company registered for not < 5 years
Accumulated losses not < 50% of net worth Cash losses in current financial year and preceding financial year
Documentation
Statement of net worth and accumulated losses, if any
Reference
Companies Act[section 2(29A)]
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Documentation
Schedule showing loans taken with terms, conditions & repayment schedule Details of debentures with redemption date, payment date etc Loan agreement, debenture trust deeds
Reference
Companies Act, 1956 (section 372A)& SEBI DIP Guidelines, 2000(chapter X)
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Documentation
List of loans & advances granted by pledge of security List of records maintained by company Statement of holding stating registration in companys name( D-mat shares & securities)
Reference
Companies Act, 1956 (section 125, 372A and Schedule VI)
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Reference
Companies Act (section 620A),Chit Fund Act ,1982
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Documentation
List of records maintained Statement of holding stating registration in companys name( D-mat shares & securities)
Reference
Companies Act (section 49),AS 13
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Documentation
List of guarantees provided with details of name, amount ,period and purpose Board resolution Management representation stating reason for guarantee
Reference
Companies Act (section 372A)
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Reference
The Companies Act [section 227(1A)]
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Documentation
Prepare statement showing long term sources of funds vis a vis long term application of funds
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Documentation
List of companies, firms, parties covered u/s 301 Board resolution for preferential allotment Valuation report
Reference
The Companies Act (section 301),SEBI DIP Guidelines, 2000
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Documentation
List of debentures issued Board resolution for creation of charge or security Verify creation of charge from ROC documentation
Reference
The Companies Act , SEBI Act, 1992
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Documentation
Copy of prospectus Management representation on completeness of disclosure
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Documentation
List of debentures issued Board resolution for creation of charge or security Verify creation of charge from ROC documentation
Reference
AAS 4
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Issues in CARO
Terms not defined
Paid up share capital and reserves turnover
Reporting on frauds
Construction is vague and auditors responsibilities not clear
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Leadership
Coordinating a programme Convenors of study circle
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Committees
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Accounting Standards Board Audit Committee Auditing and Assurance Board Board of Studies Committee for members in the Industry Committee for review of Education and Training Committee on Commerce Education and career Counseling. Committee on Ethical Standards Committee on Financial Markets and Investors Protection Committee on Information Technology Research Committee Committee on Corporate Governance
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Committees (Contd)
13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. Committee on Insurance Committee on Internal Audit Committee on Trade laws and WTO Continuing Professional Education Committee Corporate and Allied Laws Committee Editorial Board Expert Advisory Committee Financial Reporting Review Board Fiscal Laws Committee ICAI-ICWAI-ICSI Coordination Committee International Affairs Committee Peer review Board Public Relations Committee Professional Development Committee Committee on Accounting Standards for Local Bodies
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Peer Review
Audit Manual Company Audit Manual Tax Audit Manual Guidance Note on Peer Review Office Records and Procedures Reporting
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Research Committee
1) 2) 3) 4) 5) 6) Accounting and Auditing Accounting and Auditing Accounting and Auditing Accounting and Auditing Accounting and Auditing Accounting and Auditing industry 7) Accounting and Auditing 8) Accounting and Auditing 9) Accounting and Auditing of Telecom industry of Media industry of Power industry of Oil industry of Pharma industry of Automobile of Sugar industry of Paper industry of NBFC
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Research Committee
10) Accounting and Auditing 11) Accounting and Auditing 12) Accounting and Auditing 13) Accounting and Auditing 14) Accounting and Auditing 15) Accounting and Auditing 16) Accounting and Auditing 17) Accounting and Auditing 18) Accounting and Auditing Hardware Industry of Cement industry of BPO Industry of Software Industry of Hotel Industry of Jewellery Industry of Textile Industry of BPO Industry of Tea Industry of Computer
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Questions
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THANK YOU
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