Chapter – 10 “Company Audit”

Section – Wise Index of Chapter X of Companies Act, 2013 along with Corresponding Rules
Chapter X of Companies Act, 2013 – Audit & Auditors Companies (Audit and Auditors) Rules, 2014
(Sec. 139 – 148)
Appointment of Subsequent Auditor of Non-Government Company at Rule 3 Manner and Procedure of Selection and Appointment of Auditors
Sec. 139(1)
AGM Rule 4 Conditions for appointment and Notice to Registrar
Sec. 139(2) Rotation of Auditors Rule 5 Class of Companies
Sec. 139(3) Rotation of Auditing Partner and his team
Sec. 139(4) Power of C.G. to prescribe the manner of rotation. Rule 6 Manner of Rotation of Auditors by the companies on expiry of their
term.
Sec. 139(5) Appointment of Subsequent Auditor of Government Company
Sec. 139(6) Appointment of First Auditor of Non-Government Company
Sec. 139(7) Appointment of First Auditor of Government Company
Sec. 139(8) Filling of Casual Vacancies
Sec. 139(9) Re-appointment of Retiring Auditor
Sec. 139 (10) No Auditor is appointed or reappointed at AGM
Sec. 139 (11) Considerations of recommendations of Audit Committee
Sec. 140(1) Removal of Auditor before expiry of his term Rule 7 Removal of Auditor before expiry of his term
Sec. 140(2) Filing of statement in case of Resignation Rule 8 Resignation of Auditor
Sec. 140(3) Penalty for non-compliance of Sec. 140(2)
Sec. 140(4) Removal of Auditor on expiry of tenure / Giving of Special Notice
Sec. 140(5) Directions for Change of Auditors Rule 9 Liability to devolve on concerned partners only.
Sec. 141(1) Eligibility for appointment as Auditor
Sec. 141(2) Authorised Partner to act and sign in case of audit firm and LLP
Sec. 141(3) Disqualifications to be appointed as auditor Rule 10 Disqualifications of Auditor
Sec. 141(4) Vacation of Office in case of Subsequent disqualifications

Compiled by: CA. Pankaj Garg Page 1

 Sec. 142 Remuneration of Auditors
Sec. 143(1) Right of Access/Right to obtain Information/Inquiry into propriety
matters
Sec. 143(2) Reporting on Books and Accounts and Financial Statements
Sec. 143(3) Reporting on other Matters Rule 10A Internal Financial Controls
Rule 11 Other Matters to be included in Auditor’s Report
Sec. 143(4) Reasons for Adverse Remarks or Qualifications
Sec. 143(5) Directions by CAG to auditor of Government Company
Sec. 143(6) Order by CAG of Supplementary Audit of F.S. of Govt. Company.
Sec. 143(7) Order by CAG of Test audit of Accounts of Government Company
Sec. 143(8) Audit of accounts of Branch Office Rule 12 Duties and Powers of the company auditor’s with reference to audit of
the branch and the branch auditor
Sec. 143(9) Compliance with Standards of Auditing
Sec. 143(10) Powers of C.G., to prescribe the Standards of Auditing
Sec. 143(11) Powers of C.G. to issue order for specified companies to report on
certain matters. (CARO, 2015)
Sec. 143(12) Reporting on Fraud Rule 13 Reporting of Frauds by auditor
Sec. 143(13) No Breach of duty if reporting u/s 143(12) is done in good faith.
Sec. 143(14) Application of Sec. 143 over Cost Accountant and Company Secretary.
Sec. 143(15) Penalty for non-compliance of Sec. 143(12)
Sec. 144 Auditor not to render certain services
Sec. 145 Auditor to sign audit reports, etc.
Sec. 146 Auditor to attend General Meetings
Sec. 147 Punishment for contravention
Sec. 148 Central Government to specify audit of certain items of cost in respect Rule 14 Remuneration of Cost Auditor.
of certain companies

Compiled by: CA. Pankaj Garg Page 2

 Appointment of Auditor

Appointment of Subsequent Auditor Appointment of First Auditor

Non-Government Company – Sec. 139(1) Government, Govt. owned Non-Government Company Government, Govt. owned /
/ controlled Companies – – Sec. 139(6) controlled Companies – Sec.
 Appointment will be at First AGM Sec. 139(5) 139(7)
 till conclusion of 6th AGM; and
 hereafter till conclusion of every 6th AGM Appointment of Auditor First auditor shall be First Auditor shall be
appointed by appointed
 in prescribed manner (Rule 3).
In respect of a Financial by CAG
 Subject to following conditions:
year Board of Directors
Condition Details of condition Within 60 days of
1. Ratification Omitted by Companies registration of company
will be made by Within 30 days
(Amendment) Act, 2017
2. Written Before appointment company If CAG does not appoint the
CAG of registration of company auditor
consent shall obtain
(a) Written consent from auditor BOD will appoint within next
(b) Certificate from auditor. Within a period of 180 If Board fails, Board shall 30 days
(Rule 4) Days inform the members
3. Certificate  Certificate shall indicate If Board fails, Board shall
From the commencement Members shall within 90 inform the members
 Whether auditor has satisfied
the criteria as provided u/s of financial year days
Members shall within 60
141. days
4. Intimation to  Company shall inform the Who shall hold the office at an EGM at an EGM
ROC auditor and ROC about the till the conclusion of next
AGM appoint the first auditor appoint the first auditor
appointment of auditor within
15 days of appointment.
Compiled by: who hold office till
 Rule 4 – Intimation to ROC Who hold office till
conclusion of first AGM
will be in Form ADT-1 CA. Pankaj Garg conclusion of first AGM

Compiled by: CA. Pankaj Garg Page 3

 Rule 3 & 4 of Companies (Audit & Auditor’s) Rules, 2014

Rule 3 – Manner and procedure for selection and Appointment of Auditors Rule 4 – Conditions for Appointment and
Notice to Registrar
Company is required to constitute Audit Committee u/s 177

Yes No Certificate obtained from the auditor shall

contain the following:
Audit Committee shall consider the qualifications and BOD shall consider the
experience of the person considered for appointment qualifications and experience (a) That the individual or the audit form, as
as auditor of the person considered for
appointment as auditor the case may be, is eligible for
appointment as per the provisions of
Audit Committee shall recommend the name of person BOD Agree this Act and Chartered Accountants Act,
to BOD for their consideration
Place the matter for 1949.
BOD disagree considerations by members (b) That proposed appointment is as per
in AGM.
the terms provided in the Act.

BOD shall refer back the matter to audit committee for (c) That proposed appointment is within
reconsideration the limits prescribed by the Act.
(d) That list of proceedings against the

Audit Committee agree for Audit committee decides auditor or the audit firm or any partner
reconsideration not to reconsider of the firm w.r.t. disciplinary matters as
disclosed in the Certificate, is true and
BOD will record the
reasons for disagreement correct.

BOD make its own

recommendations
Compiled by: CA. Pankaj Garg
Place the matter for considerations
by members in AGM.

Compiled by: CA. Pankaj Garg Page 4

 Rotation of Auditor

Sec. 139(2) Sec. 139(3) Sec. 139(4)

Listed companies and Other prescribed companies Rule 5 Unlisted Public Companies having Members may resolve the C.G. may by Rules
Shall not appoint paid up capital > 10Cr. following:
(a) Rotation of auditing
Private Companies having paid up Prescribe the manner
partner & his team at
An individual as an auditor for more than one term of capital > 50 Cr. of rotation for Sec.
such interval as may be
139(2)
five consecutive years. Companies not covered above if prescribed.
public borrowings from banks and (b) That audit shall be
conducted by more than (Rule 6 prescribes
An audit Firm as an auditor for more than two terms of FI/ public deposits > 50Cr.
one auditor the manner of
five consecutive years. rotation)
1st Proviso Individual Auditor Not eligible for reappointment for 5 years after completing of
as auditor in same company tenure Rule 6 – Manner of Rotation
Audit Firm Not eligible for reappointment for 5 years after completing of
as auditor in same company tenure 1. For calculating period of 5 years / 10 years, period
served prior to commencement of this Act, shall also
2nd Audit Firm  Having a common partner with audit firm
be considered.
Proviso  Whose tenure has just expired 2. Individual auditor / Audit Firm shall not be eligible
 As on date of appointment for appointment as auditor for a period of 5 years if
it belongs to same network to whom retiring auditor
 Shall not be appointed as auditor of same company
belong to.
 for a period of five years 3. Break in the term should be for a continuous period
3rd Proviso Every Company  Existing before commencement of this Act of 5 years.
4. A partner in charge of audit firm who certifies the
 Shall comply with requirement of Sec. 139(2)
financial statements of the company, if retires from
 Within a period which shall not be later than the date of First the said firm and join another firm, such other firm
AGM after 3 years from the date of commencement of this Act. shall also be ineligible to be appinte da s auditor for
4th Proviso Sec. 139(2) shall not  Right of company to remove auditor a period of 5 years.

prejudice the  Right of auditor to resign. Compiled by: CA. Pankaj Garg

Compiled by: CA. Pankaj Garg Page 5

 Other Provisions of Sec. 139

Filling of Casual vacancies Reappointment of No auditor Appointed Recommendation of

Auditor at AGM Audit Committee
– Sec. 139(8) – Sec. 139(9) – Sec. 139(10) – Sec. 139(11)
A retiring auditor may If no Auditor is Where a company is
be appointed required to constitute
Non Govt. Co. – Sec. 139(8)(i) Govt. Co./Govt. Owned/ an audit committee
controlled Co. - Sec. 139(8)(ii) Reappointed at AGM, if
at AGM (Sec. 177)
he is
Due to resignation Other Be filled by
Reasons Existing auditor will All appointments
Not disqualified under
Be filled by BOD Be filled by CAG continue including filling of
law
BOD casual vacancies
Within 30 days
Within 30 days Not unwilling to
Shall be made only after
Such appointment Within 30 continue,
AND considering the
shall be days If CAG does not fill the casual
No special resolution recommendations of
vacancy
Approved in has been passed w.r.t. audit committee.
General meeting
It will be filled by
(a) Appointing someone
Convened within 3 else as auditor
months Board of Directors (b) providing expressly
Compiled by: CA. Pankaj Garg
that retiring auditor
Of shall not be
Within next 30 days
recommendations
reappointed.
of BOD

Compiled by: CA. Pankaj Garg Page 6

 Sec. 140 – Removal, Resignation of Auditor and giving of Special Notice

Sec. 140(1) – Removal before expiry Sec. 140(2) & (3) – Filing Sec. 140(4) – Special Notice Sec. 140(5) – Directions for change of Auditor
of Statement in case of
Resignation Special notice shall be required Tribunal may, by order, direct the company
Requires
to change its auditors
Auditor who has resigned to pass the Special resolution at
Special resolution of Company AGM providing that either suo motu or on an application made to
& Shall file it by the C.G. or by any person concerned,
Previous approval of CG in prescribed (a) Retiring Auditor shall not be
manner (Rule 7). re-appointed.
Within 30 days of if it is satisfied that the auditor has acted in a
or
resignation fraudulent manner or abetted or colluded in
(b) To appoint as auditor any
Before taking any action, auditor any fraud.
person other than retiring
concerned should be provided an Statement in prescribed auditor. If the application is made by the C.G.
opportunity of being heard. and
form
Rule 7 Copy of notice to be sent Tribunal is satisfied that any change of the
(Rule 8 : ADT-3)
Application to CG immediately to concerned auditor is required
auditor.
To Company & ROC Tribunal shall within 15 days of receipt of
should be made within 30 days
(Also to CAG – in case of Auditor has a right of such application, make an order
Govt. Companies) representation
of passing of Board Resolution (reasonable length) that he shall not function as an auditor
Indicating the reasons and
in Form ADT-2. Copy of notice and representation C.G. may appoint another auditor in his place.
and other facts relating to needs to be sent to every person
Within 60 days of approval by CG, An auditor against whom final order has
resignation. to whom notice of AGM was given.
been passed by the Tribunal u/s 140(5)
Sec. 140(3): Fine for non-
convene a general meeting Auditor may demand for reading
compliance, Ranging from shall not be eligible to be appointed as an
the representation in meeting.
Rs. 50,000 (Not exceeding auditor of any company for a period of 5
to Pass Special Resolution. Representation need not be
years from the date of passing of the order
Audit Fees) – Rs. 5,00,000 sent or read out at meeting, if
on application of company or and
Opportunity Board Application General the auditor shall also be liable for action u/s
Resolution to CG Meeting other person, Tribunal pass
Compiled by: CA. Pankaj Garg such order. 447.

Compiled by: CA. Pankaj Garg Page 7

 Sec. 141 – Eligibility, Qualifications and Disqualifications of Auditor

Sec. 141 (1) & 141 (2) – Sec. 141(3) - Persons not eligible for appointment & Rule 10 Sec. 141(4) –
Eligibility to be appointed as Auditor Vacation of office

A person shall be eligible (a) Body Corporate other than LLP If after appointment
(b) Officer or Employee of the company
for appointment as an auditor (c) Partner/Employee of Officer/Employee of the company An auditor
(d) (i) person/ is holding any security * or Company /
only if he is a CA. relative/ interest in the subsidiary /
Incurs any disqualification
A Firm whereof Majority of Partners (ii) partner is indebted > 5 Lacs in the holding /
(iii) has given a guarantee in associate, or
Mentioned in Sec. 141(3)
Practicing in India connection with indebtedness subsidiary of same holding.
of 3rd person > 1 Lac in the
* no disqualification if relative holds any security in the company of face He shall vacate the office
are Qualified
value upto 1 Lac.
(e) Person or firm having business relationship with Company / Subsidiary / And such vacation shall be
may be appointed
Holding / Associate / Subsidiary of Such Holding or Associate Company treated as casual vacancy
(f) A Person whose relative is a director or is in employment of the company as a
by its firm name as auditor
Director or KMP.
A Firm including LLP Compiled by:
(g) A person who is in full time employment elsewhere
Or CA. Pankaj Garg
If appointed as Auditor
A person holding appointment as auditor or more than 20 companies other
than OPC, dormant companies, Small Companies and private companies
Only partners who are CA having paid up capital < 100Cr.
(h) A person who has been convicted of an offence involving fraud and a period of
Shall be authorized to 10 years has not elapsed.
(i) Any person who directly or indirectly renders any service referred to in
Act and sign on behalf of firm. Sec. 144 to company or its holding company or its subsidiary company.

Compiled by: CA. Pankaj Garg Page 8

 Powers / Rights & Duties of Company Auditor (Sec. 143)

RIGHTS OF AUDITOR – Sec. 143(1) DUTIES of AUDITOR

 at all times 1. Loans and advances are properly secured and terms are prejudicial .
2. Book entries are prejudicial.
Right of
Access

 to books of Account & Vouchers

Inquire into Propriety 3. Shares, debentures and other securities are sold at a price less than acquisition cost in case of non
 whether kept at Regd. Office or at any banking and non investment company.
other place. Matters – Sec. 143(1) 4. Loans and advances made are shown as deposits.
5. Personal expenses charged to revenue account.
6. Cash has actually been received on shares allotted for cash, if not received, correct position shown
 From the officers of the company in books and balance sheet.
Right to
Obtain

 As considers necessary
Info.

Reporting over Accounts &

 For performance of his duties. Financial Statements That to the best of auditor information & knowledge, the accounts & financial statements give a true and fair view of
– Sec. 143(2) the state of the company affairs as at the end of its financial year & profit & loss and cash flow for the year.

1. Obtained all necessary information for the audit.

Duties of Auditor Supplementary Test Audit 2. Proper books of accounts have been maintained. Reasons for
of Govt. Cos. – Sec. Audit – Sec. 143(7) 3. Branch audit report has been received and manner of dealing with it. reservations –
143(5) – Sec. 143(6) 4. Balance Sheet and P & L Account agree with the books of accounts. Sec. 143(4)
5. Financial statements comply with AS.
CAG – direct the Within 60 days of CAG may For every
6. Comments on financial transactions having any adverse effect on functioning of company.
auditor the manners days of receipt of If considers matter
7. Directors disqualified u/s 164(2).
in which accounts Audit Report necessary 8. Qualifications w.r.t. maintenance of accounts. reported with a
are to be audited. Reporting u/s 143(3) 9. Adequacy and operative effectiveness of IFC with reference to F.S. qualification
Auditor report shall CAG have a Right by an order 10. Other matters as prescribed. (Rule 11)
Rule 11
include: Auditor shall
1. Disclosure of impact of pending litigations on financial position.
 Directions issued To order for cause test audit 2. Provisions for Material Forseeable losses on long term contracts made. state the
by CAG. supplementary 3. Any delay in transferring amounts to IEPF. reasons thereof
 Action taken audit of F.S. of accounts of 4. Disclosures w.r.t. holdings and dealings in SBNs.
thereon Govt. companies
 Its impact on Bu such persons as Compiled by: Fraud involving prescribed amount Rule 13
Fraud > 1Cr.
Accounts and F.S. authorized by him Committed by officers or employees
CA. Pankaj Garg
Reported to Audit Committee / BOD within 2 days
Should be report to CG in prescribed
Sec. 143(8) Audit of Branch Accounts (will be discussed manner (Rule 13) Seeking their reply within 45 days
separately)
Sec. 143(9) Every Auditor shall comply with Auditing If reply receive, forward his report, reply and comments on
Frauds below prescribed amount reply to CG within 15 days
Standards
Reporting u/s 143(12)
Sec. 143(10) CG may prescribe the SA in consultation Should be reported to Audit If reply not recd., forward his report to CG along with a
with NFRA Committee or BOD note that reply not recd.
Sec. 143(11) CG may direct that auditor’s report shall
include a statement on such matters as Details of Such Frauds need to be
disclosed in Board’s report. Nature of Fraud with description Approx. amount involved
specified in order issued by it. (CARO, 2016)
Parties involves remedial action taken

Compiled by: CA. Pankaj Garg Page 9

 Other Provisions (Sec. 142, 144, 145, 146 & 147)

Sec. 142 – Remuneration Sec. 144 – Auditor not to Sec. 145 – Signing of Sec. 146 – Sec. 147 – Punishment for
of Auditors render certain services Audit Reports Attending of Contravention
General meetings
Over the Company & Officer in
default – 147(1)
Authority to Fix Other Services that may be Shall be in accordance with
 Violation of Sec. 139-146
remuneration rendered Sec. 141(2)  Company – Fine from Rs. 25,000
 Shall be General meeting  As approved by the BOD to Rs. 5 Lacs.
or in such manner as or Audit Committee.  Officer in default–Imprisonment
may be determined  All Notice & other upto 1 year or fine from Rs.

therein. Services that cannot be rendered directly or indirectly to communication of 10,000 to Rs. 1 Lac or Both

 May be BOD in case of Co, Holding or Subsidiary general meetings

Over the Auditor – 147(2)
first auditor if appointed  Accounting & Book Keeping. shall be forwarded  Violation of Sec. 139, 143, 144,
to Auditor. 145.
by BOD  Internal Audit
 Fine from ₹25,000 to (₹5 Lacs or
 Unless exempted 4 times the remuneration,
 Design & Implementation of Financial Information System.
auditor shall whichever is less).
 Actuarial Services.  In case of Willful default –
Elements of remuneration attend either Imprisonment upto 1 year and
 Investment advisory. himself or through fine from ₹50,000 to (₹25 Lacs
 Shall include all or 8 times the remuneration,
 Investment Banking his authorized whichever is less).
expenses incurred in
 Outsourced Financial representative any
connection with audit general meeting,
 Management Services
and any facility extended  Auditor shall have If auditor convicted u/s 147(2)
 Other Prescribed.
to auditor. right to be heard
he shall be liable to
 Does not include at such meeting on

remuneration paid for part of business Refund the remuneration

Compiled by: CA. Pankaj Garg and
any other service. which concerns
Pay for damages
him as auditor.

Compiled by: CA. Pankaj Garg Page 10

Cost Records and Cost Audit (Section 148 of Companies Act, 2013 & Companies (Cost Records and Audit), Rules, 2014

Cost Records Cost Audit

Sec. 148(1) Rule 3 of Companies (Cost Requirement Cost Auditor Cost Audit report
C.G. may by order Records & Audit) Rules, 2014

Companies including foreign Sec. 148(2) Rule 4 of Companies (Cost Sec. 148(3)
In respect of such Sec. 148(5) & 148(6)
companies Records & Audit) Rules, 2014 Cost Audit shall be conducted
companies C.G. may be order Cost Auditor shall submit
his report to
Cost Records are required to by Cost Accountant
Engaged in Engaged in direct for the be audited BOD
Appointed by BOD
production of goods Company shall
production of audit of cost If overall annual turnover in prescribed manner
prescribed goods Or
providing services records of No person appointed u/s 139 within 30 days of date of
Or From all products and
as specified As an auditor receipt of report
providing prescribed
services
services companies
Shall be appointed as cost furnish such report to CG
Regulated Sector Non covered u/s
Regulated In immediate preceding
direct that 148(1) auditor along with full information &
Sector Financial Year
 Telecommunication  Iron Rule 6 of Companies (Cost explanation.
 Electricity  Steel having Records & Audit) Rules, 2014 Rule 6 of Companies
particulars relating to In case of
 Petroleum  Rubber
prescribed net Cost Auditor shall be appointed (Cost Records & Audit)
Regulated Non Regulated
 Sugar  Cement within 180 days of commencement Rules, 2014
Material  Drugs and Pharma  etc.
worth or Sector Sector
of every financial year. Cost Auditor shall submit
turnover >50 Cr. >100 Cr.
Labour  Fertilisers Before appointment written Cost Audit Report
or consent & certificate be obtained.
Other items of cost Having turnover > 35 Cr. in a manner AND Company Shall inform the cost in Form CRA-3.
auditor of his appointment.
Cost Auditor shall forward
Company Shall file a notice with CG
Shall be included in During immediate preceding Aggregate Turnover of Duly Signed Report to BOD
specified in that in Form CRA-2 within 30 days of
financial year Individual product or service
order Board meeting or within 180 days
the books of accounts of commencement of FY whichever Within 180 days from
shall include cost records in closure of FY.
>25 Cr. >35 Cr. is earlier.
their books of accounts
Cost Auditor appointed as such Report along with
Requirement of Cost Audit shall not apply to a company shall continue till expiry of 180 information & explanation to
days of closure of FY or till
Exemption –

Every Company under these Rules shall In respect of each of

Rule 4(3)

Whose revenue from exports in foreign exchange exceeds 75% submission of cost audit report. Shall be furnished to CG in
its Financial year
Rule 5

of its total revenue Cost statements shall be approved

or
Form CRA-4 in XBRL Format
by BOD before being signed by any
which is operating from SEZ.
Maintain Cost records in Form CRA - 1 director on behalf of Board for
or Compiled by: CA. Pankaj Garg
Engaged in generation of electricity for captive consumption submission to cost auditor.

Compiled by: CA. Pankaj Garg Page 11

 Companies (Auditor’s Report) Order, 2016

Applicability of CARO 2016 Matters to be reported under CARO 2016 (Para 3)

Para Reporting Area Reporting Requirements

CARO 2016 apply to all companies including foreign No.
companies except the following 3(i) Fixed Assets  Whether proper records maintained.
 Whether physical verification has been conducted at reasonable intervals by mngt.
(a) Banking Company  Whether material discrepancies noticed and if so, whether dealt properly in books.
(b) Insurance Company  Title deeds of immovable properties are held in name of Co., if not provide details.
(c) Company licensed to operate u/s 8 3(ii) Inventories  Whether physical verification has been conducted at reasonable intervals by mngt.
(d) One Person Company  Whether material discrepancies noticed and if so, whether dealt properly in books.
(e) Small Company 3(iii) Loans and Advances Whether loans have been granted to companies, firms, LLP covered u/s 189. If so,
(f) Private limited Company (not being a subsidiary or (a) T & C are not prejudicial to the company’s interest;
holding of public co) (b) Schedule of repayment of principal & payment of interest has been stipulated;
 Paid up capital + Reserves & Surplus < 1Cr. (c) State the total amount overdue for > 90 days.
(as on Balance Sheet Date) 3(iv) Compliance of Provisions  In respect of loans, investments, guarantees, and security
of Sec. 185 & 186  If not, provide the details thereof.
+
 Total borrowings from Bank & F.I. < 1Cr. 3(v) Public Deposits  Directives by RBI and Sec. 73 to 76 complied with. If not - nature of contravention.
 Order passed by CLB/RBI/Court/Tribunal–Whether complied with or not.
(at any point of time during the FY)
3(vi) Cost Records  Whether Specified u/s 148(1); whether accounts and records made and maintained.
+
3(vii) Statutory Dues  Whether undisputed PF, ESI, IT, ST, ST, Custom, Excise, VAT, cess & Other – paid
 Total revenue as disclosed in Schedule III < 10 Cr.
regularly. If Not outstanding >6 months as on Balance Sheet Date.
(for the FY)  W.r.t. disputed IT, ST, ST, Custom, Excise, VAT – State Amount involved & forum
3(viii) Repayment of Dues  Whether co. default in repayment of dues – F.I., Bank, Govt., Debenture holders.
Important Notes  If Yes – Nature and Amount of Default.
1. CARO not apply over audit report on Consolidated 3(ix) Money raised by public  Whether money Raised by IPO/FPO/term Loans – applied for stated purpose.
F.S. issue & term loans  If Not – details along with delay and subsequent ratification be reported.
2. Provisions of CARO are equally applicable in case 3(x) Fraud  Whether any fraud by company or on company by its officers/employees–noticed or reported.
of branches.  If Yes – Nature and amount to be stated.
3. Paid up capital includes equity as well as 3(xi) Managerial remuneration  Whether managerial remuneration has been paid with requisite approvals u/s 197.
Preference.  If Not, amount involved and steps taken for securing refund to be reported.
4. Reserves include all types of reserves & P & L 3(xii) Nidhi Companies  Whether the net owned funds to deposits ratio 1:20.
Balance.  Whether 10% unencumbered term deposits maintained.
5. All Loans (secured/unsecured, long term/short 3(xiii) Transaction with  Whether transactions with related parties are in compliance with Sec. 177 & 188.
term, etc.) are to be considered and in aggregate. Related Parties  Whether details disclosed in F.S. as required by applicable AS.
6. F.I. includes NBFC. 3(xiv) Preferential Allotment  Whether any preferential allotment of shares/FCD/PCD has been made.
7. Total Revenue comprises of Revenue from  If so, whether Sec. 42 complied with and amount raised used for stated purpose.
Operations and Other Income.  If Not – provide details of amount involved and nature of non-compliance.
3(xv) Non-cash transactions  Whether co. has entered into non-cash transactions with directors.
with Directors  If so. Whether Sec. 192 has been complied with.
Compiled by: CA. Pankaj Garg
3(xvi) Registration with RBI Whether regn. required u/s 45IA of RBI Act, 1934. If So- whether regn. obtained.

Compiled by: CA. Pankaj Garg Page 12