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8/2/2019 49 Caro Checklist
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Private & Confidential
Firm Name:
Checklist - Companies (Auditor's Report) Order, 2003
Client:
Audit Period:
Clause No. Area/Requirement Guidance and Audit Procedures Conclusion
4(i) (a) Fixed Assets Proper records
4(i) (b) Fixed Assets Physical verification
4(i)( c) Fixed Assets Disposal of Fixed Assets
4(ii) (a) Inventories Physical verification
4(ii) (b) Inventories Procedures of Verification
4(ii) ( c) Inventories Proper records of Inventory
4(iii)(a) Loans granted Loans granted
4(iii)(b) Loans granted interest & terms Loans granted - terms
4(iii)(c) Loans granted repayment Receipts
4(iii)(d) Loans granted overdue Overdue amounts
4(iii)(e) Loans taken Loans taken
4(iii)(f) Loans taken interest and terms Loans taken - terms
4(iii)(g) Loans taken repayment Repayment
4(iv) Internal Control System Internal Control System - purchases,sales etc.,
4(v)(a) & (b) Register under Section 301 etc., 301 Register and transactions
4(vi) Acceptance of Deposits Public deposits
4(vii) Internal Audit Internal Audit
4(viii) Cost Records Maintenance of Cost Records
4(ix) (a) & (b) Statutory dues Statutory dues
4(x) Accumulated losses etc., Losses etc.,
4(xi) Dues to Banks & FIs etc., Default in repayment of dues
4(xii) Loans and Advances granted Loans and Advances granted4(xiii)(a) to (d) Nidhi/mutual benefit fund/society Nidhi/mutual benefit fund etc.,
4(xiv) Dealing or Trading in Securities Dealing etc.,in Securities
4(xv) Guarantees Guarantees given
4(xvi) Term Loans Utilisation of Term Loans
4(xvii) Funds raised Utilisation of funds
4(xviii) Allotment of shares Preferential allotment
4(xix) Debentures Securities for Debentures
4(xx) Money raised on public issue End use of monies
4(xxi) Fraud Fraud
Issue Sheet
Completed by:
Reviewed by:
I have satisfied myself that the above checklist has been properly completed (referred Statement on CARO wherever
relevant) and all matters requiring the attention of the Audit Partner are set forth in the Issue sheet.(Refer the No. of the
issue sheet ).
I have reviewed the work done by the assistant-in charge and have satisfied myself that the above checklist has been
satisfactorily completed in line with the Statement on CARO issued by ICAI. Working papers were reviewed and agree with
the conclusions above.
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Whether records of fixed assets are
maintained showing the following particulars:-
a). Year of acquisition
b). Sufficient description of the assets to make
identification possible.
c). Classificaton, that is, the head under which
it is shown in accounts eg. Land, Building,
Plant and Machinery etc.
d). Location
e). Quantity, i.e number in units
f). Original cost
g). Adjustment for revaluation or for increase
or decrease in cost consequent on revaluation
of Foreign currency Liabili ties if any, along
with the dates of such adjustments.
h). Depreciation written off to date.
i). Written down value.
j). Rate and basis of depreciation and
particulars regarding amortisation and
impairment, (including the accumulated
depreciation/amortisation and impairment loss
and the charge for the current year)
k). Particulars regarding sale, discarding,
demolition, destruction etc.
l). Part iculars of f ixed assets that have been
retired from active use and held for disposal.
m). Particulars of fixed assets that have been
fully depreciated or amortised or impaired
n). Whether fixed assets as per
Register/Records agree with General Ledger
balances. If not, note the disagreements inrespect of each class of assets e.g.
- Land freehold
- Land leasehold
- Building
- Land
- Plant and Machinery
- Vehicles
- Furniture and Fixtures
- Office Equipment etc.
Clause 4(i) (a): Whether the company is maintaining proper records showing full particulars, including
quantitative details and situation of fixed assets;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has the management carried out a physical
verification of fixed assets during the year
according to the policy of the company? (eg.
phased manner, all assets every year etc.,)
2. Obtain the instructions issued by the
management to the staff for the physical
verification.
3. Obtain the working papers of physical
verification done by the management during the
year according to the policy of the company.
Also, confirm and evidence adherance to the
instructions issued.
4. Is the frequency of verification reasonable?
5. Ensure whether assets physically verified
agreed/reconciled to book figures?
6. Obtain a statement of descrepancies obtained
and consider if they are material, whether thesame have been properly adjusted in the books
of account.
7. Whether management representation is
obtained confirming that:
a) fixed assets are physically verified by the
company in accordance with the policy of the
company;
b) periodicity of the physical verification of fixed
assets;
c) details of the material discrepancies noticed
during the physical verification of the fixed assets;d) if no discrepancies were noted during physical
verification, the same should be clearly
mentioned.
Clause 4(i)(b): Whether these fixed assets have been physically verified by the management atreasonable 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
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has a substantial portion of fixed assets been
disposed off during the year? "Substantial" has to
be judged in the backgorund of factors such as
proportion of assets disposed off to that category of
assets and also total assets of the company in
value terms
2. Determine whether such disposal affected the
going concern status of company or not by carrying
out procedures such as analysis and discussionwith the management of the significance of such
assets to the company as a whole, reading the
minutes of the meetings of the Board of directors
and others to understand the entity's future
business plans, review of the post balance sheet
events to analyse the affect of such disposal on the
going concern status of the company.
3. Determine whether the going concern
assumption is appropriate due to mitigating factors:i) If yes, whether the plan or factors that need to be
disclosed have been disclosed?
ii) If no, whether adequate disclosure has been
made in the financial statement?
Also whether it has been considered whether there
are any adverse implications on the main audit
report? (Refer SA 570, formerly AAS 16, Going
Concern)
Clause 4(i)(c): If a substantial part of fixed assets have been disposed off during the year, whetherit has affected the going concern;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has the management physically verified the
following items of inventory during the year ?
i) Finished Goods
ii) Raw Materials and Components
iii) Stores and Spares
iv) Work-in-Progress
v) Maintenance Supplies
vi) Consumables and Loose Tools
vii) Packing Materials
2. Review firm's completed stock take
questionnaire and conclude on the effectiveness of
the process and whether the frequency of such
verification is reasonable.
Clause 4(ii)(a): Whether physical verification of inventory has been conducted at reasonable
intervals by the management
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Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks1 Have we observed the physical verification?
2. I f so, have we completed the check list for at tendance at
physical stock taking?
3. Are we satisfied that stock taking procedures were reasonable
and adequate in relation to the size of the Company, nature of its
business and volume of stock? If not, list out the
inadequacies/weaknesses observed by us.
4. In case we have not observed the physical verification, have
we studied the stock taking instructions issued by the client?
(Attach a copy where available)
5. Do these instructions cover, inter alia, the following key control
points:
-The independence of persons taking stock
- Proper stacking/arrangement of stocks to facilitate
identification and counting?
-Usage of counting tags or identification marks etc in order to
prevent double counting?
-Control of stock taking sheets/tags (e.g. numerical
sequencing) and reconciliation of the sheets/tags at the
conclusion of stock taking
-Control over movement of stocks during the course of stock
taking (Stoppage of movements during stock taking is highly
desirable).
-Collection of cut-off details viz. last challan No., GRN No.,
Excise Gate Pass No. etc.
-Comparison of rough stock sheets with bin cards and
preparation of shortage/excess list
- Signing of stock sheets by the client’s staff (both by the
counter and by the supervisor)
-Identification of damages, obsoletes and slow moving stocks
- Proper segregation of goods invoiced and sold but yet to be
despatched and other stocks of third parties
-Checking of the serviceability and adequacy of the measuring
instruments
6. Is there any report/certificate from the client’s official-in-charge
of stock-taking evidencing that the stock taking instructions were
followed? (Attach a copy)
7. In case the client does not have any instructions in writing, is
there any report from the client’s official-in-charge of stock-taking
outlining the procedures followed during the course of stock
taking? (Attach a copy)
8. On the basis of our findings, are we satisfied that stock taking
procedures were reasonable and adequate in relation to the size
of the Company and nature of i ts business? If not, l ist out the
inadequacies/weaknesses.
9. In case of continuous stock taking method, whether
management:
- Maintains adequate and up-to-date stock records
- Has established adequate procedures for physical verification
of inventories, so that, in the normal circumstances, the program
of physical verification will cover all material items of inventory at
least once during the year; and
-Investigates and corrects all material differences between the
book records and the physical counts
Clause 4(ii)(b): Are the procedures of physical verification of inventory followed by the management reasonable and
adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such
procedures should be reported;
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Firm Name:
Completed by:Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1.Whether the records of the Inventory show the followingparticulars:
(i) details regarding dates of transactions;
(ii) relevant document number and department identification, if
any,
(iii) identification code of the item;
(iv) quantity of the receipts and issues and balances;
(v) physical verification quantities;
(vi) location;
(vii) particulars of the item, like nomenclature, nature, etc.
(vii) valuation details; etc.
2. Are the stock registers updated as and when the transactions
occur?
3. Verify that the transactions entered in stock registers are dulysupported by relevant documents.
4. Verify whether inventories as per Register/Records agree with
General Ledger balances
5. Obtain a statement of descrepancies obtained and consider if
they are material, whether the same have been properly adjusted
in the books of account.
Clause 4(ii)(c): Whether the company is maintaining proper records of inventory and whether any material discrepancies were
noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response
1. Has the company granted any loans to
companies, firms and other parties covered in the
Register maintained under Section 301 of the Act?
2. Obtain a statement containing the name of the
company, firm or other Party, nature of relationship,amounts and dates of loans granted, amounts and
dates of loans refunded, amounts and dates of
interest received, closing balance at year end,
particulars of instalments (amount and period
outstanding for) of overdue principal and interest
together with the details regarding the rate of
interest, if any, and brief terms and conditions like
security, repayment particulars (principal and
interest) etc.,
3. Examine the above statement with necessary
documents and records on a reasonable test check
basis.
4. Report information as per the table below in the
case of all loans granted.
5. Check and conclude that the rate of interest and
other terms and conditions are not prima facie
prejudicial to the interest of the company or
otherwise by consideration of factors such as loan
agreements, borrower's financial standing, its ability
to lend, nature of security, the availability of
alternative sources of finance, the urgency of
borrowing, purpose of the loan, prevailing market
rates of interest etc.,Number of Parties Amount
involved
(In Rupees)
Year end
balance
(In
Ru ees
Notes:
1. The requirement of this clause also covers advances which are in the nature of loans.
2. Loan transactions that have been squared up during the year also would get covered under the requirement.
Clause 4(iii)(a) : Has the company granted any loans, secured or unsecured to companies, firms or other
parties covered in the register maintained under section 301 of the Act. If so, give the number of parties
and amount involved in the transactions; and
Clause 4(iii)(b) Whether the rate of interest and other terms and conditions of loans given by the
company, secured or unsecured, are prima facie prejudicial to the interest of the company; and
Remarks
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Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response
1. The regularity of receipt of principal
amount and interest should be considered
in the light of procedures such as review of
receipt schedule, loan agreements and
other relevant documents, actual dates of
receipt of principal and interest.
2. The following particulars should be
considered in reporting the irregularity of
receipt of principal and interest-
Name of the Party Overdue
Princi al
Overdue
Interest
Year end Balance
Notes:
2. Where no stipulations have been made for repayment of the loan, the auditor should state his inability to make
comments in the absence of terms of repayment.
1. If a due date for receipt of interest is not specified, it would be reasonable to assume that it falls due on each
anniversary of the loan.
Clause 4(iii)(c): Whether receipt of principal amount and interest are also regular; andRemarks
(In Rupees)
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Completed by:
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Reviewed by:
Date:
Audit Procedures Response
1. Obtain a statement with the names of the companies,
firms or other parties, amount of loan granted,
outstanding amount at the year end and steps taken for
the recovery.
2. The reasonableness of steps taken by the company
for recovery should be judged in the light of factors such
as issue of reminders, sending advocate's notice,
management's representations, follow up with theborrowers, etc., as the case may be.
3. If not satisfied about the reasonability of steps taken,
consider the name of the party, overdue amount of
principal and interest for reporting.
4.Obtain management's representation regarding steps
that have been taken for recovery of overdue amounts
exceeding rupees one lakh
Clause 4(iii)(d): If overdue amount is more than one lakh, whether reasonable steps have been
taken by the company for recovery of the principal and interest;Remarks
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Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response
1.Has the company taken any loans from companies,
firms and other parties covered in the Register
maintained under Section 301 of the Act?
2. Obtain a statement containing the name of the
company, firm or other Party, nature of relationship,
amounts and dates of loans taken, amounts and datesof loans repaid, amounts and dates of interest paid,
closing balance at year end, particulars of instalments
(amount and period outstanding for) of overdue
principal and interest together with the details
regarding the rate of interest, if any, and brief terms
and conditions like security, repayment particulars
(principal and interest) etc.,
3. Examine the above statement with necessary
documents and records on a reasonable test check
basis.
4. Report information as per the table below in the
case of loans all loans taken.
5. Check and conclude that the rate of interest and
other terms and conditions are not prima facie
prejudicial to the interest of the company or otherwise
by consideration of factors such as loan agreements,
nature of security, the availability of alternative sources
of finance, the urgency of borrowing, purpose of the
loan, prevailing market rates of interest etc.,
Number of Parties Amountinvolved
In Ru ees
Year end balance(In Rupees)
Notes:
1. The requirement of this clause also covers advances which are in the nature of loans.
2. Loan transactions that have been squared up during the year also would get covered under the requirement.
Clause 4(iii)(e): Has the company taken any loans, secured or unsecured from companies, firms or otherparties covered in the register maintained under section 301 of the Act. If so, give the number of parties
and the amount involved in the transactions; and
Clause 4(iii)(f): Whether the rate of interest and other terms and conditions of loans taken by the
company, secured or unsecured, are prima facie prejudicial to the interest of the company; and
Remarks
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Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response
1. The regularity of payment of principal
amount and interest should be considered
in the light of procedures such as review of
repayment schedule, loan agreements and
other relevant documents, actual dates of
payment of principal and interest.
2. The following particulars should be
considered in reporting the irregularity of
principal and interest: (in Rupees)
Name of the Party OverduePrincipal
OverdueInterest
Year end Balance
Notes:
1. If a due date for payment of interest is not specified, it would be reasonable to assume that it falls due on each
anniversary of the loan.
2. Where no stipulations have been made for repayment of the loan, inability to make comments under the clause
should be stated.
Clause 4(iii)(g) Whether payment of the principal amount and interest are also regular.Remarks
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. On the basis of our understanding,
documentation and validation thereof in the
Myclient file-control activities in the areas of
Inventory cycle, property, plant and equipment
cycle, revenue and receivables cycle, review
of internal audit reports, are we satisfied that
there is an adequate internal control system
commensurate with the size of the company
and the nature of its business for the
purchase of inventory and fixed assets and
for the sale of goods and services?
If not document the inadequacies and
weaknesses thereof and consider implications
for reporting.
2. Review the reports of internal audit,
minutes of the Board, Audit committee,
management committee, if any and any other
relevant internal reports to identify major
weaknesses in internal controls and whether
there is any continuing failure to correct such
weaknesses.
3. In the case of continuing failure to correct
any major weakness identified, report the
weakness and steps taken by the
management to correct such weakness, if
addressed subsequent to the balance sheet
date or the fact of failure to correct such
weakness.
4. Consider the implications of such control
weaknesses on the nature, extent and timing
of audit procedures in those areas and
implications, if any, on the adequacy or
reliability of the books of account and the
overall report.Notes:
1. Ordinarily, any weakness in internal controls that exposes the company to a risk of significant loss
or the risk of a material misstatement in the financial statements may be considered as a
major weakness.
2. Continuing failure should be judged with reference to the weakness that existed at the time of
previous year's audit.
3. If any major weakness is corrected by the date on which the audit report is issued, the fact of such
correction subsequently must also be reported.
Clause 4(iv): Is there an adequate internal control system commensurate with the size of thecompany and the nature of its business, for the purchase of inventory and fixed assets and for
the sale of goods and services. Whether there is a continuing failure to correct major
weaknesses in internal control system.
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Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1.Has the company entered into any contracts or
arrangements that need to be entered into the register
maintained under Section 301 of the Act?
2. Are particulars of contracts or arrangements referred to
in Section 301 entered into the register maintained under
that section?
3. Obtain a list containing the name of the party, nature of
relationship, description of transaction and amount and
date of each such transaction individually and for al l the
transactions during the year.
4. Check the list for completeness of information with
reference to: knowledge from previous year's audit,
review of entity's procedures for identification of entries to
be made in 301 register, inquiries as to the affiliation of
directors and key management personnel, officers with
other entities, review of shareholders records to identify
the principal shareholders, review of entity's income tax
returns, review of joint venture and other relevant
agreements, minutes of board meetings, Form 24AAssubmitted etc.,
5. In respect of transactions exceeding the value of rupees
five lakhs in respect any party and in any one financial
year made under such contract or arrangements examine
information such as price l ists, quotations and records
relating to prices for similar transactions with other parties
at the relevant time.
6. In cases where transactions are entered with sole
suppliers, examine the reasonableness of prices paid
with reference to list prices of the supplier concerned,
other trade terms of the supplier, etc. and where required,
consider the same appropriately in the report.
7. The reasonableness of the prices should be determined
taking into account factors such as delivery period, quality
of the product, quantity, credit terms, past performance of
the party etc.,
Notes: 1. The requirement of this clause does not cover transactions with subsidiaries per se unless one or more of the
directors of the company are interested in the subsidiary in terms of Section 297/299 of the Companies Act, 1956.
Clause 4(v) (a): Whether the particulars of contracts or arrangements referred to in section 301 of the Act have beenentered in the register required to be maintained under that section; and
Clause 4(v)(b): Whether transactions made in pursuance of such contracts or arrangements have been made at
prices which are reasonable having regard to the prevailing market prices at the relevant time;
(This information is required only in case of transactions exceeding the value of five lakhs rupees in respect of any
party and in any one financial year).
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Audit Procedures Response Remarks
1. Has the Company accepted any deposits from
public within the meaning of Section 58A, 58AA
and rules framed thereunder?
2. Obtain a general understanding of Section 58A,
58AA and the relevant rules and ascertain the
system and procedures of the company to ensure
compliance with the provisions of the said sections
and the rules made thereunder.
3. Check the compliance with the requirements of
the Act and the rules framed thereunder by
completing the firm's checklist on Acceptance of
Deposit Rules and Companies Act 1956.
4. Examine the internal controls in place for
identifying defaults in repayment of deposits made
by small investors or part or any interest thereon.
Based on the understanding so gained, perform a
reasonable test check of the deposits received
from small investors.
5. Enquire of the management possible instances
of non-compliances with Section 58A, 58AA and
relevant rules and about any order passed by the
CLB, National Company Law Tribunal, RBI, or any
Court, or any other Tribunal on contraventions.
6. Examine the correspondence and documents
filed with the Registrar of Companies, Company
Law Board, National Company Law Tribunal, RBI,
legal correspondence for orders passed and thesteps taken by the company to comply with the
order.
Clause 4(vi): In case the company has accepted deposits from the public, whether the directives issued by the
Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Act and
the rules framed there under, where applicable, have been complied with. If not, the nature of contraventions
should 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?
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Reviewed by:
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Audit Procedures Response Remarks
1. Is the company a listed company or having paid up
capital and reserves exceeding Rs. 50 lakhs as at the
commencement of the financial year concerned or having
an average annual turnover exceeding five crores rupees
for a period of three consecutive financial years
immediately preceding the financial year?
2. Consider the following factors to determine whether the
internal audit system is commensurate with the size of theand the nature of its business-
-Size of the internal audit department; and whether the
company has a separate internal audit department or an
outside professional firm is engaged;
- Internal Audit Plan and adequacy of areas of coverage
-Qualifications of the internal audit staff;
-Whether the internal audit department is independent
of the accounting and custody departments;
-Reporting levels of internal audit;
-Areas of coverage, and also whether the internal auditsare conducted in accordance with the generally
accepted auditing standards;
-Adequacy of technical assitance available to the
internal audit department;
-Reports submitted by the internal audit and follow up
procedures thereof.
1. The date of the balance sheet must be considered in reckoning the listing status of the company.
2. While evaluating the adequacy of internal audit system, existence or otherwise of other forms of internal controls must also
be taken into account.
Clause 4(vii): In the case of listed companies and/or other companies having a paid-up capital and reserves exceeding Rs.50lakhs as at the commencement of the financial year concerned, or having an average annual turnover exceeding five crore
rupees for a period of three consecutive financial years immediately preceding the financial year concerned, whether the
company has an internal audit system commensurate with its size and nature of its business;
Notes:
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Audit Procedures Response Remarks
1. Is maintenance of cost records prescribed
by Central Government under Section
209(1)(d) applicable to the company?
2. Obtain a list of books and records made
and maintained by the company under
Section 209(1)(d) of the Companies
Act,1956.
3. Conduct a general review of the cost
records to ensure that the records as
prescribed are made and maintained.
Clause 4(viii): Where maintenance of cost records has been prescribed by the CentralGovernment under clause (d) of sub-section (1) of section 209 of the Act, whether such
accounts and records have been made and maintained;
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Clause 4(ix)(a): Is the company regular in depositing undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax,
Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and any other statutory dues
with the appropriate authorities and 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.
Clause 4(ix)(b): In case dues of Income tax/ Sales tax /Wealth tax/ Service tax/ Custom duty/ Excise
duty/ cess have not been deposited on account of any dispute, then the amounts involved and the
forum where dispute is pending shall be mentioned.
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1. Obtain a statement containing the list ofvarious statutes under which the company is
required to make payments to appropriate
authorities including those relating to Provident
Fund, Investor Education and Protection Fund,
Employees’ State Insurance, Income-tax,
Sales-tax, Wealth Tax, Service Tax, Custom
Duty, Excise Duty, cess etc, the nature and
amounts of payments under each statute, the
due dates for making such payments, the
dates on which the payments were made by
the Company, the arrears due for more than
six months as at the Balance Sheet date andthe date and amount of subsequent payments,
if any made out of such arrears.
2. Obtain a general understanding of various
statutes governing the entities and dues
payable under those statutes. Make enquiries
of the management about the statutes under
which the company is required to pay dues and
the policies and procedures in place for
identifying and payment of such dues.
3. Verify the statement under 1 above and with
the general understanding obtained and
gained the underlying documents and records,
compile the the following details in the case of
arrears of statutory dues:
- Name of the statute
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Clause 4(ix)(a): Is the company regular in depositing undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax,
Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and any other statutory dues
with the appropriate authorities and 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.
Clause 4(ix)(b): In case dues of Income tax/ Sales tax /Wealth tax/ Service tax/ Custom duty/ Excise
duty/ cess have not been deposited on account of any dispute, then the amounts involved and the
forum where dispute is pending shall be mentioned.
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- Nature of the dues
- Amount
- Due date
- Date of payment
4. Whether the Company has been generally
regular in depositing statutory dues or
otherwise, report the same appropriately.
5. In the case of disputed statutory dues,
compile the following details:- Name of the Statute
- Nature of the dues
- Amount
- Forum where dispute is pending
Information under this clause should be given
separately for each period even though the
dispute relates to the same nature of statutory
dues, like income taxes etc.,
Notes:1. The scope under this clause is restricted to only those statutory dues which are required to be paid
regularly to a body.
2. Reporting under this clause is required irrespective of the fact whether or not there are any arrears
as at the balance sheet date.
3. For a matter to be considered as "disputed" there must be a positive evidence or action on part of
the company to show that it has not accepted the demand for payment of duty or tax. The sustain-
-ability or otherwise of the claim is not to be judged.
4. Penalites or interest would be covered under "amounts payable".
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Obtain a statement containing the names of the
institution/bank/debenture holder, the period and
amounts of default, due dates thereof and dates and
amounts of subsequent payments, if any. Yes
2. Verify the statement in 1 above, with documents
such as agreements, other terms and conditions,
debenture trust deed as the case may be. Identify the
period and amount of default for reporting. Yes
Notes:
1. The requirement covers all the defaults existing on the balance sheet date, irrespective of when the defaults have occurred.
2. Dues cover all amounts including interest and principal.
3. Applications for reschedulement/restructuring will not be binding unless approved.4. Dues not paid by the company on account of unilateral disputes tantamount to default.
Clause 4(xi): Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture
holders? If yes, the period and amount of default to be reported;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Whether the company has granted any
loans and advances on the basis of security
by way of pledge of shares, debentures and
other securities?Yes
2. If yes, examine whether documents and
records include details such as the name and
address of the borrower, amount, terms and
conditions such as period, rate of interest,
security etc., disbursements, repayments,recovery of interest; full particulars of security,
names of the companies, number and class
of shares, distinctive numbers, particulars as
to tit le etc; documents needed for transfer,
details as to periodical ackowledgements of
the parties, proof to establish the power of the
party to borrow- e.g. board resolution etc.,
Yes
3. Obtain a statement containing the details of
such loans granted including name of the
party, amount of loan/advance granted,
amount outstanding as the balance sheet
date and type and nature of security and
verify the same on a reasonable test checkbasis with documents and records mentioned
in 2 above.
Yes
4. Verify the securities pledged by reference
to physical securities or statements from
depository participants. In the case of
dematerialized form of securities confirm that
the company has a valid right to sell the
shares in the event of default.
Yes
5. Whether security is in the custody of
company and market value of security is
adequate to cover the outstanding amount ofloan and interest? Yes
6. List the deficiencies for reporting. Yes
Notes:
1. The requirement of this clause does not extend to other forms of security like
hypothecation, guarantee etc.,
2. Other securities may be construed to mean bonds or promissory notes issued by a government
or semi-government authority.
Clause 4(xii): Whether adequate documents and records are maintained in cases where thecompany has granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities; If not, the deficiencies to be pointed out.
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Is the Company a nidhi/mutual benefit
fund/society?
2. Check compliance with the following:
a) Whether the net owned funds to deposit
liability ratio is more than 1:20 as on the date of
balance sheet? (Refer to the definitions in theClause)
b) whether the company has complied with the
prudential norms on income recognition and
provisioning against sub-standard / doubtful /
loss assets;
c) Whether the company has adequate
procedures for appraisal of credit proposals /
requests, assessment of credit needs and
repayment capacity of the borrowers by
examination of the policies and procedures and a
reasonable test check of the transactions
effected during the year with relevant documents
such as individual borrower files, loan applicationforms,supporting documentation, sanctions,
security documents etc.,
d) Whether the repayment schedule of various
loans granted by the nidhi is based on the
repayment capacity of the borrower and would be
conducive to recovery of the loan amount by
examination of the system of granting of loans
and making a reasonable test check of
transactions.
3. Ensure that the requirements of the rules
regarding the records to be maintained, returns to
be filed etc., are complied with, where applicable.
4. Consider the implications of non-compliances
under 2 a) and b) above also in the auditors' report
on the financial statements.
Notes:
1. Net owned funds means the aggregate of paid up equity capital and free reserves as reduced
by accumulated losses and intangible assets appearing in the last audited balance sheet of the company
i.e. balance sheet of the current year.
2. Deposit liability would mean aggregate of deposits accepted by the company.
Clause 4(xiii): In respect of nidhi/ mutual benefit fund/societies;
(a) whether the net-owned funds to deposit liability ratio is more than 1:20 as on the date ofbalance sheet;
(b) whether the company has complied with the prudential norms on income recognition and
provisioning against sub-standard/doubtful/loss assets;
(c) whether the company has adequate procedures for appraisal of credit proposals/requests,
assessment of credit needs and repayment capacity of the borrowers;
(d) whether the repayment schedule of various loans granted by the nidhi is based on the
repayment capacity of the borrower;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Is the company dealing or trading in shares, securities, debentures
and other investments?
2. Whether the records of the Investments show the following
particulars:
(i) details regarding dates of transactions-purchases and sales;
(ii) classes of investments;
(iii) distinctive numbers and the face value ;(iv) quantity of the receipts and issues and balances;
(v) physical verification quantities;
(vi) cost, valuation details;
(vii) profit/loss arising on sale;
(viii) amounts receivable/payable.
3. Examine the timeliness of updation of the records by adpoting
procedures such as surprise inspection of the records, system of
internal controls over updation, review of internal audit and other
reports for exceptions, if any, in this regard.
4. Verify that the transactions entered in the registers are dulysupported by relevant documents.
5. Verify whether the aggregate of balance as per the
Registers/Records agrees with General Ledger balances.
6. Obtain a statement containing details of investments not held in the
name of the company and those where exemption under Section 49 of
the Act is available. Check the statement with necessary supporting
documents as in 4 above and with the requirements of Section 49 of
the Act.
7.In case investments which are intended to be sold immediately may
not have been transferred in the name of the company, whether, in the
circumstances of each case, the failure to transfer the investments tothe company’s name is understandable.
Notes:
1. The requirement does not apply to companies which are not dealing or trading in investments but purchase
investments with a view to hold such investments and earn income from dividend or interest. Factors to consider to decide
in this regard include objects of the company, period for which investments are normally held, reasons for purchase/sale,
internal approvals covering such purchase and sale, method of valuation-cost or lower of cost or market value, treatment
of profits/gains in the tax assessments etc.
Clause 4(xiv): If the company is dealing or trading in shares, securities, debentures and other investments, whether
proper records have been maintained of the transactions and contracts and whether timely entries have been madetherein; also whether the shares, securities, debentures and other investments have been held by the company, in its
own name except to the extent of the exemption, if any, granted under section 49 of the Act;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks1. Has the company given any guarantees for loans
taken by others from bank or financial institutions?
2. Obtain a list containing the name of the party, nature
of relationship, if any, amount of loans taken, closingbalance as at the balance sheet date together with
brief terms and conditions like description of security
given, estimated amount of such security, defau lt
action conditions, if any.
3. Understand and document the internal controls over
issue of guarantees and confirm its operation during
the year. Consider implications, if any, on reporting or
in management letter.
4. Verify the above statement with documents, such as
memorandum of association, to confirm whether thecompany can issue guarantees, maximum permissableamounts, the parties in respect of whom and the types
of guarantees that can be given; minutes of the board
of di rectors, compliance with the requirements of
Section 372A of the Companies Act, letters of
borrowing parties requesting the 295/372A of the
Companies Act, letters of borrowing parties requesting
the guarantee, company's letters, guarantee
documents etc.,
5. If the company has issued a guarantee incontravention of the clauses of the memorandum of
association, consider the same appropriately inreporting.
6.Whether the tangible/ intangible benefits flowing to
the company due to furnishing of guarantee are
commensurate with risk undertaken by the company indoing so?
7. If in judgement and conclusion it was established
that the terms are prejudicial to the interest of the
company, obtain an explanation from the company whythe company considers the same as not prejudicial.
8. If not convinced by management's exp lanation,
consider appropriately in reporting disclosing the
amount of such guarantee.
9. Whether a written representation from the
management has been obtained that:
a) All obligations in respect of guarantees have been
duly recorded in the register and disclosed;
b) There are no guarantees issued upto the year-endwhich are yet to be recorded; and
c) Contingencies l ikely to result in a loss have been
adjusted/provided for, and are not inc luded under
contingent liabilitiesNotes:
2. The requirement only relates to guarantees given during the year.
3. In determining whether any guarantees given are prejudicial to the interest of the company,
factors such as financial standing of the party, its ability to borrow, nature of security offered,
availability of alternate sources of finance, urgency of the borrowing for which the guarantee was given etc.,
should be evaluated
Clause 4(xv): Whether the company has given any guarantee for loans taken by others from bank or
financial institutions, the terms and conditions whereof are prejudicial to the interest of the
company;
1. The requirement only applies to guarantees given for loans taken by others from banks or financial
institutions and not from other sources.
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has the company obtained any term loans or made
any utilisation during the year? Yes
2.Obtain a statement containing the specific terms of
loans and the details of application-amounts, dates and
the purpose.
3.Verify the statement with documents such as sanction
letters and other documents containing the terms and
conditions and those relating to actual utilisation.
4. If term loans were not applied for the purpose for
which they were obtained, indicate the amount and the
purpose for which it was ultimately utilised.
5. In the case of temporary application of funds for other
purposes before they were utilised for the stated
purpose, mention such fact in the report.
6.Whether the funds flow statement has been reviewed
where one to one correlation is not possible?
Notes:
1. Working capital term loans are not within the scope of this clause.
2. The reporting requirement under this clause also covers temporary use of surplus funds.
3. It is not necessary to establish a one to one relationship with the amount of term loan and its utilisation.
Clause 4(xvi): Whether term loans were applied for the purpose for which the loans were obtained;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1.Obtain a statement containing the specific
terms of funds and details of use-amounts
and nature.
2. Compare the quantum of long term funds
with the long term application of funds.
3. Compare the quantum of short term funds
with the short term application of funds.
4. If the differences point towards use of
short term funds for long term investment,
consider appropriately in reporting.
Notes:
1. Long-term sources of funds would include share capital, reserves and surplus, provision
for depreciation, long term debt securities, long term loans. Long term application of funds would
include investment in fixed assets, long term investments and other assets of similar nature,
repayment of long term loans and advances or redemption of debt securities, use for core working
capital etc., Short term sources of funds include temporary credit facilities like cash credits,
overdraft, reduction in current assets or increase in current liabilities etc., Short term application offunds includes all application otherwise than for long term use, increase in current assets or
decrease in current liabilities etc.,
2. The requirement has to be determined on the basis of the overall picture of the sources and
application of funds based on the balance sheet of the company unless a one to one direct
relationship can be established between a particluar source and application.
Clause 4(xvii): Whether the funds raised on short-term basis have been used for long terminvestment; If yes, the nature and amount is to be indicated;
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Firm Name:
Completed by:Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has the company made any preferential allotment of shares to
parties and companies covered in the Register maintained underSection 301 of the Companies Act,1956?
2. Obtain a statement containing the names of the parties and
companies, nature of relationship, description of allotments made-equity/preference, number of shares, price and terms and
conditions of the allotments made during the year.
3. In the case of listed companies check whether the price forshares issued on a preferential basis is not less than higher of the
following-
-the average of the weekly high and low of the closing prices ofthe related shares quoted on the stock exchange during the sixmonths preceding the relevant date.
- the average of the weekly high and low of the closing prices of
the related shares quoted on the stock exchange during the twoweeks preceding the relevant date.
4. In the case of listed companies, confirm and verify that the
company has complied with the requirements of guidelines laid
down in this regard by SEBI.
5. In the case of private company and an unlisted public company,examine the method used for valuation of the shares and also
ascertain the reasonableness of the assumptions underlying the
calculation.
6. If in the judgement and conclusion, it was eastablished that theprice charged is not fair, obtain a representation from the
management as to why such price charged is not prejuducial to
the interest of the company and consider appropriately inreporting.
7. Consider compliance with the requirements of SA 620 (formerly
AAS-9) "Using the work of an Expert" if the valuation report of an
expert is used as the basis.
8. If the company has made a preferential issue by passing anordinary resolution, also examine the relevant order of the
Government passed in this regard. If, on the basis of order, it is
concluded that the price charged is not prejudicial, state the fact of
reliance on such order for the purpose of reporting.
9. Obtain a representation from the management as to why thecompany considers that the price charged is not prejudicial to the
interest of the company and evaluate whether the explanation is
convincing
Notes:
1.The term "shares" includes both preference as well as Equity.
2. In the case of a listed company, allotment of shares under Section 81(1A) of the Companies Act,1956 is known aspreferential allotment of shares.
Clause 4(xviii): Whether the company has made any preferential allotment of shares to parties and companies
covered in the Register maintained under section 301 of the Act and if so whether the price at which shares
have been issued is prejudicial to the interest of the company;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has the company issued any debentures and the
same outstanding at the end of the year?
2. Verify the debenture trust deed executed under
Section 117A of the Act in respect of debentures issued
during the year with particular reference to security
requirements.
3.Verify whether such security or charge is created as
required under section 125 and 130 of the Act by
examining the documents evidencing the charge-forms
filed with ROC etc.,
Clause 4(xix) Whether security or charge has been created in respect of debentures issued?
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1. Has the company made any public issue or made any
utilisation during the year?
2. Obtain a statement containing the quantum of money
raised on public issue of any security made by the
company during the year and details of end use of
money so raised.
3. Verify such statement with reference to end use as set
out in the Prospectus. Where the issue exceeds Rs. 500
Crores, refer the half yearly reports of the monitoring
agency as submitted to SEBI.
4. Verify the disclosure made by the company in the
financial statements in this regard.
5. If we are not satisfied with the disclosures made in the
financial statements, consider the matter for reporting
setting out clearly the information which should have
been dislosed.
6. Whether the cash flow statement has been reviewed
where one to one correlation is not possible?
7. If we are unable to determine the end use of money
raised from public issues state the fact together with the
reasons thereof in our report.
8. Whether a representation from the management has
been obtained as to the completeness of the disclosures
with regard to the end use of moneys raised by public
issues.
Clause 4(xx): Whether the management has disclosed on the end use of money raised by public issuesand the same has been verified;
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Firm Name:
Completed by:
Date:
Reviewed by:
Date:
Audit Procedures Response Remarks
1.Complete our understanding and assessment of
fraud considerations as per steps given under "Fraud
Risk" in MYClient file. Done
2. On the basis of work carried out as above, are we
satisfied that there are no indications of fraud on or
by the company noticed or reported during the year?
Done
3. If any fraud is noticed or if there is a doubt about
the existence of fraud, carry out procedures as
mentioned in SA 240 (formerly AAS-4) "The Auditor's
Responsibility to consider fraud and error in an audit
of Financial Statements" Done
4. If the response to 2 above is "No" determine the
nature and extent of such frauds and implications on
our reporting. Done
5. Where any fraud on the company or by the
company has been noticed or reported, whether the
the nature and amount of frauds has beendetermined and disclosed? Also, whether
management representation has been obtained to
this effect?Done
Notes:
The following are the indicative sources relating to identification of Fraud:
i. the reports of internal reviews/audits conducted, if any.
ii.inquiries of the management about any frauds on or by the company that it has noticed or that have been
reported to it.
iii. discussions with other employees of the company.
iv. examination of the minutes book of the meetings of Board, audit committee etc.,
v. Reports, if any, on inspection/investigation by Regulatory/Government Authorities.
Clause 4(xxi): Whether any fraud on or by the company has been noticed or reported during the year; Ifyes, the nature and the amount involved is to be indicated
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Firm Name:
Clause No. Area/Requirement Brief Description of the Issue How addressed in the Audit
4(i) (a) Fixed Assets
4(i) (b) Fixed Assets
4(i)( c) Fixed Assets
4(ii) (a) Inventories
4(ii) (b) Inventories
4(ii) ( c) Inventories
4(iii)(a) Loans granted
4(iii)(b) Loans granted interest & terms
4(iii)(c) Loans granted repayment
4(iii)(d) Loans granted overdue
4(iii)(e) Loans taken
4(iii)(f) Loans taken interest and terms
4(iii)(g) Loans taken repayment
4(iv) Internal Control System
4(v)(a) & (b) Register under Section 301 etc.,
4(vi) Acceptance of Deposits
4(vii) Internal Audit
4(viii) Cost Records
4(ix) (a) & (b) Statutory dues
4(x) Accumulated losses etc.,
4(xi) Dues to Banks & FIs etc.,
4(xii) Loans and Advances granted
4(xiii)(a) Chit Fund company
4(xiii)(a) to (d) Nidhi/mutual benefit fund/society
4(xiv) Dealing or Trading in Securities
4(xv) Guarantees4(xvi) Term Loans
4(xvii) Funds raised
4(xviii) Allotment of shares
4(xix) Debentures
4(xx) Money raised on public issue
4(xxi) Fraud
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