Applicability Non-Applicability

Every Company including a Foreign i. Banking Company [defined in clause (c) Section 5 Banking
Company defined U/s 2 (42) of the regulation Act 1949 (10 of 1949)]
Companies Act 2013 ii. Insurance Company [defined under Insurance Act 1938 (4
of 1938)]
iii. Company licensed to operate U/s 8 of the
Companies Act 2013
iv. One Person Company
v. Small Company
vi. Private Company (Other than holding or subsidiary of a
public company with-
o Paid-up Capital + Reserves & Surplus < 1 Crore Rs.
(As on balance sheet date)
o Total Borrowings < 1 Crore Rs.
(From Bank or Financial Institution at any point of time
during the Financial Year, including revenue from discontinuing
operations)
o Total Revenue < 10 Crore Rs.
CA DEEPIKA RATHI : AUDITING & ASSURANCE 1
 (During the Financial Year as per Financial Statements)

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 Auditor’s Report to contain matters specified in paragraphs 3 & 4

Paragraph 4
Paragraph 3
Reasons to be stated for
Matters to be included in
unfavorable or qualified
auditor’s report
answers

 Every report made by the auditor u/s 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 2019 shall in addition contain the
matters specified in paragraphs 3 and 4 as may be applicable

 Note: This Order shall not apply to the auditor’s report on Consolidated
Financial Statements except clause (xxi) of paragraph 3.
CA DEEPIKA RATHI : AUDITING & ASSURANCE 3
 Matters to be included in the Auditor’s Report : Paragraph 3 of the order

a. Adequacy of Records :
Whether the company
A. Maintaining proper records of PPE showing-
- Full particulars
- Quantitative details &
- Situation
Fixed Assets B. Maintaining proper records of Intangible assets showing
(i) - Full particulars
b. Physical verification :
Whether
o PPE have been physically verified by the management at reasonable intervals.
o Any material discrepancies noticed on such verification.
If so
o Same have been properly dealt in books of account.

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C . Title deed :
Whether
o The title deeds of all the immovable properties (other than properties where the
company is the lessee and the lease agreements are duly executed in favour of the
lessee) disclosed in the financial statement

o Are held in the name of the company

o If not provide the details thereof in the format below

Description Gross Held in Whether promoter Period held Reasons for
of property carrying name of director or their indicate range not being held
value relative or where appropriate in name of
employee company
*Also indicate
if in dispute

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d. Revaluation :
Whether
o The company has revalued its PPE (Including Right to use assets) or Intangible Assets
or both during the year
If so
o Whether the revaluation is based on the valuation by a Registered valuer
- Specify the amount of change
- if change is 10 % or more in the aggerate of the net carrying value of each class
of PPE or intangible assets.

e. Proceeding for holding Benami Property:

Whether
o Any proceedings have been initiated or are pending against the company for
holding any benami property under the Benami Transactions (Prohibition) Act 1988
(45 of 1988) and rules made thereunder
If so
o Company has appropriately disclosed the details in its Financial Statement.

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 a. Physical verification :
Whether
o Physical verification of inventory has been conducted at reasonable intervals by the
management
o In the opinion of the auditor the coverage and procedures of such verification by the
management is appropriate
o Any discrepancies of 10% or more in the aggregate for each class of inventory were
noticed
If so
Inventories o They have been properly dealt with in the books of account.
(ii) b. Quarterly return/statements filed with bank or financial statement :
Whether
o During any point of time of the year, the company has been sanctioned working
capital limits in excess of 5 crore Rs. in aggregate form banks or financial statements
on the basis of security of current assets
o The quarterly returns or statements filed by the company with such bank or financial
institutions are in agreement with books of account of the company
If not
o Give details
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 Whether during the year the company has made
- investments in
- Provide any guarantee or security or
- Granted any loans or advance in nature of loans secured or unsecured
- To companies, firms, Limited Liability Partnerships or any other parties
Investments If so
Guarantee/ a. Whether during the year the company has provided
Security/ o Loans /Advances in nature of loans /Stood guarantee /Security
Loans/ o To other entity [not applicable to companies whose principal business is to
give loans].
Advances to o If so indicate
Companies,
o Aggregate amount during the year and
firms, LLP or o Balance outstanding at the balance sheet date
Other Parties o with respect to such loans or advances and guarantees or security
(iii)
A B
To Subsidiaries, Joint venture & To other parties other than Subsidiaries,
Associates Joint venture & Associates

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b. Terms & conditions are not prejudicial to the company’s interest :
Whether
o Investment made, guarantees provided, security given and the terms and
conditions of the grant of all loans and advances in the nature of loans and
guarantees provided
o Are not prejudicial to the company’s interest

c. Repayment Schedule :
o In respect of loans & advances in the nature of loans,
o Schedule of repayment of principal and payment of interest has been stipulated
and
o the repayments or receipts are regular.

d. Overdue Amount :
If the amount is overdue state
o The total amount overdue for more than 90 days
o Reasonable steps taken for recovery

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e. Loan/ Advances fall due, renewed/extended/ settled :
Whether any loan or advance in the nature of loan granted which has
o Fallen due during the year
o Has been renewed or
o Extended or
o Fresh loans granted to settle the overdues of existing loans given to same
parties
If so , specify
o The aggregate amount and
o Percentage(%) of the aggregate to the total loans or advances in the nature of
loans granted during the year.
f. Loan/ Advance – repayment on demand or not stipulated
Whether the company has granted any loans or advance in the nature of loans
either
- Repayable on demand or
- Without specifying any terms or period of repayment
If so, specify
o The aggregate amount and Percentage(%) thereof to the total loans granted
o Aggerate amount of loans granted to Promoters, Related parties.
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Compliance • In respect of Loans, Investments, Guarantees & Security
of section o Whether → provisions of section 185 & 186 of the Companies Act 2013 has been
185 & 186 complied with
(iv) o If not → provide details thereof
• Compliance :
In case the company has accepted deposits
o Whether → The directives issued by RBI and the Provisions of sections 73 to 76
Public or any other relevant provisions of the Companies Act 2013 and the rules
framed there under where applicable has been complied with.
Deposits o If not → the nature of such contraventions be stated
(v) • Order :
If an order has been passed by Company Law Board/ National Company Law Tribunal/
RBI/ Any court/ Any other Tribunal
o Whether → the same has been complied with or not.
Maintenance Whether
of Cost o Maintenance of cost record has been specified by the CG U/s 148 (1) of the
Record Companies Act 2013 and
(vi) o Such accounts & records have been so made and maintained.
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 a. Undisputed statutory dues :
Whether → Company is regular in depositing undisputed statutory dues including
- Goods and Service Tax
- Provident Fund
- Employees’ State Insurance
- Income Tax
Deposit of - Sales - Tax
Statutory - Service Tax
Dues - Duty of custom
(vii) - Duty of excise
- Value Added Tax
- Cess and other statutory dues
To appropriate authorities
If not → the extent of arrears of outstanding statutory dues as at the last day of
Financial Year concerned for a period of more than 6 months from the date they
became payable shall be indicated.

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 b. Disputed statutory dues :
Where statutory dues have not been deposited on account of any dispute then
o Amount involved and
o Forum where dispute is pending
shall be mentioned

• Whether
Any transactions not recorded in the books of account have been surrendered or
Unrecorded disclosed as income during the year in the tax assessments under the Income Tax Act
Income 1961.
(viii) • If so
Whether the previously unrecorded income has been properly recorded in the books of
account during the year.

a. Default in repayment of Loans/Other Borrowings/ and Interest thereon:

Repayment Whether → the company has defaulted in repayment of loans or other borrowings or in
of Dues the payment of interest thereon to any lender.
(ix)
If yes → the period and the amount of default to be reported as per the format below
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 Nature of Name Amount not Whether No. of days delay Remarks if
borrowing of paid on due principal or or unpaid any
including debt lender date interest
securities

b. Wilful Defaulter :
Whether→ the company is a declared wilful defaulter by a bank or financial institution
or other lender.

c. Application of Term Loan obtained :

o Whether → the term loan were applied for the purpose for which the loans were
obtained
o If not →
 Amount of loan so diverted and
 the purpose for which it is used
May be reported

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d. Short Term Funds used as Long Term Funds :
o whether → fund raised on short term basis have been utilized for long term purpose
o If yes, indicate → the nature and amount.

e. Fund obtained to meet the obligations of Subsidiaries, associates or joint venture :

o Whether → company has taken any fund from any entity or person on account of
or to meet the obligations of its subsidiaries, associates or joint ventures
o If yes provide →
• details thereof with nature of such transactions and
• The amount in each case

f. Loan raised on pledge of securities held in Subsidiaries, associates or joint venture :

o Whether → Company has raised loans during the year on the pledge of securities
held in its subsidiaries, joint venture or associates companies
o If so give →
• Details thereof and
• Also report if the company has defaulted in repayment of such loans raised.

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 a. Application Money raised by Public Issue:
Whether →
o Money raised by way initial public offer (IPO) or further public offer (FPO) [including
debt instruments] during the year
o were applied for the purposes for which those are raised
If not report →
Application
o The details together with delays or default &
Money raised o Subsequent rectification if any as may be applicable.
by Public b. Preferential Allotment/ Private Placement :
Offer & Whether →
Preferential o Company has made any preferential allotment or private placement of shares or
convertible debentures (Fully, partially or optionally convertible) during the year and
Allotments
if so
(x) o The requirements of section 42 and section 62 of the Companies 2013 have been
complied with &
o Fund raised have been used for the purpose for which the funds raised
If not report →
o Provide details in respect of amount involved &
o Nature of noncompliance
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 a. Whether → Any fraud by the company or any fraud on the company has been noticed
or reported during the year.
If yes indicate → The nature and amount involved.
Fraud
b. Whether → Any report U/s 143 (12) of Companies Act 2013 has been filed by the
Reporting auditors in Form ATD -4 as prescribed under rule 13 of Companies (Audit and Auditors)
(xi) Rules 2014 with the Central Government .

c. Whether → The auditor has considered whistle-blower complaints if any received

during the year by the company.

a. Compliance of Net Owned Fund :

Whether →Nidhi Company has complied with the Net Owned Funds to Deposits in the
Nidhi ratio of 1 : 20 to meet out the liability.
Company
(xii) b. Maintenance of Unencumbered Term Deposit :
Whether → Nidhi Company is maintaining 10% Unencumbered Term Deposits as
specified in the Nidhi Rules 2014 to meet out the liability.

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 c. Default in repayment of Deposit and Interest thereon :
Whether → There has been any default in payment of Interest on deposits or
repayment thereof for any period
If so provide → Details thereof

Related Whether →
o All the transactions with related parties are in compliance with section 177 & 188
Parties
and
Transactions o Details have been disclosed in the financial statements etc. as required by the
(xiii) applicable Accounting Standards.

Internal Audit a. Whether → Company has an Internal Audit System commensurate with the size and
nature of its business.
System
(xiv) b. Whether → Report of the Internal Auditor for the period under audit were considered
by the Statutory Auditor

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 Non Cash
Transactions Whether → Company has entered into any non-cash transactions with the directors or
persons connected with him.
with
Directors If so → whether the provisions of section 192 of Companies Act have been complied with.
(xv)
a. Registration U/s 45- IA of RBI Act 1934 :
Whether → Company is required to be registered U/s 45- IA of RBI Act 1934
If yes → Whether the registration has been obtained.
b. Conduct of Activities of NBFC & HFC without valid CoR :
Whether → Company has conducted any Non- Banking Financial or Housing Finance
Registration activities without a valid Certificate of Registration from RBI as per RBI Act 1934.
with RBI Core Investment Company CIC :
(xvi) c. Whether → the company is a Core Investment Company as defined in the regulations
made by the RBI
If so →
- whether it continues to fulfil the criteria of a CIC and
- in case the company is an exempted or unregistered CIC whether it continues to fulfil
such criteria
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 d. Whether→ the Group has more than one CIC as part of the Group
If yes → indicate the number of CICs which are part of the Group

Whether → The company has incurred cash losses in the Financial Year and in the
immediately preceding financial year.
Cash Losses
(xvii) If So → State the amount of cash losses.

Consideration
of issue Whether → There has been any resignation of the Statutory Auditors during the year
raised by the
outgoing If so → Whether the auditor has taken into consideration the issues objections or concerns
auditors raised by the outgoing auditors.
(xviii)

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 o On the basis of
- Financial ratios
Existence of - Ageing and expected date of realization of financial assets
Material - Payment of financial liabilities
- Other information accompanying the financial statements
uncertainty
- The auditor’s knowledge of the Board of Directors and management plans.
as to meet its o Whether the Auditor is of the opinion that
liability - No material uncertainty exists as on the date of the audit report
(xix) - Company is capable of meeting its liabilities existing at the date of balance sheet as
and
- When they fall due within a period of one year form the balance sheet date.

a. Whether → in respect of other than ongoing projects , the company has transferred
Transfer of unspent amount to a Fund specified in Schedule VII to the Companies Act within a
period of 6 months of the expiry of the financial year in compliance with second
unspent CSR
proviso to Section 135 (5).
amount b. Whether → any amount remaining unspent U/s 135 (5) of the Companies Act pursuant
(xx) to any ongoing project has been transferred to special account in compliance with
provision of section 135 (6).
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Qualifications
o Whether → There have been any qualification/ adverse remarks by the respective
or adverse auditors in the Companies (Auditor’s Report) Order (CARO) reports of the companies
remarks in included in the Consolidated Financial Statements.
the CARO
Reports of o If yes indicate →
Group  Details of the companies and
 The paragraph number of the CARO report containing the qualifications or adverse
Companies remarks.
(xxi)

Paragraph 4. Reasons to be stated for unfavorable or qualified answers

1. When Auditor’s response to any of the reporting matters is UNFAVOURABLE/QUALIFIED
The auditor should state the reasons of such response.

2. Where the Auditor is unable to express any opinion on any specified matter,
Auditor’s report shall indicate: → Facts together with reasons as to why it is not possible to give opinion
on same.

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