I’m presenting my first article on the topic “Comparison between CARO 2016 and CARO 2020” I’ve briefly specified the subject matter of each clause and the corresponding clause, of that respective matter, in CARO 2016. I’m attaching the link at the end for detailed differences between the both. I hope this article would be of a little value addition to you all.
CARO 2020
(i)(a) and (i)(b) of CARO 2016 dealt with FA whereas the corresponding (i)(a)(A) and (i)(b) respectively of CARO 2020, deals with PPE only.
(i)(a)(B) Records to be maintained of intangible assets (Newly added)
(i)(a)(c) Title deeds of immovable properties now specifically excludes lease agreements in the favour of Company lessee, when read in comparison with the same clause of CARO 2016
(i)(a)(d) Revaluation of PPE by company on the basis of registered valuer and the procedure thereof (newly added)
(i)(a)(e) Proceedings against the Company under Benami law (newly added)
(ii)(a) Appropriateness of coverage and procedure of inventory verification along with the specific inclusion of 10% limit of discrepancies noticed, when read in comparison with clause (ii) of CARO 2016
(ii)(b) Company’s sanctioned WC threshold of 5 Cr and the quarterly returns filed by it. (Newly added)
(iii) The scope is widened to include investments made or guarantees/ securities provided or loans and advances granted to companies, firms, LLP or any other parties.
(iii)(a) Also mandated to detail about the nature of loan/ guarantee provided and outstanding balance at year end, along with the other TnC details
Clause (iii)(b) of CARO 2020 is to be read in comparison with clause (iii)(a) of CARO 2016
And similarly, the clauses (iii)(c) and (iii)(d), are to be read in comparison with the successive clauses.
(iii)(e) Renewal and extension of the loans or advances which has fallen due during the year along with the details of amount and its % thereof (newly added)
(iii)(f) Grant of any loans or advances in the nature of loans repayable on demand along with the details of amount and its % thereof (newly added)
(iv) of CARO 2020 has no change in its provisions, when read in comparison with the same clause of CARO 2016
(v) Now includes “deemed deposits”, whereas clause (v) of CARO 2016 only included “accepted deposits”
(vi) & (vii) of CARO 2020 has no change in its provisions, when read in comparison with the same clauses of CARO 2016
(viii) Undisclosed income now disclosed in Tax Assessments (newly added)
(ix)(a) removes the specific lenders list and is now read as “repayment of loans or other borrowings or in the payment of interest thereon to any lender” , when read in comparison with clause (ix) of CARO 2016
(ix)(b) Company being a “declared wilful defaulter” (newly added)
(ix)(c) Purpose of term loans and the diversion thereof, if any (newly added)
(ix)(d) ST purpose funds utilised for LT purpose (newly added)
(ix)(e) Funds taken by the Company for meeting the related party obligations and details thereof (newly added)
(ix)(f) Loans raised by the company by pledging securities held in its related companies (newly added)
(x)(a) of CARO 2020 has no change in its provisions, when read in comparison with Clause (ix) of CARO 2016
(x)(b) of CARO 2020 has no change in its provisions, when read in comparison with Clause (xiii) of CARO 2016
(xi)(a) of CARO 2020 has no change in its provisions, when read in comparison with Clause (x) of CARO 2016
(xi)(b) Report of Fraud [Sec 143(12)] filed by the Auditor in Form AOC-4 (newly added)
(xi)(c) Whistle blower complaints being considered by Auditor (newly added)
CARO 2020 removed the clause (xi) of CARO 2016, in relation to the Managerial Remuneration
Clauses (xii)(a) and (xii)(b) are just a breakup of what clause (xii) of CARO 2016 stated.
(xii)(c) Default in repayment by the company (newly added)
(xiii) of CARO 2020 has no change in provisions, when read in comparison with the same clause of CARO 2016
Clause (xiv) provisions being newly added, specifies the following:
(xiv)(a) Internal audit system of the Company
And
(xiv)(b) Internal Audit Report being considered by the Statutory Auditor
(xv) of CARO 2020 has no change in provisions, when read in comparison with the same clause of CARO 2016
Clause (xvi)(a) of CARO 2020 has no change in its provisions, when read in comparison with Clause(xvi) of CARO 2016
Here begins the additional clauses of CARO 2020 :
(xvi)(b) Company conducting any Non-Banking Financial or Housing Finance activities without a valid Certificate of Registration (CoR)
(xvi)(c) Company being a Core Investment Company (CIC)
(xvi)(d) Group having more than one CIC as part of the Group
(xvii) Cash losses incurred by the company
(xviii) Resignation of statutory auditors of the company
(xix) Auditor’s opinion regarding the existence of any material uncertainty in the company and it’s capability to repay liabilities.
(xx)(a) Company transferring unspent amount to a Fund specified in Schedule VII to the Companies Act, in respect of other than ongoing projects.
(xx)(b) Company transferring unspent amount to special account, in respect of the ongoing projects.
(xxi) Qualifications or adverse remarks by the respective auditors in the Companies (Auditor’s Report) Order (CARO) reports, if any.
Disclaimer : IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION. THIS HAS BEEN SHARED FOR KNOWLEDGE PURPOSES ONLY.
AUTHOR : MUSKAN LALWANI (CLICK HERE TO VIEW PROFILE)