Sr. No.

Ref. To CARO, 2003

Questions

Name of the Person

Yes

No

N. A.

Para 1(2)

CARO, 2003 shall apply to every company including a foreign company as defined in Section 591 of the Act, except the following:

Para 1(2)(i), (ii) and (iii)

i.     a Banking Company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949

ii.    an insurance company as defined in clause (21) of section 2 of the Act

iii.   a company licensed to operate under section 25 of the Act

1.

Does the company transact the business of accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise?

2.

Are the cash flows from deposits from public in the form of operating cash flow?

3.

Does the company carry on the business of insurance?

4.

Is the company licensed to operate under section 25 of the Act?

Para 1(2)(iv)

a private limited company with a paid up capital and reserves not more than fifty lakh rupees and has not accepted any public deposit and does not have loan outstanding ten lakh rupees or more from any bank or financial institution and does not have a turnover exceeding five crore rupees

5.

Is the company a private limited company?

6.

Whether the paid-up capital and reserves are not less than fifty lakh rupees?

[Paid-up capital (Equity and Preference) = Subscribed capital – calls unpaid + amount originally paid-up on forfeited shares]

[Reserves are the portion of earnings, receipts, or other surplus of an enterprise (whether capital of revenue) appropriated by management for a general or specific purpose other than provision for depreciation or diminution in the value of assets or for a know liability]

7.

Has the company accepted deposits from public?

8.

Has the company taken loan from any bank or financial institution?

9.

Was the outstanding amount of the loan at any time during the year not less than ten lakh rupees?

10.

Whether the turnover of the company exceeds five crore rupees?

Para 4

The auditor’s report on the account of a company to which this order applies shall include a statement on the following matters, namely :-

Para 4(i)

a.    whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets

b.    whether these fixed assets have been physically verified by the management at reasonable 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

c.    if a substantial part of fixed assets have been disposed off during this year, whether it has affected the going concern

11.

Is the company maintaining proper records of fixed assets showing the following particulars:

Ø      Type of Asset: Tangible, Intangible or Leased

Ø      Date of acquisition of each asset

Ø      Cost of acquisition of each asset

Ø      Description of the Asset

Ø      Break-up of the cost

Ø      Date when put to use

Ø      Depreciation for the year

Ø      Depreciation provided till date

Ø      Estimated useful life

Ø      Exchange fluctuation capitalised

Ø      Date of revaluation

Ø      Amount of Revaluation

Ø      Method of Treatment of Revaluation

Ø      Date of sale of asset

Ø      Sale Value of the asset

Ø      Profit / Loss on such sale

Ø      Impairment losses provided

Ø      Situation of fixed assets

12.

Do the figures of original cost and depreciation to date extracted from these records tally with the figures shown in the books of accounts?

13.

Whether any assets are located in the residential premises of the staff?

14.

Is a record maintained separately for the assets located in the residential premises of the staff stating the following minimum details:

Ø      Corresponding serial no. of the fixed assets register

Ø      Date from which the asset is located thereat

Ø      Name of the Employee

Ø      Designation of the employee

Ø      Reasons for the asset being located there

15.

Whether fixed assets have been physically verified by management?

16.

Is a record being maintained for results found during such physical verification?

17.

Has such physical verification process and results approved by top management?

18.

Have the discrepancies been documented by a comparative chart stating the reason for the discrepancy?

19.

Whether appropriate personnel have reviewed the discrepancies?

20.

Whether such discrepancies have been accounted for?

21.

Is it ensured that all assets are physically verified at least once in every three years?

22.

Has the company sold off fixed assets during the year?

23.

Has the sale been approved by top management?

24.

Have the reasons of sale of each fixed asset been documented?

25.

Is the sale of such a substantial portion to make the going concern assumption questionable?

Para 4(ii)

a.    whether physical verification of inventory has been conducted at reasonable intervals by the management

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

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

26.

Has the company maintained proper inventory records showing the following:

Ø      Record of each receipt classified into kinds of materials

Ø      Record of each issue for production

Ø      Movement of material in process from one process to another

27.

Has the company reconciled its inventory records with the purchase account?

28.

Has the management conducted physical verification of inventory at least on a quarterly basis?

29.

Whether top management has approved such verification process?

30.

Whether the management has instituted adequate “cut-off” procedures?

31.

Whether the personnel responsible for conducting physical counts properly instructed?

32.

Are such instructions documented?

33.

Whether any discrepancies noticed on such physical verification are documented by a comparative chart stating the reasons for the discrepancy?

34.

Whether appropriate personnel have reviewed the discrepancies?

35.

Whether the discrepancies have been accounted for?

36.

Whether damaged and obsolete inventory items have been identified?

37.

Whether such obsolete and damaged inventory items kept separately so as to enable easy identification?

38.

Whether the reasons for treating such inventory items as obsolete or damaged have been recorded and approved?

Para 4(iii)

a.    Has the company either granted or taken any loans, secured or unsecured to / from 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.

b.    Whether the rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, are prima facie prejudicial to the interests of the company

c.    Whether the payment of the principal amount and interest are also regular

d.    If overdue amount is more than one lakh, whether reasonable steps have been taken by the company for recovery / payment of the principal and interest

39.

Has the company prepared the Register of Contracts as specified by Section 301 of the Companies Act, 1956?

40.

Has the company taken loans from the parties listed in the register maintained under Section 301?

If yes, then provide the following details:

1.    Name of the Party

2.    Relationship with the Company

3.    Amount in Rs.

4.    Year end Balance

41.

Has the company granted loans to the parties listed in the register maintained under Section 301?

If yes, then provide the following details:

1.    Name of the Party

2.    Relationship with the Company

3.    Amount in Rs.

4.    Year end Balance

42.

Has the company done a comparative analysis of the rate of interest and other terms and conditions before taking / granting the loan from / to such party?

43.

Has such comparative analysis been documented?

44.

Has such analysis been reviewed by an appropriate independent person before taking / granting the loan from / to such party?

45.

Has the decision been taken with the objective of minimum risk and maintenance of profitability?

46.

Is the payment of principal and interest regular in accordance with the payment schedule, if any?

If not, then provide the following details:

1.    Name of the Party

2.    Overdue Principal

3.    Overdue Interest

4.    Year end balance

47.

If the payment of principal and / or interest is not regular, have steps been taken by the company for recovery / payment of the principal and interest?

48.

Are the payment / recovery steps documented?

49.

Is the overdue amount more than one lakh rupees?

Para 4(iv)

is there an adequate internal control procedure 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. Whether there is a continuing failure to correct major weaknesses in internal control

50.

Has the management in place proper internal control and internal check for purchase of inventory, fixed assets and for the sale of goods?

51.

Has the management evaluated the internal controls regularly?

52.

Has the evaluation process been documented?

53.

Has the company made threat identification and vulnerability analysis and the probability of such occurrence assessed?

54.

Has such risk assessment process been documented?

55.

Whether any weaknesses were observed during such evaluation?

56.

Have adequate steps been taken to correct the weaknesses identified?

57.

Whether the internal audit function has been assigned with the responsibility of evaluating the internal controls and assessing the risks?

58.

Whether the internal audit function had made such evaluation and assessment at least annually?

Para 4(v)

a.    whether transactions that need to be entered into a register in pursuance of Section 301 of the Act have been so entered

b.    whether each of these transactions 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 lakh rupees in respect of any party and in any one financial year)

59.

Whether transactions with any of the party listed in the register maintained under section 301 of the Companies Act, 1956 during the financial year exceed five lakh rupees?

60.

Whether sufficient market analysis and survey was conducted before undertaking transaction with such party?

61.

Have such analysis and survey been documented?

Para 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 and 58AA of the Act and the rules framed thereunder, 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 whether the same has been complied with or not

62.

If the company has accepted deposits from public, whether the following, where applicable, have been complied with:

Ø      Directives issued by the Reserve Bank of India

Ø      Provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder

63.

Whether the Company Law Board has passed any order for contravention of Section 58A, 58AA and the rules framed thereunder?

64.

Whether the order of Company Law Board is being complied with?

Para 4(vii)

in the case of listed companies and / or other companies having a 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 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

65.

Whether the company has an internal audit system?

66.

Whether internal audit function is assigned to a firm of chartered accountants?

67.

Whether the scope of internal audit been documented?

68.

Whether the scope of internal audit function include the following:

Ø      Review of accounting system and related internal controls

Ø      Examination for management of financial and operating information

Ø      Examination of the economy, efficiency and effectiveness of operations including non-financial controls of the organization

Ø      Physical examination and verification

69.

Whether the internal audit work is carried out by persons having adequate technical training and proficiency?

70.

Whether the internal auditor has prepared adequate audit manuals, audit programmes, and working papers?

71.

Is the internal audit report being submitted within time?

72.

Whether the management promptly addresses the negative comments in the internal audit report?

73.

Whether there is a procedure of issuing a compliance report by the management for each report of internal auditor?

Para 4(viii)

where maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, whether such accounts and records have been made and maintained

74.

Whether maintenance of cost records have been prescribed by the Central Government?

75.

Whether the prescribed cost records have been maintained in the form required?

Para 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, 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

b.    in case dues of sales tax / income tax / custom tax / wealth tax / excise duty / cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending may please be mentioned.

(A mere representation to the Department shall not constitute the dispute)

76.

Is the company regular in depositing statutory dues including the following:

Ø      Provident Fund

Ø      Investor Education and Protection Fund

Ø      Employees’ State Insurance

Ø      Income Tax

Ø      Sales Tax

Ø      Wealth Tax

Ø      Custom Duty

Ø      Excise Duty

77.

Is the company liable to pay any statutory dues other than those listed above?

78.

Whether the statutory dues other than those listed above have been paid regularly?

If not, then provide the following details:

Ø      Name of the Statute

Ø      Nature of the dues

Ø      Amount (Rs.)

Ø      Due Date

Ø      Date of Payment

79.

Whether any of the statutory dues have been under dispute?

If yes, provide the following details in respect of each accounting period:

Ø      Name of the Statute

Ø      Nature of the dues

Ø      Amount (Rs.)

Ø      Forum where dispute is pending

80.

Whether the management has the following policies and procedures in place to discharge its responsibilities for the prevention and detection of non-compliance with laws and regulations:

Ø      Monitoring legal requirements and ensuring that operating procedures are designed to meet these requirements

Ø      Developing, publicizing and following a Code of Conduct

Ø      Ensuring employees are properly trained and understand the Code of Conduct

Ø      Monitoring compliance with the Code of Conduct and acting appropriately to discipline employees who fail to comply with it.

Ø      Establishing a legal department and / or engaging legal advisors to assist in monitoring legal requirements.

Ø      Maintaining a register of significant laws with which the entity has to comply within its particular industry and a record of complaints in respect of non-compliance.

81.

Whether any of the above mentioned duties have been assigned to the internal audit function?

82.

Has the company constituted an audit committee?

83.

Whether above mentioned duties for compliance with laws and regulations have been assigned to it?

Para 4(x)

whether in case of a company which has been registered for a period of not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the financial year immediately preceding such financial year also

84.

Whether the company has been registered for a period not less than five years?

85.

Does the company have accumulated losses?

86.

Are the accumulated losses not less than fifty percent of Paid-up capital + Free reserves

87.

Whether the company has incurred cash loss during the financial year? (Cash loss means Fund from operations/Operating Profit before Working Capital Changes as per the Indirect Method of Cash Flow Statement prescribed by AS 3, “Cash Flow Statements”)

88.

Whether the company has incurred cash loss during the immediately preceding financial year?

Para 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

89.

Has the company taken advances / loans from bank / financial institution / debenture holders?

90.

Have the loans / advances been paid in accordance with the agreed payment structure?

91.

Has the company obtained external confirmations of the balance outstanding?

92.

Has the company defaulted in repayment of dues to financial institution or bank or debenture holders?

If yes, then provide the following details:

Ø      Period of default for each loan

Ø      Amounts involved separately for each loan

Ø      Lender’s name

Ø      Description of the loan

Para 4(xii)

whether adequate documents and records are maintained in cases where the company 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

93.

Has the company granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities?

94.

Is the value of the security greater than the amount of loan outstanding?

95.

Have such loan grants been adequately documented and properly secured including the following as a minimum:

Ø      The full name and address of the borrower

Ø      The amount of the loan or advance

Ø      Stipulations regarding period of repayment, the rate of interest, the security to be pledged and all other terms of the loan or advance

Ø      The record of disbursements, repayments towards the loan or advance and recovery of the interest

Ø      Full particulars of the security pledged

Ø      The documents needed to transfer the ownership of the security in case of need

Ø      Periodical acknowledgements from the parties confirming the balances due

Ø      Proof that the party has power to borrow

Ø      Source from which the value of security is obtained

Para 4(xiii)

whether the provisions of any special statue applicable to chit fund have been duly complied with? 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 of Balance Sheet

b.    whether the company has complied with the prudential norms on income recognition and provisioning against sub-standard / default / 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 and would be conducive to recovery of the loan amount

96.

Is the company engaged in the business of managing, conducting or supervising as a foreman or agent of any transaction or arrangement by which it enters into an agreement with a number of subscribers that every one of them shall subscribe to a certain sum of installments for a definite period and that each subscriber, in his turn, as determined by lot or by auction or by tender or in such other manner as may be provided for in the agreement, shall be entitled to a prize amount?

97.

Is the company’s principal business accepting fixed deposits from, and lending money to, members?

98.

If answer to question no. 96 and / or 97 is in affirmative, whether the net-owned funds to deposit liability ration is more than 1:20 as on the date of balance sheet?

(Net owned funds mean paid-up equity capital + reserves available for distribution as dividend – accumulated losses – intangible assets and deposit liability means the aggregate of the deposits accepted by the company)

99.

If answer to question no. 96 and / or 97 is in affirmative, whether the company has complied with the prudential norms on income recognition and provisioning against sub-standard / default / loss assets?

100.

If answer to question no. 96 and / or 97 is in affirmative, whether the company has policies and procedures in place for –

Ø      Appraisal of credit proposals / requests

Ø      Assessment of credit needs

Ø      Repayment capacity of the borrowers

101.

If answer to question no. 96 and / or 97 is in affirmative, whether the credit appraisal policies and procedures established by the company have been followed in sanctioning disbursement and post-sanction follow-up and follow-up for repayment of loans?

102.

If answer to question no. 96 and / or 97 is in affirmative, is the repayment schedule of various loans granted by the nidhi based on the repayment capacity of the borrower assed at the time of credit appraisal?

Para 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 made therein; also whether the shares, securities, debentures and other securities 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

103.

Has the company dealt in or traded shares, securities, debentures and other investments?

104.

Are any of such investments to be sold off within a year?

105.

Are the investment transactions properly recorded to indicate the following:

Ø      The person from whom or to whom the purchase or sale was made

Ø      The rate at which the purchase or sale was made

Ø      The number of shares or other investments with full details regarding class, distinctive numbers, numbers of certificates, etc.

Ø      Bought note / Sale note

Ø      Adjustments when securities are purchased or sold

Ø      Details of holdings in individual companies

Ø      Classes of investments

Ø      Basis of valuation of closing stock

Ø      Basis on which profit or sale is computed

Ø      Shares received as bonus shares

Ø      Right Shares subscribed or sold

Ø      Individual accounts of the parties from whom moneys are due for sale or to whom moneys are payable for purchases and the settlements made there against

106.

Is the company holding investments in its own name?

107.

If the company is not holding its investment in its own name, whether the same is in accordance with the provisions of section 49 of the Companies Act, 1956?

108.

Whether the company has maintained a register stating the following as required by sub-section (7) of section 49 of the Companies Act, 1956

a.    The nature, value and such other particulars as may be necessary fully to identify the share or securities in question; and

b.    The bank or person in whose name or custody the share or securities are held

Para 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

109.

Has the company given any guarantee for loans taken by others from bank or financial institutions?

110.

Have such guarantees been approved by the Corporate?

Para 4(xvi)

Whether term loans were applied for the purpose for which the loans were obtained

111.

Has the company taken any loans with repayment periods beyond 36 months?

112.

Whether the loans with repayment period beyond 36 months were applied for the purpose for which the loans were obtained?

Para 4(xvii)

Whether the funds raised on short-term basis have been used for long-term investment and vice versa; If yes, the nature and amount is to be indicated.

113.

Has the company prepared cash flow statement showing separately cash flows from operating, investing and financing activities?

114.

Can it be evidenced from the cash flow statement that funds raised on short-term basis have been used for operating activities?

115.

Can it be evidenced from the cash flow statement that funds raised on long-term basis have been used for investment activities?

Para 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 prices at which shares have been issued is prejudicial to the interest of the company

116.

Has the company made any preferential allotment of shares?

117.

Have such allotments been made to parties listed in the Register maintained under Section 301?

118.

Whether the price of share was determined by an appropriate independent person?

119.

Has the basis of fixation of price documented?

120.

Whether the explanatory statement attached with the notice stated the rationale for determination of prices of shares?

121.

Whether preferential issue has been made by passing a special resolution?

122.

If answer to the above is in negative, whether Central Government’s approval has been taken by the company?

Para 4(xix)

whether securities have been created in respect of debentures issued

123.

Whether securities have been created in respect of debentures issued?

124.

Whether securities have been created in favour of the debenture trust?

125.

Whether adequate amount, so as to cover the redemption of debentures, as and when it falls due, is credited to the debenture redemption reserve?

Para 4(xx)

whether the management has disclosed on the end use of money raised by public issues and the same has been verified

126.

Has the management disclosed on the end use of money raised by public issues in its prospectus?

127.

Whether the money raised by public issues were used for the purposes as disclosed in the prospectus?

Para 4(xxi)

whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated

128.

Has any fraud been noticed by the Corporate during the year?

129.

Whether the management has assessed the risk that the financial statements may be materially misstated as a result of fraud?

130.

Whether the management has put in place appropriate accounting and internal control systems to address the risk of financial statements being materially misstated as a result of fraud?