Page 204 - CA Final PARAM Digital Book.

Author’s Note
# Mistake point
Since excise duty is credited separately to excise duty account it shall not be considered for
calculation of total turnover .If the entire amount (net + tax) was accounted in books collectively in a single

account than it would have been considered in calculation of total turnover

As per Guidance Note of CARO, 2020 issued by ICAI, while computing total borrowings from banks and
financial institutions, loans from banks and financial institutions are to be taken cumulatively not
individually.

QNO Cl 1--Title Deed Not in Name of Company Old Course – (N17M, M17R, N19R, M19R, N21M)
391.000 TITANIUM CNO—CARO.080
Whilst the Audit team has identified various matters, they need your advice to include the same in your
audit report in view of CARO 2020: -
The Company is in the process of selling its office along with the freehold land available at Pune and is
actively on the lookout for potential buyers. Whilst the same was purchased at ₹ 20 Lakh in 2006, the
current market value is ₹ 200 Lakh. This property is pending to be registered in the name of the
Company, due to certain procedural issues associated with the Registration though the Company is

having a valid possession and has paid its purchase cost in full. The Company has disclosed this amount
under Fixed Assets though no disclosure of non-registration is made in the notes forming part of the
accounts.
OR
NSP Limited has its factory building, appearing as fixed assets in its financial statements in the name of
one of its directors who was overlooking the manufacturing activities.
Answer Part I -- Relevant Standards & Laws
▪ Clause (i)(c) of Para 3 of CARO, 2020
Part II -- Requirements of Relevant Standards & Laws
➢ Clause (i)(c) of Paragraph 3 of the CARO, 2020,
• The auditor is required to report on whether 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 statements are held in the name of the company, if
not, provide the following details:

Part III – Case Discussion
➢ In the present case, the Company has office along with freehold land in Pune. Though company
has paid its purchase cost in full however, this property is pending to be registered in the name of
the company i.e. title deed is not in the name of Company since 2006.
Therefore, the auditor is required to report the same in accordance with clause (i)(c) of para 3 of
CARO 2020.
Part IV – Conclusion
➢ The reporting under this clause, where the title deeds of the immovable property are not held in
the name of the Company, may be made incorporating following details, in the form of a table or
otherwise in case of land:-

• total number of cases,
• whether leasehold / freehold,
• gross block and net block, (as at Balance Sheet date), and
• remarks, if any.

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