Page 211 - CA Final PARAM Digital Book.

• Nature of borrowing, including debt securities
• Name of lender (Lender wise details to be provided in case of defaults to banks, financial
institutions and Government)
• Amount not paid on due date
• Whether principal or interest
• No. of days delay or unpaid
• Remarks, if any
Part III – Case Discussion
➢ In the given case, C Ltd. has defaulted in repayments of dues to a financial institution during the
financial year 2016-17 which remain outstanding as at March 31, 2017.

However, the company has settled the total outstanding dues including interest in April 2017 but,
the dues were outstanding as at March 31, 2017.

Part IV – Conclusion
➢ Therefore, it needs to be reported in the notes to accounts.
The draft report for above matter is as under:

“The company has taken a loan during the year, from a financial institution amounting to` XXXX @
X% p.a. which is repayable by monthly instalment of ` XXXX for XX months.

The company has defaulted in repayment of dues including interest to a financial institution during
the financial year 2015-16 amounting to` XXXX which remained outstanding as at March 31, 2017.

The period of default is XXX days. However, the outstanding sum was settled by the company in
April, 2017.”
Author’s Note
# Mistake point

Students may forget to write on the reporting aspect. Question specifically asks to draft a suitable
Auditor's Report.
N14
QNO Cl 9--Default in Repayment (Re schedulement) Old Course – (M11E, M14R, M15R , SM17, PM17)
404.000 TITANIUM CNO—CARO.200
K Ltd. has taken a term loan from a nationalized bank in 2010 for ₹ 200 lakhs repayable in five equal
instalments of ₹ 40 lakhs from 31st March 2011 onwards. It had repaid the loans due in 2011 & 2012, but
defaulted in 2013, 2014 & 2015. As the auditor of K Ltd. what is your responsibility assuming that
company has sought re schedulement of loan?

Answer Part I -- Relevant Standards & Laws
▪ Clause (ix) of Para 3 of CARO

Part II – Requirements of Relevant Standards & Laws
➢ Requirements of Clause (ix) of Para 3 of CARO
Whether the company has defaulted in repayment of loans or other borrowings or in the payment
of interest thereon to any lender, if yes, the period and the amount of default to be reported as
below:

• Nature of borrowing, including debt securities
• Name of lender (Lender wise details to be provided in case of defaults to banks, financial
institutions and Government)
• Amount not paid on due date
• Whether principal or interest
• No. of days delay or unpaid
• Remarks, if any

www.auditguru.in PARAM 7.51 | P a g e