Page 301 - CA Final PARAM Digital Book.

India. The Statutory Auditor of the company is required to give a report to the Board of Directors. What
shall be the content of the Auditor’s Report to the Board.
Answer ➢ Matters to be Included
Material to be included in the Auditor’s report to the Board of Directors: The auditor’s report on
the accounts of a non-banking financial company shall include a statement on the following
matters, namely.
All NBFCs
• In the case of all Non-Banking Financial Companies
(COR)
• Conducting Non-Banking Financial Activity without a valid Certificate of
Registration (CoR) granted by the Bank is an offence under chapter V of the RBI
Act, 1934. Therefore, if the company is engaged in the business of non-banking
financial institution as defined in section 45-I (a) of the RBI Act and meeting the
Principal Business Criteria (Financial asset/income pattern) as laid down vide the
Bank’s press release dated April 08, 1999, and directions issued by DNBR, auditor
shall examine whether the company has obtained a Certificate of Registration
(CoR) from the Bank.
(Principal Business Test)
• In case of a company holding CoR issued by the Bank, whether that company is
entitled to continue to hold such CoR in terms of its Principal Business Criteria
(Financial asset/income pattern) as on March 31 of the applicable year.
(Net Owned Fund)
• 3. Whether the non-banking financial company is meeting the required net
owned fund requirement as laid down in Master Direction Non-Banking Financial
Company Non-Systemically Important Non-Deposit taking Company (Reserve
Bank) Directions, 2016 and Master Direction Non-Banking Financial Company
Systemically Important Non-Deposit taking Company and Deposit taking Company
(Reserve Bank) Directions, 2016.
Systematically Important if Asset Size above 500 Crore
Non-Systematically Important & Non-Deposit taking NBFC (ND-NBFC)
Systematically Important & Not Deposit taking NBFC (SI-ND-NBFC)
Systematically Important & Deposit taking NBFC (SI-D-NBFC)
(Certificate from Statutory Auditor)
• Note: Every non-banking financial company shall submit a Certificate from its
Statutory Auditor that it is engaged in the business of non-banking financial
institution requiring it to hold a Certificate of Registration under Section 45-A of
the RBI Act and is eligible to hold it. A certificate from the Statutory Auditor in this
regard with reference to the position of the company as at end of the financial
st
year ended March 31 may be submitted to the Regional Office of the
Department of Non-Banking Supervision under whose jurisdiction the non-
banking financial company is registered, within one month from the date of
th
finalization of the balance sheet and in any case not later than December 30 of
that year. The format of Statutory Auditor’s Certificate (SAC) to be submitted by
NBFCs has been issued by RBI.

NBFCs holding Deposits
• In the case of a non-banking financial companies accepting/holding public deposits Apart
from the matters enumerated in (A) above, the auditor shall include a statement on the
following matters, namely-

(Regularization of Deposits)
• Whether the public deposits held by the company in excess of the quantum of
such deposits permissible to it under the provisions of Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 are
regularized in the manner provided in the said Directions;

(Rating)
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