Page 153 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Exemption from IFCR Reporting
Non-applicability to Certain Companies: Note that clause (i) of sub-section (3) of section 143 does not apply
to a private company that is either a one-person company or a small company.
Turnover and Borrowing Criteria: The clause is also inapplicable to companies with less than fifty crores
turnover as per the latest audited financial statement and those having aggregate borrowings less than twenty-
five crores at any time during the financial year from banks, financial institutions, or any corporate body.
Rule 11 of the Companies (Audit and Auditors) Rules, 2014
(Shortcut – L AF Da)
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1. Disclosure of Pending Litigations: Rule 11 of the Companies (Audit and Auditors) Rules, 2014 mandates
that the auditor's report should include views on whether the company disclosed the impact of pending
litigations on its financial position in the financial statement.(SA 501)
2. Provision for Foreseeable Losses: The auditor must comment on whether the company has made the
necessary provisions for material foreseeable losses on long-term contracts, including derivative contracts, as
required by law or accounting standards.
3. Use of Accounting Software with Audit Trail: The auditor should report whether the company used
accounting software with an audit trail feature for maintaining its books of account and whether this feature
was operational throughout the year without being tampered with, preserving the audit trail as per statutory
requirements for record retention.(Applicable from 1 April 2023)
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4. Transfer to Investor Education and Protection Fund: The auditor should state whether there has been any
delay by the company in transferring the required amounts to the Investor Education and Protection Fund.

Funds
5A. Management Representation on Fund given: The management should represent whether, to the best of
its knowledge, no funds have been advanced, loaned, or invested by the company to any intermediaries with the
understanding that they would further lend or invest in ultimate beneficiaries, other than what is disclosed in
the notes to the accounts.
5B. Management Representation on Fund Receipts: The management should confirm whether, aside from
what is disclosed in the notes to the accounts, the company has not received funds from any funding parties to
be used for lending or investing in ultimate beneficiaries or to provide any guarantee or security on their behalf.
5C. Auditor's Opinion on Representations: Based on reasonable and appropriate audit procedures, the auditor
should state if they have noticed any material misstatement in the representations under sub-clauses (i) and (ii).
6. Compliance with Section 123 on Dividend: The auditor must confirm whether the dividend declared or
paid by the company during the year complies with section 123 of the Companies Act, 2013.
Audit Trail
Definition of Audit Trail: Audit trail refers to a sequential record that documents the history of financial
transactions to its source, allowing auditors to trace every step of the financial data of a transaction from the
general ledger to the source document.
Director’s Remuneration.
Section 197(16): The Companies (Amendment) Act, 2017, effective from 12-09-2018, inserted section 197(16)
in the Companies Act, 2013, requiring auditors to state in their report whether the directors' remuneration is in
accordance with the section's provisions and to report any excess payment.

ICAI Advisory: As per the advisory issued by ICAI on 09-09-2019, auditors of public companies should include
the reporting requirements of section 197(16) in the "Report on Other Legal and Regulatory Requirements"
section of the auditor's report.

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