Page 257 - CA Inter Audit PARAM

CA Ravi Taori
as disclosed in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing operations)
exceeding rupees 10 crore during the financial year as per the financial statements.
From the above, it is clear that ABC Pvt. Ltd. is a subsidiary of XYZ Ltd. and hence not exempt from CARO,
2016 although it is satisfying the conditions that allow exemption to private limited company which is not a
subsidiary or holding company of a public company.

QNO CARO (Cl 1 - Requirements) Old Course --(M19R/M19M/N21R/N18M/M19E/M22R)
CARO.05 Bhaskar CNO - CARO.070
Discuss the reporting requirements regarding Fixed Assets under CARO, 2020.
OR
Explain the Reporting requirements the auditor should ensure under CARO 2020 related to fixed assets.
Answer Reporting requirements regarding Fixed Assets under CARO, 2020 are:
➢ Whether the company is maintaining proper records showing full particulars
• including quantitative details and situation of Property, Plant and Equipment;
• intangible assets;
➢ whether these Property, Plant and Equipment 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.
➢ 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:
• Description of property
• Gross carrying value
• Asset held in name of
• Whether held in name of promoter, director or their relative or employee
• Period during which it was not held in name of the Company
• Reason for not being held in name of company
• Where ownership of the Asset is in dispute, details of such dispute;
➢ whether the company has revalued its Property, Plant and Equipment (including Right of Use assets)
or intangible assets or both during the year and, if so, whether the revaluation is based on the
valuation by a Registered Valuer; specify the amount of change, if change is 10% or more in the
aggregate of the net carrying value of each class of Property, Plant and Equipment or intangible
assets;
➢ whether any proceedings have been initiated or are pending against the company for holding any
benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules
made thereunder, if so, whether the company has appropriately disclosed the details in its financial
statements;

QNO Cl 1 (Theory) Old Course--(M18E/N16M/N18M)
CARO.07 Bhaskar CNO - CARO.070
Write short notes on Physical verification of Fixed assets “at reasonable intervals”.
Answer ➢ Physical verification of Fixed Assets at Reasonable Intervals:
• Clause 1(b)
• It is duty of the auditor to report as per clause 1(b) of Para 3 of CARO 2020 that
whether these Plant, Property & Equipment 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. What constitutes ‘reasonable interval’ depends on the
circumstances of each case.

• Responsibility of Management
• Physical verification of Plant, Property & Equipment is primarily a responsibility of the
management. The management is required to carry out physical verification of fixed
assets at appropriate intervals in order to ensure that they are in existence.

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