Page 260 - CA Inter Audit PARAM

CA Ravi Taori
or financial institutions are in agreement with the books of account of the Company, if not, give
details.

QNO Cl 1 & 7 – Requirements Old Course--(N18M/M20M/M23M)
CARO.11 Bhaskar CNO - CARO.070/CARO.130 New Course – (S24R)
State the matters to be included in the auditor's report as per CARO, 2020 regarding-
(i) Plant, Property & Equipment
(ii) Statutory dues
Answer ➢ Matters to be included in the Auditor's Report under CARO, 2020:
The auditor's report on the accounts of a company to which CARO applies shall include a statement
on the following matters, namely-
• Plant, Property & Equipment
Refer from QNO CARO.05 above.

• Reporting requirements regarding Statutory Dues under CARO, 2020 are:
• Whether the company is regular in depositing undisputed statutory dues including
Goods and Services Tax, provident fund, employees' state insurance, income-tax, sales-
tax, service tax, duty of customs, duty of excise, value added tax, cess and any other
statutory dues to the appropriate authorities and if not, the extent of the arrears of
outstanding statutory dues as on the last day of the financial year concerned for a
period of more than six months from the date they became payable, shall be indicated;
• Where statutory dues referred to in subclause (a) have not been deposited on account
of any dispute, then the amounts involved and the forum where dispute is pending
shall be mentioned. (A mere representation to the concerned Department shall not be
treated as a dispute).

QNO Clause 7 -- Case Study Old Course--(N20E)
CARO.12 Bhaskar CNO - CARO.130

"AS Ltd. is regular in depositing undisputed statutory dues except Employee's State Insurance (ESI) which
is outstanding as at the last day of the financial year for a period of more than four months from the date

they became payable. Further AS Ltd has not remitted an Income- tax Demand on account of appeal which
is pending in High Court. State the reporting requirements of the auditor under CARO, 2016. "
Answer Reporting requirement under CARO 2016: As per clause (vii) (a) of Para 3 of CARO, 2016, the auditor of a
company has to report whether the company is regular in depositing undisputed statutory dues including
provident fund, employees' state insurance, incometax, sales-tax, Goods and Services Tax (with effect from
July 1, 2017), service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues
to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the
last day of the financial year concerned for a period of more than six months from the date they became
payable, shall be indicated.

Further, as per clause (vii) (b) of Para 3 of CARO, 2016, the auditor of a company has to report where dues
of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not
been deposited on account of any dispute, then the amounts involved and the forum where dispute is
pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a
dispute).

In the instant case, AS Ltd. is regular in depositing undisputed statutory dues except ESI. ESI is outstanding
for a period of more than 4 months. AS Limited has also not deposited income tax demand on account of an
appeal which is pending before High Court.

As per CARO 2016, the auditor is required to indicate in his report, extent of the arrears of outstanding
statutory dues as on the last day of the financial year concerned for a period of more than six months from
the date, they became payable. Thus, Auditor of AS Ltd. Is not required to report the outstanding ESI as same
is outstanding for a period less than 6 months.

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