Page 261 - CA Inter Audit PARAM

CA Ravi Taori
However, the auditor is required to report income tax demand which is not deposited on
account of pending appeal in accordance with clause (vii)(b).

QNO-- Cl 7 Case Study – Dispute New Course – (S24E)
CARO.12.50 Bhaskar CNO – CARO.130

M/s. PQ Limited has a turnover of ₹ 807 crores during the financial year 2023-24. It has outstanding dues
towards Goods and Services Tax (GST) of ₹ 10 lakhs since June 2023. When enquired by the auditor, the
company's management informed him that they have filed an objection letter for the said demand with

the GST Authorities, however, no response is received from the GST Department. State the reporting
responsibility of the auditor under paragraph 3, clause (vii) of the Companies Auditor's Report Order, 2020
[CARO, 2020].
Answer Reporting responsibility of the auditor under paragraph 3 of CARO, 2020: The auditor is required to report
as per clause (vii) (a) of Paragraph 3 of CARO, 2020 that 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;

Further, the auditor is also required to report as per Clause (vii) (b) of Paragraph 3 of CARO, 2020, where
statutory dues referred to in sub-clause (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 Cl 3 & 5- Loan to Related Party and Accepting Deposits Old Course -- (N19E/M21M/N22M)
CARO.15 Bhaskar CNO - CARO.090/CARO.110
M Ltd. has given certain loans to related parties and also has accepted certain deposits. As an auditor, how
you include the above items in paragraph 3 of CARO, 2020 ?
OR
Discuss the reporting requirements as per CARO, 2020, regarding
Deposits accepted by company or amounts which are deemed to be deposits
➢ Clause III
• whether during the year the company has made investments in, provided any guarantee or
security or granted any loans or advances in the nature of loans, secured or unsecured, to
companies, firms, Limited Liability Partnerships or any other parties, if so,-
• whether during the year the company has provide loans or provided advances in the
nature of loans, or stood guarantee, or provided security to any other entity [not
applicable to companies whose principal business is to give loans], if so, indicate
o the aggregate amount during the year, and balance outstanding at the balance
sheet date with respect to such loans or advances and guarantees or security
to subsidiaries, joint ventures and associates
o the aggregate amount during the year, and balance outstanding at the balance
sheet date with respect to such loans or advances and guarantees or security
to parties other than subsidiaries, joint ventures and associates;
• whether the investments made, guarantees provided, security given and the terms and
conditions of the grant of all loans and advances in the nature of loans and guarantees
provided are not prejudicial to the company’s interest;
• in respect of loans and advances in the nature of loans, whether the schedule of
repayment of principal and payment of interest has been stipulated and whether the
repayments or receipts are regular;
• if the amount is overdue, state the total amount overdue for more than ninety days,
and whether reasonable steps have been taken by the company for recovery of the
principal and interest;
• whether any loan or advance in the nature of loan granted which has fallen due during
the year, has been renewed or extended or fresh loans granted to settle the overdues
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