Page 264 - CA Inter Audit PARAM

CA Ravi Taori
• whether the company has taken any funds from any entity or person on account of or to
meet the obligations of its subsidiaries, associates or joint ventures, if so, details thereof
with nature of such transactions and the amount in each case;
• whether the company has raised loans during the year on the pledge of securities held in
its subsidiaries, joint ventures or associate companies, if so, give details thereof and also
report if the company has defaulted in repayment of such loans raised;

QNO CARO (Cl 11 - Requirements) Old Course -- (M18M/M19M/M21M/M22M)
CARO.21. Bhaskar CNO - CARO.170 New Course – (J25M)
50
State the matters to be included in the auditor's report as per CARO, 2020 regarding-
(ii) Fraud by the company or on the Company by its officers or employees.

During the audit of a limited company as a statutory auditor you discovered that a fraud amounting to ₹
5 lakh has been committed by the company. What are the reporting requirements regarding fraud under
the Companies Auditor's Report Order, 2020?
Answer ➢ Fraud by the company or on the Company by its officers or employees.
Clause 11:
• whether any fraud by the company or any fraud on the company has been noticed or
reported during the year, if yes, the nature and the amount involved is to be indicated;
• whether any report under sub-section (12) of section 143 of the Companies Act has been
filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and
Auditors) Rules, 2014 with the Central Government ;
• whether the auditor has considered whistle-blower complaints, if any, received during the
year by the company;

QNO Cl 10 - Case of Debenture holder Money Old Course--(N20R/N18E/N21M/N22E)
CARO.23 Bhaskar CNO - CARO.160
The company has raised funds by issuing fully convertible debentures. These funds were raised for the
expansion and diversification of the business. However, the company utilized these funds for repayment
of long-term loans and advances.” Advise the auditor regarding reporting requirements under CARO, 2020.
Answer ➢ The auditor is required to report as per clause x(b) of paragraph 3 of CARO 2020 whether the
company has made any preferential allotment or private placement of shares or convertible
debentures (fully, partially or optionally convertible) during the year and if so, whether the
requirements of section 42 and section 62 of the Companies Act, 2013 have been complied with and
the funds raised have been used for the purposes for which the funds were raised, if not, provide
details in respect of amount involved and nature of non-compliance;
➢ In view of the above clause, the auditor would report that funds raised by the company for expansion
and diversification of business have not been used for the said purpose rather the company has
utilised these funds for repayment of long term loans and advance.

QNO CARO (Cl 10 - Requirements) Old Course -- (M19M/M18E)
CARO.25 Bhaskar CNO - CARO.160 New Course -- (SM25)
State the matters to be included in the auditor's report as per CARO, 2020, regarding:
(i) Private Placement of Preferential Issues.
(ii) Utilisation of IPO and further public offer.
Answer ➢ Private Placement of Preferential Issues.
Whether the company has made any preferential allotment or private placement of shares or
convertible debentures (fully, partially or optionally convertible) during the year and if so, whether
the requirements of section 42 and section 62 of the Companies Act, 2013 have been complied with
and the funds raised have been used for the purposes for which the funds were raised, if not, provide
details in respect of amount involved and nature of non-compliance;

➢ Utilisation of IPO and further public offer.
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