In supersession of the Companies (Auditor's Report) Order, 20O3 the Central Government, after consultation with the Institute of Chartered Accountants of India, hereby makes the following
Order, namely:-
This order may be called the Companies (Auditor's Report) Order, 2015
lt shall apply to every company including a foreign company except
1. banking company
2. insurance company
3. section 8
4. One Person Company
5. Pvt Ltd with a paid up capital and reserves not more than rupees fifly lakh and which does not have loan outstanding exceeding rupees twenty fivc lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year.
Matters to be included in Companies (Auditor's Report) Order, 2015
The auditor's report on the account of a company to which this Order applies shall include a
statement on the following matters
(i) (a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
(b) whether these fixed assets 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;
(ii) (a) whether physical veriflcation of inventory has been conducted at reasonable
intervals by the management;
(b) are the procedures of physical verification oI inventory followed by the
management reasonable and adequate in relation to the size of the company and
the nature of its business. If not, the inadequacies in such procedures should be
reported;
(c) whether the company is maintaining proper records of inventory and whether
any material discrepancies were noticed on physical verification and if so, whether
the same have been properly dealt with in the books of account;
(iii) whether the company has granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained under section
189 of the Companies Act. If so,
(a) whether receipt of the principal amount and interest are also regular; and
(b) if overdue amount is more than rupees one lakh, whether reasonable steps
have been taken by the company for recovery of the principal and interest;
(iv) is there an adequate internal control system commensurate with the size ofthe
compaly and the nature of its business, for the purchase of inventory and fixed
assets and for the sale of goods and services. Whether there is a continuing failure
to correct major weaknesses in internal control system.
(v) in case the company has accepted deposits, whether the directives issued by
the Reserve Bank of India and the provisions of sections 73 to 76 or any other
relevant provisions of the Companies Act and the rules framed there under, where
applicable, have been complied with? II not, the nature of contraventions should be
stated; If an order has been passed by Company Law Board or National Company
Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether
the same has been complied with or not?
(vi) where maintenance of cost records Government under sub-section (l) of section
been specified by the Central of the Companies Act, whethersuch accounts and records have been made and maintained:
(vii) (a) is the company regular in depositing undisputed statutory dues including
provident fund, employees'state insurance, income-tax, sales-tax, wealth tax,
service tax, duty of customs, duty of excise, value added taxr cess and any other
statutory dues with the appropriate authorities and ii not, the extent of the arrears
of outstanding statutory dues as at 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 by the auditor.
(b) in case dues of income tax or sales tax or wealth tax or service tax or duty of
customs or duty of excise or value added tax or cess have not been deposited on
account of any dispute, then the amount$ involved and the forum where dispute is
pending shall be mentioned. (A mere representation to the concerned Department
shall not constitute a dispute).
(c) whether the amount required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the Companies Act,
1956 (1 of 1956) and rules made thereunder has been transferred to such fund
within time.
(viii) whether in case of a company which has been registered for a period not less
than five years, its accumulated losses at the end of the financial year are not less
than fifty per cent of its net worth and whether it has incurred cash losses in such
financial year and in the immediately preceding financial year;
(ix) whether the company has deiaulted in repayment of dues to a financial
institution or bank or debenture holders? tf yes, the period and amount of default to
be reported:
(x) whether the company has given any guarantee for loans taken by others from
bank or financial institutions, the terms and conditions whereof are preiudicial to
the interest of the company;
(xi) whether term loans were applied for the purpose for which the loans were
obtained;
(xii) whether any fraud on or by the company has been noticed or reported during
the year; Ifyes, the nature and the amount involved is to be indicated.
Order, namely:-
This order may be called the Companies (Auditor's Report) Order, 2015
lt shall apply to every company including a foreign company except
1. banking company
2. insurance company
3. section 8
4. One Person Company
5. Pvt Ltd with a paid up capital and reserves not more than rupees fifly lakh and which does not have loan outstanding exceeding rupees twenty fivc lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year.
Matters to be included in Companies (Auditor's Report) Order, 2015
The auditor's report on the account of a company to which this Order applies shall include a
statement on the following matters
(i) (a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
(b) whether these fixed assets 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;
(ii) (a) whether physical veriflcation of inventory has been conducted at reasonable
intervals by the management;
(b) are the procedures of physical verification oI inventory followed by the
management reasonable and adequate in relation to the size of the company and
the nature of its business. If not, the inadequacies in such procedures should be
reported;
(c) whether the company is maintaining proper records of inventory and whether
any material discrepancies were noticed on physical verification and if so, whether
the same have been properly dealt with in the books of account;
(iii) whether the company has granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained under section
189 of the Companies Act. If so,
(a) whether receipt of the principal amount and interest are also regular; and
(b) if overdue amount is more than rupees one lakh, whether reasonable steps
have been taken by the company for recovery of the principal and interest;
(iv) is there an adequate internal control system commensurate with the size ofthe
compaly and the nature of its business, for the purchase of inventory and fixed
assets and for the sale of goods and services. Whether there is a continuing failure
to correct major weaknesses in internal control system.
(v) in case the company has accepted deposits, whether the directives issued by
the Reserve Bank of India and the provisions of sections 73 to 76 or any other
relevant provisions of the Companies Act and the rules framed there under, where
applicable, have been complied with? II not, the nature of contraventions should be
stated; If an order has been passed by Company Law Board or National Company
Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether
the same has been complied with or not?
(vi) where maintenance of cost records Government under sub-section (l) of section
been specified by the Central of the Companies Act, whethersuch accounts and records have been made and maintained:
(vii) (a) is the company regular in depositing undisputed statutory dues including
provident fund, employees'state insurance, income-tax, sales-tax, wealth tax,
service tax, duty of customs, duty of excise, value added taxr cess and any other
statutory dues with the appropriate authorities and ii not, the extent of the arrears
of outstanding statutory dues as at 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 by the auditor.
(b) in case dues of income tax or sales tax or wealth tax or service tax or duty of
customs or duty of excise or value added tax or cess have not been deposited on
account of any dispute, then the amount$ involved and the forum where dispute is
pending shall be mentioned. (A mere representation to the concerned Department
shall not constitute a dispute).
(c) whether the amount required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the Companies Act,
1956 (1 of 1956) and rules made thereunder has been transferred to such fund
within time.
(viii) whether in case of a company which has been registered for a period not less
than five years, its accumulated losses at the end of the financial year are not less
than fifty per cent of its net worth and whether it has incurred cash losses in such
financial year and in the immediately preceding financial year;
(ix) whether the company has deiaulted in repayment of dues to a financial
institution or bank or debenture holders? tf yes, the period and amount of default to
be reported:
(x) whether the company has given any guarantee for loans taken by others from
bank or financial institutions, the terms and conditions whereof are preiudicial to
the interest of the company;
(xi) whether term loans were applied for the purpose for which the loans were
obtained;
(xii) whether any fraud on or by the company has been noticed or reported during
the year; Ifyes, the nature and the amount involved is to be indicated.
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