CARO 2016 Vs CARO 2015

CARO  means Companies Auditor’s Report Order, Here is differential between CARO 2015 & 2016

DRAFT CARO 2016	CARO 2015
1.       Short title, application and commencement
(v) a private limited company, not being a subsidiary or holding of a public company, having a paid up capital and reserves and surplus not more than rupees one crore as at the balance sheet date and which does not have total borrowings exceeding rupees one crore from any bank or financial institution at any point of time during the financial year and which does not have a total revenue as defined in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing operations) exceeding rupees ten crore during the financial year as per the financial statements.	(v) a private limited company with a paid up capital and reserves not more than rupees fifty lakh and which does not have loan outstanding exceeding rupees twenty five 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.
2. Auditor's report to contain matters specified in paragraphs 3 and 4.
Provided the Order shall not apply to the auditor's report on consolidated financial statements.
3. Matters to be included in the auditor's report
(i) Fixed Assets
(c) Whether title deeds of immovable properties are held in the name of the company. If not, provide details thereof.
(ii) Inventory
	(b) are the procedures of physical verification of 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
(iii) Loans granted
Whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered by clause (76) of Section 2 of the Companies Act, 2013. If so,	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 the terms and conditions of the grant of such loans are not prejudicial to the company's interest;
(c) If overdue amount is more than rupees five lakhs, whether reasonable steps have been taken by the company for recovery of the principal and interest.
	(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) In respect of loans, investments and guarantees, whether provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof.	(iv) Is there an adequate internal control system commensurate with the size of the company 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.
	(x)                whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company;
(vii) Regularity in depositing statutory dues
Wealth tax has been removed from list of statutory dues.	(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 the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported (in case of banks and financial institutions, lender wise details to be provided). (ix) in CARO 2015	(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 moneys raised by way of public issue/ follow-on offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not, the details together with delays / default and subsequent rectification, if any, as may be applicable, be reported;	(xi)whether term loans were applied for the purpose for which the loans were obtained;
(x)Whether any fraud by the company or any fraud on the Company by its officers/ employees has been noticed or reported during the year; If yes, the nature and the amount involved be indicated.	(xii) whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.
New Points as proposed in CARO 2016
(xi)Whether managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same
(xii)Whether the Nidhi Company has complied with the Net Owned Fund in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining 10% liquid assets to meet out the unencumbered liability.
(xiii)Whether all transactions with the related parties are in compliance with Section 188 and 177 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc as required by the accounting standards and Companies Act, 2013
(xiv)Whether the company has made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised. If not, provide details thereof.
(xv)Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether provisions of Section 192 of Companies Act, 2013 have been complied with.
4. Reasons to be stated for unfavourable or qualified answers
(2)Where the auditor is unable to express any opinion on any specified matter, his report shall indicate such fact together with the reasons as to why it is not possible for him to give his opinion on the same.	(2) Where the auditor is unable to express any opinion in answer to a particular question, his report shall indicate such fact together with the reasons why it is not possible for him to give an answer to such question.

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Railway Budget Highlights 2016-2017

Railway minister Mr. Suresh Prabhu announced Rail Budget 2016. 

1. • Railways to get Rs 40,000 crore budgetary support from the government
2. • Rs 8.5 lakh crore to be spent over 5 years for modernization of railway infrastructure
3. • Railway electrification increased by 50%; 2,000km route to be electrified next fiscal
4. • Completely paperless contract system in 2016-17
5. • WiFi in 100 stations this year and 400 other stations next year
6. • To have CCTV surveillance at all stations, 300 major stations covered this year
7. Enhanced capacity of e-ticketing system - from 2000 tickets a minute to 7200 a minute
8. • 44 new projects valued at Rs 92,714 crore to be implemented this year
9. • 2 locomotive factories at the cost of Rs 40,000 crore to be set up
10. • 400 stations to be re-developed through PPP
11. • Overnight double-decker train Uday Express to be introduced on busiest routes, carrying capacity to be increased 40% more
12. • Lower berth quota for senior citizens to be increased by 50%
13. • Will introduce sub-quota of 33% for women in each of the reserved categories in catering
14. • 17,000 additional bio-toilets to be provided by the end of current fiscal
15. • 2,800km of broad gauge track conversion envisaged
16. • 7km of broad gauge lines to be commissioned every day during 2016-17
17. • Three direct services, fully air-conditioned Humsafar, to travel at 130km per hour
18. • To introduce 20,000 screen rail display network for passing info to passengers and huge advertising potential
19. • 17 states agree to form JVs with Indian Railways for construction of rail-over-bridges
20. • Direct procurement of diesel to help save Rs 1,500 crore in 2016-17
21. • LIC to fund Rs 1.5 lakh crore over five years on favourable terms
22. • Rs 50 crore to be provided for startups by railway employees
23. • Commission 2,800km of new tracks in next year, almost 30% higher than last year

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Role of Internal Audit in Internal Controls and Internal Financial Controls:

 A line of difference
Internal control is broadly defined as a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: 

1. Effectiveness and efficiency of operations; 

2. Reliability of financial reporting and

 3. Compliance with applicable laws and regulations. (As given in COSO Framework)

Internal financial controls mean the policies and procedures adopted by the company for ensuring the:

 1. Orderly and efficient conduct of its business, including adherence to company’s policies; 

2. Safeguarding of its assets; 

3. Prevention and detection of frauds and errors and 

4. Accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

 (As given in clause (e) of Section 134(5) of New Companies Act 2013) 

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives (Operational/Reporting/Compliance)by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

 As given by the Institute of Internal Auditors (IIA) 

Understanding: Coverage of Internal Control is wider then internal financial controls as it covers all objectives (Operation/reporting/compliance) of organization.

 Author Note: Internal Audit was covering the IFC through Internal Audit in past however as a regulatory requirement it (i.e. IFC) has been classified separately.

 a. Structured demonstration approach has been introduced in The New Companies Act 2013.

 b. More regulatory reporting responsibilities have been added for compliance with internal financial controls (IFC).

 c. Meeting the requirements of IFC will automatically robust the internal control framework of the organisation. 

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What is the Trust and Society?

 Trust and Society   :                  

S. No.	Basis of Difference	Trust	Society
1.	Registration under	Indian Trust Act, 1882	Societies Registration Act, 1860
2.	Minimum Members	Two	Seven
3.	Area of Activities	All over India, Without mentioning in Deed	Separate registration for All India level (8- different states members required)
4.	Nature of control	One man control, i.e. SETTLER	Democracy system
5.	Possibility of amendment	Easy,  by a supplementary Trust Deed	Difficult, amendment in  MOA and R&R both.
6.	Name Availability	Easily available	Difficulty in availability
7.	Bank a/c operation	One person,  Settler	Two persons, either President or Secretary and Treasurer
8.	Holding of office	Trustees generally hold office for whole life	hold office for period of time and may stand for re-election
9.	Winding-up	Trust is generally irrevocable, Can not be wound-up.	wound up if  3/5th  of the members, so desire
10.	Family Members	Can become trustee	Objection in becoming members of the Governing Body
8.	Examples	Mother Teresa Charitable trust Amar Jyoti Charitable Trust	Trade Associations
9.	Govern by	Board of Trustee	Governing Body
10.	Main Instruments	Trust Deed	Memorandum Of Association & Rules and regulation
11.	Objects	General objectives	Specific objectives -prescribed
11.	Eligible for Income Tax Exemption after Registration u/s 12A & 80G
12.	Eligible for receiving Foreign Contribution after Registration under FCRA
13.	Eligible for receiving Govt. grants and benefits
14.	Profits shall not be distributed to the Trustee/ Members

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Audit of Cash and Bank Transactions in Tally ERP 9

In Tally ERP 9 ~ Functioning the below option we can compare the cash flows and get the information about the changes in are of cash receipts and cash payments.

1.Verification of negative, highest & lowest cash balance.

Gateway of Tally-Display-Account Book- Ledger-Cash-Press F6 (for daily breakup)- Press F12- to Show high/low balances – Enter Yes in option.

By functioning above options we can verify the highest, lowest and average cash balance. Which may help the management to check the blockage and shortage of fund at various locations.

2.Verification of negative ledgers and stock

Gateway of Tally-Display-Exception Reports-Negative Stock(Ledgers)

For viewing on daily/weekly/monthly/quarterly basis –Click on Auto Column and select the appropriate option.

3.Verification / Comparison of Cash Flow.

Gateway of Tally-Display-Cash Flow- click – New Column Option- Enter the period for comparison.

By functioning the above option we can compare the cash flows and get the information about the changes in are of cash receipts and cash payments.

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