The realm of asset verification has seen changes from Companies (Auditor’s Report) Order (CARO), 2016, to the current, CARO, 2020 (FIXED ASSET MANAGEMENT)
Let’s see the differences that have surfaced, between these orders:
Companies (Auditor’s Report) Order, 2016, was applicable for the financial year commencing on or after 1st April 2015. For fixed assets, it checked the following parameters:
“i) (a) Whether the corporate is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets”
(b) Whether these fixed assets are physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same has been properly addressed within the books of account;
(c) Whether title deeds of immovable properties are held within the name of the corporate. If not, provide details thereof.”
Whereas, Companies (Auditor’s Report) Order, 2020, which is applicable for the financial year commencing on or after 1st April 2019, checked the following parameters, for fixed assets:
“(i) (a) Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of PROPERTY, PLANT, AND EQUIPMENT;
(i) (b) Whether the company is maintaining proper records showing full particulars OF INTANGIBLE ASSETS
(b) Whether these fixed assets are physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same has been properly addressed within the books of account;
(c) Whether title deeds of immovable properties are held within the name of the corporate. If not, provide details thereof in the format below-
1) Description of property
2) Gross carrying value
3) Held in the name of
4) Whether promoter, director or their relative or employee
5) Period held
6) Reason for not being held in the name of the company
(d) whether the company has revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year and, if so, whether the revaluation is based on the valuation by a Registered Valuer; specify the amount of change, if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment or intangible assets;
(e) whether any proceedings have been initiated or are pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder, if so, whether the company has appropriately disclosed the details in its financial statements.”
So here are some major differences, between the two orders:
In clause (i), the word “Fixed assets” was replaced by “Property, Plant and Equipment” and “Intangible asset” separately and a new Sub-clause was inserted.
For sub-clause (c), a separate format was provided.
Sub-clause (d) will be applicable if there is a revaluation of fixed assets by a registered valuer. Also, the amount is to be specified, if deviation is 10% or more.
New sub-clause (e) inserted- Benami property held by the company if any to be reported.
“Caro 2020 is expected to significantly improve the overall quality of reporting by the auditors on the financial statements of the companies and thereby lead to greater transparency and faith in the financial affairs of the companies,” the ministry said in a statement.
n an order issued on February 25, the ministry had made it clear that listed companies will have to disclose all whistle-blower complaints to the auditor, and these will have to be mentioned in the audit reports.
There have been several instances of whistle-blower complaints being filed with the Securities and Exchanges Board of India (SEBI) against listed companies. But the market regulator said firms often do not officially disclose them to the public.
