Should we move from CARO to FARO

Companies Auditor Report Order (CARO) Rules, 2016 requires Mandatory Compliance for Companies reporting on financial statements whose financial year commences on or after 1st April 2015.

It has evolved from MAOCARO when Manufacturing companies were in question and focus of business n reporting.
With so many Financials Skeleton coming up so often, perhaps the need to report on Forensic reporting on the lines of CARO & Companies can move in that directions!!

Auditors View

As auditors idea is to obtain and receive all the information and explanations with regard to Governance practices of the consolidated group entity with all its subsidiaries corroborating to financial statements

We look to certify that
1. There is NO Evergreening of Loans

2. There is NO roundtripping of loans

3. Inter-group transactions are at arms length and do not have any manipulation of accounts, finances, loans & financial statements.

4. Transactions with related parties and Key Managerial Person (KMPs) are within norms of governance and do not cause any loss to shareholders, financiers and general public and republic of India.

5. NO netting off assets and liabilities have been carried out.

6. NO group companies and subsidiaries have vanished during the year for which proper transactions have not taken place.

7. None of the group companies is a shell company in the model or structure of the setup including the day to day operations.

8. Letter of Credit (LOCs), Guarantees, and other contingent liabilities disclosed are stated along with nature and reason of contingency including 3rd party experts certificate like Valuers, Companies Secretaries, CMAs, Engineering Experts of Technology

BFSI sector again being so deeply entangled, the details can vary with detailed insight and exclusive formats.. We request your thoughts on reporting mechanism with changing business dynamics!!

[frontpage_news widget=”879″ name=”Certicom – A Group of Chartered Accountants – Articles”]