Caro 2016 and Internal Financial Controls

CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA

CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA

LUNAWAT & CO.Chartered Accountants

LUNAWAT & CO.Chartered Accountants7th August 2016, Mayur Vihar7th August 2016, Mayur Vihar

CARO & IFCCARO & IFCCARO & IFCCARO & IFC

AGENDAAGENDAAGENDAAGENDA

�CARO 2016CARO 2016CARO 2016CARO 2016

� Internal Financial ControlsInternal Financial ControlsInternal Financial ControlsInternal Financial Controls

Lunawat & Co.

Lunawat & Co.

Audit ReportsAudit ReportsAudit ReportsAudit Reports

Companies Companies Companies Companies ActActActAct

CAROCAROCAROCARONonNonNonNon----CAROCAROCAROCARO

Other ActsOther ActsOther ActsOther Acts

Tax Tax Tax Tax AuditAuditAuditAudit

Form Form Form Form 3CA3CA3CA3CA

Form Form Form Form 3CB3CB3CB3CB

LLPLLPLLPLLP SocietySocietySocietySociety

REPORT REPORT REPORT REPORT ---- COMPANIESCOMPANIESCOMPANIESCOMPANIES

� Inquiry u/s 143(1) Inquiry u/s 143(1) Inquiry u/s 143(1) Inquiry u/s 143(1) –––– 6 points 6 points 6 points 6 points –––– only only only only

to be reported when comments to be reported when comments to be reported when comments to be reported when comments

requiredrequiredrequiredrequired

�Report to include:Report to include:Report to include:Report to include:

�Matters specified u/s 143(3) Matters specified u/s 143(3) Matters specified u/s 143(3) Matters specified u/s 143(3) ---- 9 points9 points9 points9 points

�Matters specified in Rules Matters specified in Rules Matters specified in Rules Matters specified in Rules ---- 3 points3 points3 points3 points

�Any Any Any Any order made order made order made order made u/s 143(3) for u/s 143(3) for u/s 143(3) for u/s 143(3) for

specified Companies in consultation specified Companies in consultation specified Companies in consultation specified Companies in consultation

with NFRA with NFRA with NFRA with NFRA –––– CARO 2016 CARO 2016 CARO 2016 CARO 2016 –––– 16 points16 points16 points16 points

Lunawat & Co.

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 –––– APPLICABILITYAPPLICABILITYAPPLICABILITYAPPLICABILITY

�Applicable to all including Foreign Co. Applicable to all including Foreign Co. Applicable to all including Foreign Co. Applicable to all including Foreign Co.

for a/for a/for a/for a/cingcingcingcing period after 1.4.15 except:period after 1.4.15 except:period after 1.4.15 except:period after 1.4.15 except:

�Banking Co. / Insurance Co.Banking Co. / Insurance Co.Banking Co. / Insurance Co.Banking Co. / Insurance Co.

�Section 8 Co.Section 8 Co.Section 8 Co.Section 8 Co.

�OPCOPCOPCOPC

�Small Co.Small Co.Small Co.Small Co.

�Not applicable on CFSNot applicable on CFSNot applicable on CFSNot applicable on CFS

�Branch auditor also covered, if applicable Branch auditor also covered, if applicable Branch auditor also covered, if applicable Branch auditor also covered, if applicable

to co.to co.to co.to co.

Lunawat & Co.


�P. Co P. Co P. Co P. Co not being sub. or holding of not being sub. or holding of not being sub. or holding of not being sub. or holding of

Pub. CoPub. CoPub. CoPub. Co. whose:. whose:. whose:. whose:

�Paid up Capital & Reserves < Paid up Capital & Reserves < Paid up Capital & Reserves < Paid up Capital & Reserves < 1 Cr 1 Cr 1 Cr 1 Cr as as as as

at B/s date; andat B/s date; andat B/s date; andat B/s date; and

�Bonus, Pref. shares to be included Bonus, Pref. shares to be included Bonus, Pref. shares to be included Bonus, Pref. shares to be included

�Share Application money !!Share Application money !!Share Application money !!Share Application money !!

�All reserves to be included including All reserves to be included including All reserves to be included including All reserves to be included including

revaluation reserverevaluation reserverevaluation reserverevaluation reserve

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 –––– APPLICABILITYAPPLICABILITYAPPLICABILITYAPPLICABILITY� P. Co P. Co P. Co P. Co not being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Conot being sub. or holding of Pub. Co. whose:. whose:. whose:. whose:

�Outstanding Loans Outstanding Loans Outstanding Loans Outstanding Loans ---- Bank or FIs < Bank or FIs < Bank or FIs < Bank or FIs < 1 Cr during 1 Cr during 1 Cr during 1 Cr during

FYFYFYFY; and; and; and; and

�All borrowings included All borrowings included All borrowings included All borrowings included –––– non fund based non fund based non fund based non fund based –––– to to to to

extent devolved, invoked guarantees & devolved extent devolved, invoked guarantees & devolved extent devolved, invoked guarantees & devolved extent devolved, invoked guarantees & devolved

LCsLCsLCsLCs

�TL TL TL TL –––– interest accrued & due only to be considered interest accrued & due only to be considered interest accrued & due only to be considered interest accrued & due only to be considered

�CC CC CC CC –––– balance on any day as per booksbalance on any day as per booksbalance on any day as per booksbalance on any day as per books

�OD against FD included OD against FD included OD against FD included OD against FD included

�Outstanding due of Credit card also includedOutstanding due of Credit card also includedOutstanding due of Credit card also includedOutstanding due of Credit card also included

�Foreign banks Foreign banks Foreign banks Foreign banks covered covered covered covered ---- FIs include NBFCFIs include NBFCFIs include NBFCFIs include NBFC

Lunawat & Co.


�Pvt.Pvt.Pvt.Pvt. Co Co Co Co not being sub. or holding of Pub. not being sub. or holding of Pub. not being sub. or holding of Pub. not being sub. or holding of Pub.

CoCoCoCo. whose:. whose:. whose:. whose:

�Total Revenue (including from discontinuing Total Revenue (including from discontinuing Total Revenue (including from discontinuing Total Revenue (including from discontinuing

operations) < 10 crores as per Financial operations) < 10 crores as per Financial operations) < 10 crores as per Financial operations) < 10 crores as per Financial

Statements as per Schedule IIIStatements as per Schedule IIIStatements as per Schedule IIIStatements as per Schedule III

�Other income includedOther income includedOther income includedOther income included

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�1(a) 1(a) 1(a) 1(a) ---- PPPProper roper roper roper records records records records ---- full particulars, full particulars, full particulars, full particulars,

quantitative details and situation of quantitative details and situation of quantitative details and situation of quantitative details and situation of FA.FA.FA.FA.

� FAR in electronic form if FAR in electronic form if FAR in electronic form if FAR in electronic form if 2 2 2 2 conditions conditions conditions conditions satisfiedsatisfiedsatisfiedsatisfied::::

�CCCControls ontrols ontrols ontrols &&&& security measures in security measures in security measures in security measures in Co. are Co. are Co. are Co. are such that once such that once such that once such that once

finalised, finalised, finalised, finalised, FAR FAR FAR FAR cannot be altered without proper cannot be altered without proper cannot be altered without proper cannot be altered without proper

authorization authorization authorization authorization & & & & audit trail.audit trail.audit trail.audit trail.

�FAR can FAR can FAR can FAR can be retrieved in a legible formbe retrieved in a legible formbe retrieved in a legible formbe retrieved in a legible form....

� In case In case In case In case above conditions not satisfiedabove conditions not satisfiedabove conditions not satisfiedabove conditions not satisfied, , , , to obtain to obtain to obtain to obtain a a a a

duly authenticated printduly authenticated printduly authenticated printduly authenticated print----out of out of out of out of FAR. FAR. FAR. FAR. In case In case In case In case auditor auditor auditor auditor

decides to rely on decides to rely on decides to rely on decides to rely on electronically FAR electronically FAR electronically FAR electronically FAR ---- to maintain to maintain to maintain to maintain

adequate documentation adequate documentation adequate documentation adequate documentation evidencing evaluation evidencing evaluation evidencing evaluation evidencing evaluation of of of of

controls that seek to ensure controls that seek to ensure controls that seek to ensure controls that seek to ensure completenesscompletenesscompletenesscompleteness, accuracy , accuracy , accuracy , accuracy

& security & security & security & security of of of of registerregisterregisterregister.

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�1(b) 1(b) 1(b) 1(b) –––– Physical verification Physical verification Physical verification Physical verification –––– material material material material

discrepancydiscrepancydiscrepancydiscrepancy

�1(c1(c1(c1(c) ) ) ) ---- Whether Whether Whether Whether title deeds of immovable title deeds of immovable title deeds of immovable title deeds of immovable

properties properties properties properties are held in the name of the are held in the name of the are held in the name of the are held in the name of the

company. If not, provide details thereof company. If not, provide details thereof company. If not, provide details thereof company. If not, provide details thereof

� TDR / TDR / TDR / TDR / PltPltPltPlt & Mach imbedded in land not & Mach imbedded in land not & Mach imbedded in land not & Mach imbedded in land not immimmimmimm. Prop.. Prop.. Prop.. Prop.

� In case of conversionIn case of conversionIn case of conversionIn case of conversion

� In case of mortgage In case of mortgage In case of mortgage In case of mortgage –––– banksbanksbanksbanks

�Online if availableOnline if availableOnline if availableOnline if available

�Details Details Details Details –––– no. of cases, leasehold/freehold, gross/net no. of cases, leasehold/freehold, gross/net no. of cases, leasehold/freehold, gross/net no. of cases, leasehold/freehold, gross/net

block, remarksblock, remarksblock, remarksblock, remarks

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�2(a2(a2(a2(a)(b)(c) merged into 2 )(b)(c) merged into 2 )(b)(c) merged into 2 )(b)(c) merged into 2 ---- Whether physical Whether physical Whether physical Whether physical

verification of inventory has been verification of inventory has been verification of inventory has been verification of inventory has been

conducted at reasonable intervals by the conducted at reasonable intervals by the conducted at reasonable intervals by the conducted at reasonable intervals by the

management management management management & & & & whether any material whether any material whether any material whether any material

discrepancies were noticed and if so, how discrepancies were noticed and if so, how discrepancies were noticed and if so, how discrepancies were noticed and if so, how

they have been dealt with in they have been dealt with in they have been dealt with in they have been dealt with in books books books books of of of of a/ca/ca/ca/c

�3 3 3 3 ---- Whether company has granted any Whether company has granted any Whether company has granted any Whether company has granted any

loans, secured or unsecured to cos, firms, loans, secured or unsecured to cos, firms, loans, secured or unsecured to cos, firms, loans, secured or unsecured to cos, firms,

LLPLLPLLPLLP or other parties covered is registered or other parties covered is registered or other parties covered is registered or other parties covered is registered

maintained u/s 189maintained u/s 189maintained u/s 189maintained u/s 189....[MBP[MBP[MBP[MBP----4] 4] 4] 4] –––– 184(2)/188184(2)/188184(2)/188184(2)/188

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�3 3 3 3 –––– MBP 4 MBP 4 MBP 4 MBP 4 ---- If If If If so, so, so, so,

� (a) (a) (a) (a) Whether Whether Whether Whether terms terms terms terms & conditions of grant of such & conditions of grant of such & conditions of grant of such & conditions of grant of such

loans are not prejudicial to loans are not prejudicial to loans are not prejudicial to loans are not prejudicial to company’s interestcompany’s interestcompany’s interestcompany’s interest; ; ; ;

�CY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standingCY only, terms s. 186(7), ability to lend, borrower standing

� (b) (b) (b) (b) Whether the schedule of repayment of principal & Whether the schedule of repayment of principal & Whether the schedule of repayment of principal & Whether the schedule of repayment of principal &

interest is stipulated interest is stipulated interest is stipulated interest is stipulated & whether repayments & & whether repayments & & whether repayments & & whether repayments &

interest are regular. interest are regular. interest are regular. interest are regular.

�Opening + CY, squared up loans covered Opening + CY, squared up loans covered Opening + CY, squared up loans covered Opening + CY, squared up loans covered –––– no. of cases no. of cases no. of cases no. of cases

� (c) If overdue amount (c) If overdue amount (c) If overdue amount (c) If overdue amount for more than 90 daysfor more than 90 daysfor more than 90 daysfor more than 90 days, whether , whether , whether , whether

reasonable steps taken by Co. for recovery of the reasonable steps taken by Co. for recovery of the reasonable steps taken by Co. for recovery of the reasonable steps taken by Co. for recovery of the

principal & interest principal & interest principal & interest principal & interest

�Opening Opening Opening Opening + + + + CY CY CY CY –––– no. of cases, principal no. of cases, principal no. of cases, principal no. of cases, principal amtamtamtamt overdue, overdue, overdue, overdue, inttinttinttintt

overdue, steps takenoverdue, steps takenoverdue, steps takenoverdue, steps taken

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�4 4 4 4 –––– Internal control on purchase Internal control on purchase Internal control on purchase Internal control on purchase etcetcetcetc not not not not

requiredrequiredrequiredrequired

�4 4 4 4 ---- In respect of loans, investments and In respect of loans, investments and In respect of loans, investments and In respect of loans, investments and

guarantees, whether provisions of Section guarantees, whether provisions of Section guarantees, whether provisions of Section guarantees, whether provisions of Section

185 and 186 185 and 186 185 and 186 185 and 186 have have have have been complied with. If been complied with. If been complied with. If been complied with. If

not, provide details thereofnot, provide details thereofnot, provide details thereofnot, provide details thereof.

� 185 Details 185 Details 185 Details 185 Details –––– maximum amount and closing Bal.maximum amount and closing Bal.maximum amount and closing Bal.maximum amount and closing Bal.

� 186 186 186 186 –––– more than 2 layers, exceeding limits, rate of more than 2 layers, exceeding limits, rate of more than 2 layers, exceeding limits, rate of more than 2 layers, exceeding limits, rate of

interest, other defaultsinterest, other defaultsinterest, other defaultsinterest, other defaults

5 5 5 5 –––– Deposits Deposits Deposits Deposits –––– no no no no change 73change 73change 73change 73----76767676

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�6 6 6 6 –––– Cost Records Cost Records Cost Records Cost Records –––– no no no no changechangechangechange

�7 7 7 7 –––– Statutory Dues Statutory Dues Statutory Dues Statutory Dues –––– Wealth tax Wealth tax Wealth tax Wealth tax (c) (c) (c) (c) IEPFIEPFIEPFIEPF

� Statutory Statutory Statutory Statutory due due due due arises arises arises arises out of a statuteout of a statuteout of a statuteout of a statute, rather , rather , rather , rather than than than than on on on on

an independent contractual or legal relationshipan independent contractual or legal relationshipan independent contractual or legal relationshipan independent contractual or legal relationship

� Advance tax, TDS, Custom duty… if Advance tax, TDS, Custom duty… if Advance tax, TDS, Custom duty… if Advance tax, TDS, Custom duty… if inttinttinttintt –––– irregular. irregular. irregular. irregular.

� Instalments granted by authority, penalty/Instalments granted by authority, penalty/Instalments granted by authority, penalty/Instalments granted by authority, penalty/inttinttinttintt coveredcoveredcoveredcovered

� Irregularity vs. due more than 6 monthsIrregularity vs. due more than 6 monthsIrregularity vs. due more than 6 monthsIrregularity vs. due more than 6 months

�Mere show cause Mere show cause Mere show cause Mere show cause –––– not disputed, S. 154 not disputed, S. 154 not disputed, S. 154 not disputed, S. 154 –––– disputeddisputeddisputeddisputed

� If no appeal filed If no appeal filed If no appeal filed If no appeal filed –––– undisputed duesundisputed duesundisputed duesundisputed dues

�Disclose disputed amounts even if provision made or Disclose disputed amounts even if provision made or Disclose disputed amounts even if provision made or Disclose disputed amounts even if provision made or

amount deposited under protestamount deposited under protestamount deposited under protestamount deposited under protest

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�8 8 8 8 –––– AccumAccumAccumAccum. /cash losses. /cash losses. /cash losses. /cash losses–––– not requirednot requirednot requirednot required

�8 8 8 8 –––– Earlier 9 Earlier 9 Earlier 9 Earlier 9 –––– Default to Bank, FIs, Default to Bank, FIs, Default to Bank, FIs, Default to Bank, FIs, Govt.Govt.Govt.Govt. & & & &

debenture holders debenture holders debenture holders debenture holders ---- (in case of (in case of (in case of (in case of banks, banks, banks, banks, Govt. Govt. Govt. Govt.

and and and and FIs, FIs, FIs, FIs, lender wise details to be provided). lender wise details to be provided). lender wise details to be provided). lender wise details to be provided).

�Default Default Default Default –––– non payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCsnon payment of dues, FIs include NBFCs

� Period of default and amount lender wisePeriod of default and amount lender wisePeriod of default and amount lender wisePeriod of default and amount lender wise

� All defaults existing on B/S date All defaults existing on B/S date All defaults existing on B/S date All defaults existing on B/S date –––– even earlier yearseven earlier yearseven earlier yearseven earlier years

�Debentures Debentures Debentures Debentures –––– lenderlenderlenderlender----wise detail not requiredwise detail not requiredwise detail not requiredwise detail not required

�Govt. does not include Govt. does not include Govt. does not include Govt. does not include –––– Foreign govt., Govt. Co, PSU, Foreign govt., Govt. Co, PSU, Foreign govt., Govt. Co, PSU, Foreign govt., Govt. Co, PSU,

Boards, Boards, Boards, Boards, CCCCorporationsorporationsorporationsorporations

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES� 9 9 9 9 –––– NewNewNewNew ---- Whether moneys raised by way of Whether moneys raised by way of Whether moneys raised by way of Whether moneys raised by way of IPO IPO IPO IPO

/ FPO (including / FPO (including / FPO (including / FPO (including debt instruments) &debt instruments) &debt instruments) &debt instruments) & term loans term loans term loans term loans

were applied for were applied for were applied for were applied for purposes purposes purposes purposes for which those are for which those are for which those are for which those are

raised. If not, raised. If not, raised. If not, raised. If not, details details details details together with delays / together with delays / together with delays / together with delays /

default default default default & & & & subsequent subsequent subsequent subsequent rectification.rectification.rectification.rectification.

�Default Default Default Default ---- amount involved amount involved amount involved amount involved , nature , nature , nature , nature of of of of default, delay default, delay default, delay default, delay in in in in

utilizationutilizationutilizationutilization

� Co. to disclose end Co. to disclose end Co. to disclose end Co. to disclose end use of use of use of use of IPO/FPO in notes & auditor IPO/FPO in notes & auditor IPO/FPO in notes & auditor IPO/FPO in notes & auditor

to to to to verify verify verify verify –––– see see see see SEBI (Listing SEBI (Listing SEBI (Listing SEBI (Listing Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.Obl. & Dis. Req.) Reg.

� Temporary investment (FDR) to be reportedTemporary investment (FDR) to be reportedTemporary investment (FDR) to be reportedTemporary investment (FDR) to be reported

� Term Loans from Private PartiesTerm Loans from Private PartiesTerm Loans from Private PartiesTerm Loans from Private Parties

� If against property, FDR, If against property, FDR, If against property, FDR, If against property, FDR, etcetcetcetc –––– no specific purposeno specific purposeno specific purposeno specific purpose

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 –––– CHANGESCHANGESCHANGESCHANGES�10 10 10 10 ---- Whether any fraud by Co. or any fraud Whether any fraud by Co. or any fraud Whether any fraud by Co. or any fraud Whether any fraud by Co. or any fraud

on Co. by its on Co. by its on Co. by its on Co. by its officers/ employees officers/ employees officers/ employees officers/ employees has been has been has been has been

noticed or reported during the year; If yes, noticed or reported during the year; If yes, noticed or reported during the year; If yes, noticed or reported during the year; If yes,

nature and amount involved be indicatednature and amount involved be indicatednature and amount involved be indicatednature and amount involved be indicated

�Only to report ‘noticed or reported’ frauds. Only to report ‘noticed or reported’ frauds. Only to report ‘noticed or reported’ frauds. Only to report ‘noticed or reported’ frauds. 143(12143(12143(12143(12) ) ) )

frauds to frauds to frauds to frauds to CG/AC. Reported frauds u/s 143(12) to be CG/AC. Reported frauds u/s 143(12) to be CG/AC. Reported frauds u/s 143(12) to be CG/AC. Reported frauds u/s 143(12) to be

reported not suspected fraudsreported not suspected fraudsreported not suspected fraudsreported not suspected frauds

�Management fraud vs. Employee fraud Management fraud vs. Employee fraud Management fraud vs. Employee fraud Management fraud vs. Employee fraud

� Fraudulent Fraudulent Fraudulent Fraudulent Financial Reporting Financial Reporting Financial Reporting Financial Reporting vs. Misappropriation vs. Misappropriation vs. Misappropriation vs. Misappropriation

of assetsof assetsof assetsof assets

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES� 11 11 11 11 –––– NewNewNewNew ---- Whether Whether Whether Whether managerial remuneration managerial remuneration managerial remuneration managerial remuneration

has been paid / provided in accordance with the has been paid / provided in accordance with the has been paid / provided in accordance with the has been paid / provided in accordance with the

requisite approvals mandated by the provisions requisite approvals mandated by the provisions requisite approvals mandated by the provisions requisite approvals mandated by the provisions

of of of of s. s. s. s. 197 197 197 197 r.w.r.w.r.w.r.w. schedule schedule schedule schedule V? V? V? V? If not, state the If not, state the If not, state the If not, state the

amount involved amount involved amount involved amount involved & & & & steps taken steps taken steps taken steps taken for for for for securing securing securing securing

refund of the same. refund of the same. refund of the same. refund of the same.

�Only Public CosOnly Public CosOnly Public CosOnly Public Cos

� Exclusion Exclusion Exclusion Exclusion –––– sitting sitting sitting sitting fee, fee, fee, fee, for professional servicesfor professional servicesfor professional servicesfor professional services

� Entitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approvalEntitled persons, limits, procedure and approval

�Reporting Reporting Reporting Reporting –––– payment to MD, WTD, MD, Manager, payment to MD, WTD, MD, Manager, payment to MD, WTD, MD, Manager, payment to MD, WTD, MD, Manager,

Excess amount Excess amount Excess amount Excess amount paid/ provided, Due for recovery &paid/ provided, Due for recovery &paid/ provided, Due for recovery &paid/ provided, Due for recovery &

steps takensteps takensteps takensteps taken

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�12 12 12 12 –––– NidhiNidhiNidhiNidhi Co.. Co.. Co.. Co..

�13 13 13 13 –––– NewNewNewNew ---- Whether Whether Whether Whether all transactions with all transactions with all transactions with all transactions with

related parties are in compliance with S. related parties are in compliance with S. related parties are in compliance with S. related parties are in compliance with S.

177 177 177 177 and and and and 188 and 188 and 188 and 188 and details have been details have been details have been details have been

disclosed in FS disclosed in FS disclosed in FS disclosed in FS etcetcetcetc as required by as required by as required by as required by

applicable AS. applicable AS. applicable AS. applicable AS.

� To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18To see s. 177 & 188 and AS 18

� S. 188 applicable to all companies other than on S. 188 applicable to all companies other than on S. 188 applicable to all companies other than on S. 188 applicable to all companies other than on

arm’s length transactions entered into in ordinary arm’s length transactions entered into in ordinary arm’s length transactions entered into in ordinary arm’s length transactions entered into in ordinary

course of businesscourse of businesscourse of businesscourse of business

�May test May test May test May test on TP mechanism per on TP mechanism per on TP mechanism per on TP mechanism per IT ActIT ActIT ActIT Act

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�13 13 13 13 –––– SA 550 Related Parties SA 550 Related Parties SA 550 Related Parties SA 550 Related Parties ---- transactions transactions transactions transactions

not in normal course of not in normal course of not in normal course of not in normal course of business (business (business (business (EgEgEgEg):):):):� Complex equity transactions, such as corporate Complex equity transactions, such as corporate Complex equity transactions, such as corporate Complex equity transactions, such as corporate

restructurings or acquisitionsrestructurings or acquisitionsrestructurings or acquisitionsrestructurings or acquisitions

� Transactions with offshore entities in jurisdictions with Transactions with offshore entities in jurisdictions with Transactions with offshore entities in jurisdictions with Transactions with offshore entities in jurisdictions with

weak corporate lawsweak corporate lawsweak corporate lawsweak corporate laws

� LLLLeasing easing easing easing of premises or of premises or of premises or of premises or rendering rendering rendering rendering of management services of management services of management services of management services

by by by by entity entity entity entity to another party if no consideration is exchangedto another party if no consideration is exchangedto another party if no consideration is exchangedto another party if no consideration is exchanged

� Sales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returnsSales transactions with unusually large discounts or returns

� Transactions with circular arrangements, for example, sales Transactions with circular arrangements, for example, sales Transactions with circular arrangements, for example, sales Transactions with circular arrangements, for example, sales

with a commitment to repurchasewith a commitment to repurchasewith a commitment to repurchasewith a commitment to repurchase

� Transactions under contracts whose terms are changed Transactions under contracts whose terms are changed Transactions under contracts whose terms are changed Transactions under contracts whose terms are changed

before expirybefore expirybefore expirybefore expiry.

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES�14 14 14 14 ––––NewNewNewNew ---- Whether Co. has made Whether Co. has made Whether Co. has made Whether Co. has made

preferential allotment / PP of shares or preferential allotment / PP of shares or preferential allotment / PP of shares or preferential allotment / PP of shares or

fully or partly fully or partly fully or partly fully or partly convertible convertible convertible convertible deb. during deb. during deb. during deb. during yryryryr. . . .

Whether Whether Whether Whether SSSS. 42 complied & . 42 complied & . 42 complied & . 42 complied & amount amount amount amount raised raised raised raised

used for purposes for which funds were used for purposes for which funds were used for purposes for which funds were used for purposes for which funds were

raised. raised. raised. raised.

� If not, details of amount involved and If not, details of amount involved and If not, details of amount involved and If not, details of amount involved and

nature of nonnature of nonnature of nonnature of non----compliance.compliance.compliance.compliance.

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES

�15 15 15 15 –––– NewNewNewNew ---- Whether Whether Whether Whether the company has the company has the company has the company has

entered into any nonentered into any nonentered into any nonentered into any non----cash transactions with cash transactions with cash transactions with cash transactions with

directors or persons connected with him directors or persons connected with him directors or persons connected with him directors or persons connected with him

and if so, whether provisions of and if so, whether provisions of and if so, whether provisions of and if so, whether provisions of S. 192 S. 192 S. 192 S. 192

complied complied complied complied withwithwithwith

� Persons connected Persons connected Persons connected Persons connected ---- 185(1) 185(1) 185(1) 185(1) ExplExplExplExpl. . . . –––– check MBP 1check MBP 1check MBP 1check MBP 1

� Loan, guarantee, Loan, guarantee, Loan, guarantee, Loan, guarantee, etcetcetcetc –––– MBP 2; Contracts MBP 2; Contracts MBP 2; Contracts MBP 2; Contracts –––– MBP 4MBP 4MBP 4MBP 4

� FAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGMFAR, BOD Meetings, EGM, AGM

�Merger under court schemes Merger under court schemes Merger under court schemes Merger under court schemes –––– Not nonNot nonNot nonNot non----cashcashcashcash

� Acquisition of asset in one year, settlement of liability Acquisition of asset in one year, settlement of liability Acquisition of asset in one year, settlement of liability Acquisition of asset in one year, settlement of liability

in another year in another year in another year in another year –––– Not nonNot nonNot nonNot non----cashcashcashcash

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 ---- CLAUSESCLAUSESCLAUSESCLAUSES

�16 16 16 16 –––– NewNewNewNew ---- Whether Co is required to be Whether Co is required to be Whether Co is required to be Whether Co is required to be

registered u/s 45registered u/s 45registered u/s 45registered u/s 45----IA of RBI and if so IA of RBI and if so IA of RBI and if so IA of RBI and if so

whether the registration has been obtained whether the registration has been obtained whether the registration has been obtained whether the registration has been obtained

� Understanding business, if principal business is Understanding business, if principal business is Understanding business, if principal business is Understanding business, if principal business is

Financing activityFinancing activityFinancing activityFinancing activity

� 50505050----50 Test 50 Test 50 Test 50 Test ---- Financial Assets > 50% of total assets Financial Assets > 50% of total assets Financial Assets > 50% of total assets Financial Assets > 50% of total assets

and income from Financial assets > 50% of Gross and income from Financial assets > 50% of Gross and income from Financial assets > 50% of Gross and income from Financial assets > 50% of Gross

IncomeIncomeIncomeIncome

� If required and registration not obtained reasons to If required and registration not obtained reasons to If required and registration not obtained reasons to If required and registration not obtained reasons to

be statedbe statedbe statedbe stated

Lunawat & Co.

CARO 2016 CARO 2016 CARO 2016 CARO 2016 –––– FINER POINTSFINER POINTSFINER POINTSFINER POINTS

�Comply SAsComply SAsComply SAsComply SAs–––– DDDDocumentation, Materialityocumentation, Materialityocumentation, Materialityocumentation, Materiality

�Assess Assess Assess Assess the the the the effect effect effect effect of failure to complyof failure to complyof failure to complyof failure to comply

� It’s not It’s not It’s not It’s not a separate audit engagementa separate audit engagementa separate audit engagementa separate audit engagement

�Have Check Have Check Have Check Have Check lists lists lists lists

�Need to document basis of reaching at Need to document basis of reaching at Need to document basis of reaching at Need to document basis of reaching at

adverse opinionadverse opinionadverse opinionadverse opinion

�Management RepresentationManagement RepresentationManagement RepresentationManagement Representation

�Cross check with Board ReportCross check with Board ReportCross check with Board ReportCross check with Board Report

Lunawat & Co.

Lunawat & Co.

IFC / IFC / IFC / IFC / ICFRICFRICFRICFRLunawat & Co.

S.S.S.S. ResponsibleResponsibleResponsibleResponsible RemarksRemarksRemarksRemarks

134134134134 Director Director Director Director

ResponsibilityResponsibilityResponsibilityResponsibility

StatementStatementStatementStatement

ListedListedListedListed Co Co Co Co –––– Directors have Directors have Directors have Directors have

laid down IFC to be followed laid down IFC to be followed laid down IFC to be followed laid down IFC to be followed

by the Co. & that such by the Co. & that such by the Co. & that such by the Co. & that such

controls are adequate & controls are adequate & controls are adequate & controls are adequate &

operating effectivelyoperating effectivelyoperating effectivelyoperating effectively

R. R. R. R.

8(5)(viii) 8(5)(viii) 8(5)(viii) 8(5)(viii)

Director Director Director Director

ReportReportReportReport

Details in respect of Details in respect of Details in respect of Details in respect of

adequacy of Internal adequacy of Internal adequacy of Internal adequacy of Internal

Financial controls with Financial controls with Financial controls with Financial controls with

reference to the Financial reference to the Financial reference to the Financial reference to the Financial

Statements Statements Statements Statements



177 177 177 177

(4) (4) (4) (4)

(vii) & (vii) & (vii) & (vii) &

(5)(5)(5)(5)

Audit Audit Audit Audit

CommitteeCommitteeCommitteeCommittee

AC may call for comments of AC may call for comments of AC may call for comments of AC may call for comments of

auditors about IFC before their auditors about IFC before their auditors about IFC before their auditors about IFC before their

submission to Board & may also submission to Board & may also submission to Board & may also submission to Board & may also

discuss related issues with discuss related issues with discuss related issues with discuss related issues with

internal & statutory auditors & internal & statutory auditors & internal & statutory auditors & internal & statutory auditors &

management of Co.management of Co.management of Co.management of Co.

Sch. Sch. Sch. Sch.

IVIVIVIV

Independent Independent Independent Independent

DirectorsDirectorsDirectorsDirectors

To satisfy themselves on integrity To satisfy themselves on integrity To satisfy themselves on integrity To satisfy themselves on integrity

of financial information & ensure of financial information & ensure of financial information & ensure of financial information & ensure

that financial controls & systems that financial controls & systems that financial controls & systems that financial controls & systems

of risk management are robust & of risk management are robust & of risk management are robust & of risk management are robust &

defensibledefensibledefensibledefensible



143 143 143 143

(3)((3)((3)((3)(iiii))))

Auditor Auditor Auditor Auditor


The Company has adequate IFC The Company has adequate IFC The Company has adequate IFC The Company has adequate IFC

system and operatingsystem and operatingsystem and operatingsystem and operating

effectivenesseffectivenesseffectivenesseffectiveness of such controlsof such controlsof such controlsof such controls

ICAIICAIICAIICAI AuditorAuditorAuditorAuditor Guidance Note by ICAI in Guidance Note by ICAI in Guidance Note by ICAI in Guidance Note by ICAI in

September 2015September 2015September 2015September 2015

129(4)129(4)129(4)129(4) Auditor Auditor Auditor Auditor


CFSCFSCFSCFS

Provisions applicable to Provisions applicable to Provisions applicable to Provisions applicable to

preparation, adoption & audit preparation, adoption & audit preparation, adoption & audit preparation, adoption & audit

of FS of a holding co. shall, of FS of a holding co. shall, of FS of a holding co. shall, of FS of a holding co. shall,

mutatis mutandis, apply to mutatis mutandis, apply to mutatis mutandis, apply to mutatis mutandis, apply to

CFS.CFS.CFS.CFS.

1956 ACT1956 ACT1956 ACT1956 ACT

� CARO CARO CARO CARO –––– HHHHas adequate Internal Control procedure as adequate Internal Control procedure as adequate Internal Control procedure as adequate Internal Control procedure

commensurate with the size of Co. and nature of commensurate with the size of Co. and nature of commensurate with the size of Co. and nature of commensurate with the size of Co. and nature of

its business for Purchase of inventory and fixed its business for Purchase of inventory and fixed its business for Purchase of inventory and fixed its business for Purchase of inventory and fixed

assets and for sale of goods & servicesassets and for sale of goods & servicesassets and for sale of goods & servicesassets and for sale of goods & services

� SSSS.... 217217217217((((2222AAAAAAAA)))) ---- DirectorsDirectorsDirectorsDirectors’’’’ ResponsibilityResponsibilityResponsibilityResponsibility StatementStatementStatementStatement

---- havehavehavehave takentakentakentaken properproperproperproper &&&& sufficientsufficientsufficientsufficient carecarecarecare forforforfor

maintenancemaintenancemaintenancemaintenance ofofofof adequateadequateadequateadequate accountingaccountingaccountingaccounting recordsrecordsrecordsrecords inininin

accordanceaccordanceaccordanceaccordance withwithwithwith provisionsprovisionsprovisionsprovisions ofofofof ActActActAct,,,,

� forforforfor safeguardingsafeguardingsafeguardingsafeguarding assetsassetsassetsassets ofofofof CoCoCoCo....

� forforforfor preventingpreventingpreventingpreventing &&&& detectingdetectingdetectingdetecting fraudfraudfraudfraud

� otherotherotherother irregularitiesirregularitiesirregularitiesirregularities.

Lunawat & Co.

INTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROLINTERNAL FINANCIAL CONTROL

� IFC means IFC means IFC means IFC means policies & policies & policies & policies & procedures adopted procedures adopted procedures adopted procedures adopted

by by by by Company for ensuring : Company for ensuring : Company for ensuring : Company for ensuring :

�Orderly Orderly Orderly Orderly & efficient conduct of its business, & efficient conduct of its business, & efficient conduct of its business, & efficient conduct of its business,

including adherence to company’s policiesincluding adherence to company’s policiesincluding adherence to company’s policiesincluding adherence to company’s policies, , , ,

�Safeguarding Safeguarding Safeguarding Safeguarding of its assets, of its assets, of its assets, of its assets,

�Prevention Prevention Prevention Prevention and detection of frauds and detection of frauds and detection of frauds and detection of frauds and errorsand errorsand errorsand errors, , , ,

�Accuracy Accuracy Accuracy Accuracy and and and and completeness completeness completeness completeness of the accounting of the accounting of the accounting of the accounting

records, records, records, records,

�Timely preparation Timely preparation Timely preparation Timely preparation of reliable financial of reliable financial of reliable financial of reliable financial

informationinformationinformationinformation

Lunawat & Co.

ICFRICFRICFRICFR –––– ICAIICAIICAIICAI GUIDANCE NOTE GUIDANCE NOTE GUIDANCE NOTE GUIDANCE NOTE –––– 9/20159/20159/20159/2015

� TTTTerm erm erm erm ‘IFC’ ‘IFC’ ‘IFC’ ‘IFC’ in in in in S. 143(3)(S. 143(3)(S. 143(3)(S. 143(3)(iiii) would relate to ) would relate to ) would relate to ) would relate to ‘IFC ‘IFC ‘IFC ‘IFC

over Fover Fover Fover Financial inancial inancial inancial RRRReportingeportingeportingeporting’’’’ in accordance with in accordance with in accordance with in accordance with

objectives objectives objectives objectives of an audit stated in SA 200 “Overall of an audit stated in SA 200 “Overall of an audit stated in SA 200 “Overall of an audit stated in SA 200 “Overall

Objectives of the Independent Auditor and the Objectives of the Independent Auditor and the Objectives of the Independent Auditor and the Objectives of the Independent Auditor and the

Conduct of an Audit in Accordance with Conduct of an Audit in Accordance with Conduct of an Audit in Accordance with Conduct of an Audit in Accordance with

Standards on Standards on Standards on Standards on Auditing”Auditing”Auditing”Auditing”

� Auditor needs to obtain reasonable assurance to Auditor needs to obtain reasonable assurance to Auditor needs to obtain reasonable assurance to Auditor needs to obtain reasonable assurance to

state:state:state:state:

�WWWWhether hether hether hether an adequate IFC system was an adequate IFC system was an adequate IFC system was an adequate IFC system was maintainedmaintainedmaintainedmaintained &&&&

�WWWWhether hether hether hether such IFC system such IFC system such IFC system such IFC system operated effectively operated effectively operated effectively operated effectively in in in in co. co. co. co.

in all material respects with respect to financial in all material respects with respect to financial in all material respects with respect to financial in all material respects with respect to financial

reporting only.reporting only.reporting only.reporting only.

Lunawat & Co.


� “IFC over “IFC over “IFC over “IFC over Financial Financial Financial Financial RRRReportingeportingeportingeporting” shall mean ” shall mean ” shall mean ” shall mean

� ““““A process designed to provide reasonable A process designed to provide reasonable A process designed to provide reasonable A process designed to provide reasonable

assurance regarding the reliability of financial assurance regarding the reliability of financial assurance regarding the reliability of financial assurance regarding the reliability of financial

reporting and the preparation of financial reporting and the preparation of financial reporting and the preparation of financial reporting and the preparation of financial

statements for external purposes in accordance with statements for external purposes in accordance with statements for external purposes in accordance with statements for external purposes in accordance with

generally accepted accounting principles. generally accepted accounting principles. generally accepted accounting principles. generally accepted accounting principles.

� A A A A company's company's company's company's IFC IFC IFC IFC over financial reporting includes over financial reporting includes over financial reporting includes over financial reporting includes

those policies and procedures those policies and procedures those policies and procedures those policies and procedures that:that:that:that:

1.1.1.1. PPPPertain ertain ertain ertain to the maintenance of records that, in to the maintenance of records that, in to the maintenance of records that, in to the maintenance of records that, in

reasonable detail, accurately and fairly reflect reasonable detail, accurately and fairly reflect reasonable detail, accurately and fairly reflect reasonable detail, accurately and fairly reflect

the transactions and dispositions of the assets the transactions and dispositions of the assets the transactions and dispositions of the assets the transactions and dispositions of the assets

of the companyof the companyof the companyof the company;;;;

Lunawat & Co.


2.2.2.2. Provide reasonable assurance that transactions Provide reasonable assurance that transactions Provide reasonable assurance that transactions Provide reasonable assurance that transactions

are recorded as necessary to permit preparation of are recorded as necessary to permit preparation of are recorded as necessary to permit preparation of are recorded as necessary to permit preparation of

financial statements in accordance with generally financial statements in accordance with generally financial statements in accordance with generally financial statements in accordance with generally

accepted accounting principles, and that receipts accepted accounting principles, and that receipts accepted accounting principles, and that receipts accepted accounting principles, and that receipts

and expenditures of the company are being made and expenditures of the company are being made and expenditures of the company are being made and expenditures of the company are being made

only in accordance with authorisations of only in accordance with authorisations of only in accordance with authorisations of only in accordance with authorisations of

management and directors of the company; andmanagement and directors of the company; andmanagement and directors of the company; andmanagement and directors of the company; and

3.3.3.3. Provide Provide Provide Provide reasonable assurance regarding reasonable assurance regarding reasonable assurance regarding reasonable assurance regarding

prevention or timely detection of unauthorised prevention or timely detection of unauthorised prevention or timely detection of unauthorised prevention or timely detection of unauthorised

acquisition, use, or disposition of the company's acquisition, use, or disposition of the company's acquisition, use, or disposition of the company's acquisition, use, or disposition of the company's

assets that could have a material effect on the assets that could have a material effect on the assets that could have a material effect on the assets that could have a material effect on the

financial statementsfinancial statementsfinancial statementsfinancial statements.

Lunawat & Co.

Lunawat & Co.

ICFRICFRICFRICFR

Maintenance Maintenance Maintenance Maintenance of Financial of Financial of Financial of Financial Records Records Records Records (Details / (Details / (Details / (Details / Accuracy)Accuracy)Accuracy)Accuracy)

Authorization Authorization Authorization Authorization of Transactions of Transactions of Transactions of Transactions (As per GAAP)(As per GAAP)(As per GAAP)(As per GAAP)

Safeguarding Safeguarding Safeguarding Safeguarding of assets of of assets of of assets of of assets of companycompanycompanycompany

ICFRICFRICFRICFR –––– AUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENTAUDITOR’S REQUIREMENT

� Auditor should report if company Auditor should report if company Auditor should report if company Auditor should report if company has:has:has:has:

� adequate adequate adequate adequate internal control systems in internal control systems in internal control systems in internal control systems in place; andplace; andplace; andplace; and

�whether whether whether whether they were operating effectively they were operating effectively they were operating effectively they were operating effectively asasasas at at at at

balance sheet date.balance sheet date.balance sheet date.balance sheet date.

� Not applicable on interim financial statements, Not applicable on interim financial statements, Not applicable on interim financial statements, Not applicable on interim financial statements,

such as quarterly or halfsuch as quarterly or halfsuch as quarterly or halfsuch as quarterly or half----yearly financial yearly financial yearly financial yearly financial

statements, unless such reporting is required statements, unless such reporting is required statements, unless such reporting is required statements, unless such reporting is required

under any other law or under any other law or under any other law or under any other law or regulationregulationregulationregulation

� Should use a topShould use a topShould use a topShould use a top----down approach to select the down approach to select the down approach to select the down approach to select the

controls to controls to controls to controls to test. It is not test. It is not test. It is not test. It is not necessarily necessarily necessarily necessarily the order the order the order the order in in in in

which which which which auditor auditor auditor auditor will perform will perform will perform will perform auditing auditing auditing auditing proceduresproceduresproceduresprocedures.

Lunawat & Co.

TOPTOPTOPTOP----DOWN APPROACHDOWN APPROACHDOWN APPROACHDOWN APPROACHLunawat & Co.

Internal Financial Control FrameworkInternal Financial Control FrameworkInternal Financial Control FrameworkInternal Financial Control Framework

Financial ReportingFinancial ReportingFinancial ReportingFinancial Reporting

FS ASSERTIONSFS ASSERTIONSFS ASSERTIONSFS ASSERTIONS (Completeness, Existence or (Completeness, Existence or (Completeness, Existence or (Completeness, Existence or Occurrence, Rights & Obligations, Valuations Occurrence, Rights & Obligations, Valuations Occurrence, Rights & Obligations, Valuations Occurrence, Rights & Obligations, Valuations

Presentation & Disclosure) Presentation & Disclosure) Presentation & Disclosure) Presentation & Disclosure) & & & & CONTROLSCONTROLSCONTROLSCONTROLS (Authorisation, (Authorisation, (Authorisation, (Authorisation, Safeguarding of Assets & Maintenance of Records)Safeguarding of Assets & Maintenance of Records)Safeguarding of Assets & Maintenance of Records)Safeguarding of Assets & Maintenance of Records)

Business CyclesBusiness CyclesBusiness CyclesBusiness Cycles

SubSubSubSub---- processesprocessesprocessesprocesses

ObjectivesObjectivesObjectivesObjectives

ActivitiesActivitiesActivitiesActivities

ICFR AUDIT ICFR AUDIT ICFR AUDIT ICFR AUDIT –––– ICAIICAIICAIICAI GUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTEGUIDANCE NOTELunawat & Co.

PlanningPlanningPlanningPlanning 1.1.1.1. Identify significant account balances / disclosure itemsIdentify significant account balances / disclosure itemsIdentify significant account balances / disclosure itemsIdentify significant account balances / disclosure items

2.2.2.2. Identify & understand significant flows of transactionsIdentify & understand significant flows of transactionsIdentify & understand significant flows of transactionsIdentify & understand significant flows of transactions

3.3.3.3. Identify risk of material misstatementsIdentify risk of material misstatementsIdentify risk of material misstatementsIdentify risk of material misstatements

4.4.4.4. IdentifyIdentifyIdentifyIdentify controls which address risk of material misstatementscontrols which address risk of material misstatementscontrols which address risk of material misstatementscontrols which address risk of material misstatements

5.5.5.5. Identify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGCIdentify applications, associated IT environment, ITGC

Design & Design & Design & Design &

ImplementImplementImplementImplement

ationationationation

6.6.6.6. Assess the design of controlsAssess the design of controlsAssess the design of controlsAssess the design of controls

7.7.7.7. AssessAssessAssessAssess the implementation of controlsthe implementation of controlsthe implementation of controlsthe implementation of controls

Appropriate design & implementation controlsAppropriate design & implementation controlsAppropriate design & implementation controlsAppropriate design & implementation controls

8.8.8.8. Assess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable proceduresAssess audit impact & plan other suitable procedures

9.9.9.9. Plan operative effectiveness testingPlan operative effectiveness testingPlan operative effectiveness testingPlan operative effectiveness testing

Operating Operating Operating Operating

EffectiveneEffectiveneEffectiveneEffectivene

ssssssss

10.10.10.10. Plan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectivenessPlan nature, timing & extent of testing operating effectiveness

11.11.11.11. Perform operative effectiveness testingPerform operative effectiveness testingPerform operative effectiveness testingPerform operative effectiveness testing

12.12.12.12. Assess findings & conclude on effective effectivenessAssess findings & conclude on effective effectivenessAssess findings & conclude on effective effectivenessAssess findings & conclude on effective effectiveness

13.13.13.13. Form opinion on IFCForm opinion on IFCForm opinion on IFCForm opinion on IFC

ReportingReportingReportingReporting 14.14.14.14. Assess impact on Audit OpinionAssess impact on Audit OpinionAssess impact on Audit OpinionAssess impact on Audit Opinion

15.15.15.15. Form audit opinion on financial statementsForm audit opinion on financial statementsForm audit opinion on financial statementsForm audit opinion on financial statements

Prepare and control audit documentationPrepare and control audit documentationPrepare and control audit documentationPrepare and control audit documentation

ContinuousContinuousContinuousContinuous focus on audit qualityfocus on audit qualityfocus on audit qualityfocus on audit quality

COMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLCOMPONENTS OF INTERNAL CONTROLLunawat & Co.

COMPONENTS OF INTERNAL CONTROL COMPONENTS OF INTERNAL CONTROL COMPONENTS OF INTERNAL CONTROL COMPONENTS OF INTERNAL CONTROL –––– SA 315SA 315SA 315SA 315Lunawat & Co.

S. No.S. No.S. No.S. No. ComponentComponentComponentComponent ElementsElementsElementsElements

1111 Control Control Control Control

EnvironmentEnvironmentEnvironmentEnvironment

1.1.1.1. Communication and enforcement of integrity and Communication and enforcement of integrity and Communication and enforcement of integrity and Communication and enforcement of integrity and

ethical Valuesethical Valuesethical Valuesethical Values

2.2.2.2. Commitment to competenceCommitment to competenceCommitment to competenceCommitment to competence

3.3.3.3. Participation by those charged with governanceParticipation by those charged with governanceParticipation by those charged with governanceParticipation by those charged with governance

4.4.4.4. Management’s philosophy and operating styleManagement’s philosophy and operating styleManagement’s philosophy and operating styleManagement’s philosophy and operating style

5.5.5.5. Organisational structureOrganisational structureOrganisational structureOrganisational structure

6.6.6.6. Assignment of authority and responsibilityAssignment of authority and responsibilityAssignment of authority and responsibilityAssignment of authority and responsibility

7.7.7.7. Human resource policies and practicesHuman resource policies and practicesHuman resource policies and practicesHuman resource policies and practices

2222 Entity’s Risk Entity’s Risk Entity’s Risk Entity’s Risk

Assessment Assessment Assessment Assessment

ProcessProcessProcessProcess

1.1.1.1. Management identification of business risks Management identification of business risks Management identification of business risks Management identification of business risks

relevant to the preparation of financial relevant to the preparation of financial relevant to the preparation of financial relevant to the preparation of financial

statementsstatementsstatementsstatements

2.2.2.2. External and internal events, transactions or External and internal events, transactions or External and internal events, transactions or External and internal events, transactions or

circumstances that may occur and adversely circumstances that may occur and adversely circumstances that may occur and adversely circumstances that may occur and adversely

affect an entity’s ability to initiate, record, affect an entity’s ability to initiate, record, affect an entity’s ability to initiate, record, affect an entity’s ability to initiate, record,

process, and report financial data consistent with process, and report financial data consistent with process, and report financial data consistent with process, and report financial data consistent with

the assertions of management in the financial the assertions of management in the financial the assertions of management in the financial the assertions of management in the financial




3333 ControlControlControlControl

ActivitiesActivitiesActivitiesActivities

1.1.1.1. Performance reviewsPerformance reviewsPerformance reviewsPerformance reviews

2.2.2.2. Information processingInformation processingInformation processingInformation processing

3.3.3.3. Physical controlsPhysical controlsPhysical controlsPhysical controls

4.4.4.4. Segregation of dutiesSegregation of dutiesSegregation of dutiesSegregation of duties

5.5.5.5. Authorisation controlsAuthorisation controlsAuthorisation controlsAuthorisation controls

4444 Information Information Information Information

System and System and System and System and

CommunicationCommunicationCommunicationCommunication

1.1.1.1. Information system that:Information system that:Information system that:Information system that:1.1.1.1. Identify and record all valid transactionsIdentify and record all valid transactionsIdentify and record all valid transactionsIdentify and record all valid transactions

2.2.2.2. Describe on timely basis transactions in sufficient Describe on timely basis transactions in sufficient Describe on timely basis transactions in sufficient Describe on timely basis transactions in sufficient

detail to permit proper classification of transactions detail to permit proper classification of transactions detail to permit proper classification of transactions detail to permit proper classification of transactions

for financial reportingfor financial reportingfor financial reportingfor financial reporting

3.3.3.3. Measure value of transactions in a manner that Measure value of transactions in a manner that Measure value of transactions in a manner that Measure value of transactions in a manner that

permits recording their proper monetary value in permits recording their proper monetary value in permits recording their proper monetary value in permits recording their proper monetary value in

financial Statements financial Statements financial Statements financial Statements

4.4.4.4. Determine time period in which transactions Determine time period in which transactions Determine time period in which transactions Determine time period in which transactions

occurred to permit recording of transactions in occurred to permit recording of transactions in occurred to permit recording of transactions in occurred to permit recording of transactions in

proper accounting Period proper accounting Period proper accounting Period proper accounting Period

5.5.5.5. Present properly transactions and related disclosures Present properly transactions and related disclosures Present properly transactions and related disclosures Present properly transactions and related disclosures

in financial statementsin financial statementsin financial statementsin financial statements



4444 Information Information Information Information

System and System and System and System and

CommunicationCommunicationCommunicationCommunication

2.2.2.2. Communicating individual roles and Communicating individual roles and Communicating individual roles and Communicating individual roles and

responsibilitiesresponsibilitiesresponsibilitiesresponsibilities

5555 Monitoring of Monitoring of Monitoring of Monitoring of

ControlsControlsControlsControls

1.1.1.1. Evaluating presence and functioning of Evaluating presence and functioning of Evaluating presence and functioning of Evaluating presence and functioning of

components of internal control.components of internal control.components of internal control.components of internal control.

2.2.2.2. Evaluating and communicating internal Evaluating and communicating internal Evaluating and communicating internal Evaluating and communicating internal

control deficienciescontrol deficienciescontrol deficienciescontrol deficiencies.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING�Take Engagement LetterTake Engagement LetterTake Engagement LetterTake Engagement Letter

�Perform proceduresPerform proceduresPerform proceduresPerform procedures

�Take Representation LetterTake Representation LetterTake Representation LetterTake Representation Letter

�Issue Separate ReportIssue Separate ReportIssue Separate ReportIssue Separate Report

�UnmodifiedUnmodifiedUnmodifiedUnmodified

�ModifiedModifiedModifiedModified

�QualifiedQualifiedQualifiedQualified

�AdverseAdverseAdverseAdverse

�DisclaimerDisclaimerDisclaimerDisclaimer

Lunawat & Co.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING�QQQQualified ualified ualified ualified or an or an or an or an adverse opinion if adverse opinion if adverse opinion if adverse opinion if material material material material weaknesses weaknesses weaknesses weaknesses identified as identified as identified as identified as part of audit. part of audit. part of audit. part of audit.

�Material Material Material Material weaknesses is a deficiency or a weaknesses is a deficiency or a weaknesses is a deficiency or a weaknesses is a deficiency or a combination of combination of combination of combination of deficiencies deficiencies deficiencies deficiencies in in in in ICFR, ICFR, ICFR, ICFR, such such such such that material misstatement of co.’s annual that material misstatement of co.’s annual that material misstatement of co.’s annual that material misstatement of co.’s annual FS FS FS FS not prevented/detected on timely not prevented/detected on timely not prevented/detected on timely not prevented/detected on timely basisbasisbasisbasis

�Adverse Adverse Adverse Adverse opinion opinion opinion opinion ---- if matters are pervasive if matters are pervasive if matters are pervasive if matters are pervasive to to to to FS FS FS FS i.e. they impact various elements, i.e. they impact various elements, i.e. they impact various elements, i.e. they impact various elements, accounts or a substantial portion of FS. accounts or a substantial portion of FS. accounts or a substantial portion of FS. accounts or a substantial portion of FS. Additionally, significant control Additionally, significant control Additionally, significant control Additionally, significant control deficiencies reported to audit committeedeficiencies reported to audit committeedeficiencies reported to audit committeedeficiencies reported to audit committee

Lunawat & Co.

ICFR REPORTINGICFR REPORTINGICFR REPORTINGICFR REPORTING�Auditor to disclaim opinion Auditor to disclaim opinion Auditor to disclaim opinion Auditor to disclaim opinion on on on on co.’s ICFR:co.’s ICFR:co.’s ICFR:co.’s ICFR:

� if if if if company has not established its system of IFC over company has not established its system of IFC over company has not established its system of IFC over company has not established its system of IFC over

financial reporting considering essential financial reporting considering essential financial reporting considering essential financial reporting considering essential

components of internal control ; components of internal control ; components of internal control ; components of internal control ; orororor

� auditor is unable to obtain sufficient appropriate auditor is unable to obtain sufficient appropriate auditor is unable to obtain sufficient appropriate auditor is unable to obtain sufficient appropriate

audit evidence to express an opinion audit evidence to express an opinion audit evidence to express an opinion audit evidence to express an opinion on ICFR but on ICFR but on ICFR but on ICFR but is is is is

able to perform appropriate substantive procedures able to perform appropriate substantive procedures able to perform appropriate substantive procedures able to perform appropriate substantive procedures

to express an opinion on to express an opinion on to express an opinion on to express an opinion on FS; FS; FS; FS; orororor

� system of system of system of system of ICFR were ICFR were ICFR were ICFR were not made available to not made available to not made available to not made available to auditor auditor auditor auditor to to to to

enable enable enable enable them them them them to determine if to determine if to determine if to determine if Co. has Co. has Co. has Co. has established established established established

adequate adequate adequate adequate ICFR ICFR ICFR ICFR and whether such internal financial and whether such internal financial and whether such internal financial and whether such internal financial

controls were operating effectively controls were operating effectively controls were operating effectively controls were operating effectively

Lunawat & Co.

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- QUALIFIEDQUALIFIEDQUALIFIEDQUALIFIEDLunawat & Co.

Due to Due to Due to Due to adequacy adequacy adequacy adequacy

(and therefore (and therefore (and therefore (and therefore

operating operating operating operating

effectiveness)effectiveness)effectiveness)effectiveness)

• The Company The Company The Company The Company did not have an appropriate did not have an appropriate did not have an appropriate did not have an appropriate

internal control system internal control system internal control system internal control system for customer acceptance, for customer acceptance, for customer acceptance, for customer acceptance,

credit evaluation and establishing customer credit evaluation and establishing customer credit evaluation and establishing customer credit evaluation and establishing customer

credit limits for sales, which could potentially credit limits for sales, which could potentially credit limits for sales, which could potentially credit limits for sales, which could potentially

result in the Company recognising revenue result in the Company recognising revenue result in the Company recognising revenue result in the Company recognising revenue

without establishing reasonable certainty of without establishing reasonable certainty of without establishing reasonable certainty of without establishing reasonable certainty of

ultimate collectionultimate collectionultimate collectionultimate collection

• ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the

material weakness/material weakness/material weakness/material weakness/eseseses described above on the described above on the described above on the described above on the

achievement of the objectives of the control achievement of the objectives of the control achievement of the objectives of the control achievement of the objectives of the control

criteria, criteria, criteria, criteria, the Company has maintained, in all the Company has maintained, in all the Company has maintained, in all the Company has maintained, in all

material respects, adequate internal financial material respects, adequate internal financial material respects, adequate internal financial material respects, adequate internal financial

controls over financial reporting as on..controls over financial reporting as on..controls over financial reporting as on..controls over financial reporting as on..

• …these material weakness/…these material weakness/…these material weakness/…these material weakness/eseseses do not affect our do not affect our do not affect our do not affect our

opinion on the standalone financial statements opinion on the standalone financial statements opinion on the standalone financial statements opinion on the standalone financial statements

of the Companyof the Companyof the Companyof the Company

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- ADVERSEADVERSEADVERSEADVERSELunawat & Co.

Due to Due to Due to Due to adequacy adequacy adequacy adequacy

(and therefore (and therefore (and therefore (and therefore


effectiveness)effectiveness)effectiveness)effectiveness)


internal control system internal control system internal control system internal control system for customer acceptance, for customer acceptance, for customer acceptance, for customer acceptance,

credit evaluation and …...credit evaluation and …...credit evaluation and …...credit evaluation and …...


internal control system for inventory internal control system for inventory internal control system for inventory internal control system for inventory with regard with regard with regard with regard

to receipts, issue for production and physical to receipts, issue for production and physical to receipts, issue for production and physical to receipts, issue for production and physical

verification. Further, the internal control system verification. Further, the internal control system verification. Further, the internal control system verification. Further, the internal control system

for identification and allocation of overheads to for identification and allocation of overheads to for identification and allocation of overheads to for identification and allocation of overheads to

inventory was also not adequate. These could inventory was also not adequate. These could inventory was also not adequate. These could inventory was also not adequate. These could

potentially result in material misstatements in potentially result in material misstatements in potentially result in material misstatements in potentially result in material misstatements in

the Company’s trade payables, consumption, the Company’s trade payables, consumption, the Company’s trade payables, consumption, the Company’s trade payables, consumption,

inventory and expense account balances.inventory and expense account balances.inventory and expense account balances.inventory and expense account balances.

• …the Company …the Company …the Company …the Company has not maintained adequate has not maintained adequate has not maintained adequate has not maintained adequate

internal financial controls internal financial controls internal financial controls internal financial controls over financial reportingover financial reportingover financial reportingover financial reporting


opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the

CompanyCompanyCompanyCompany

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- QUALIFIEDQUALIFIEDQUALIFIEDQUALIFIEDLunawat & Co.

Qualified Qualified Qualified Qualified ---- Due to Due to Due to Due to


effectivenesseffectivenesseffectivenesseffectiveness

Unmodified Unmodified Unmodified Unmodified –––– On On On On

AdequacyAdequacyAdequacyAdequacy

• The Company’s The Company’s The Company’s The Company’s internal financial controls over internal financial controls over internal financial controls over internal financial controls over

customer acceptancecustomer acceptancecustomer acceptancecustomer acceptance, credit evaluation and , credit evaluation and , credit evaluation and , credit evaluation and

establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales,

were not operating effectively were not operating effectively were not operating effectively were not operating effectively which could which could which could which could

potentially result in the Company recognising potentially result in the Company recognising potentially result in the Company recognising potentially result in the Company recognising

revenue without establishing reasonable revenue without establishing reasonable revenue without establishing reasonable revenue without establishing reasonable

certainty of ultimate collectioncertainty of ultimate collectioncertainty of ultimate collectioncertainty of ultimate collection

• ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the ..except for the effects/possible effects of the

material weakness/material weakness/material weakness/material weakness/eseseses described above on the described above on the described above on the described above on the


criteria, criteria, criteria, criteria, the Company’s internal financial controls the Company’s internal financial controls the Company’s internal financial controls the Company’s internal financial controls

over financial reporting were operating over financial reporting were operating over financial reporting were operating over financial reporting were operating

effectively as on..effectively as on..effectively as on..effectively as on..



of the Companyof the Companyof the Companyof the Company


Due to Due to Due to Due to operating operating operating operating

effectivenesseffectivenesseffectivenesseffectiveness

Unmodified Unmodified Unmodified Unmodified –––– On On On On

AdequacyAdequacyAdequacyAdequacy

• The Company’s The Company’s The Company’s The Company’s internal financial controls over internal financial controls over internal financial controls over internal financial controls over

customer acceptancecustomer acceptancecustomer acceptancecustomer acceptance, credit evaluation and , credit evaluation and , credit evaluation and , credit evaluation and

establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales, establishing customer credit limits for sales,

were not operating effectively were not operating effectively were not operating effectively were not operating effectively which could which could which could which could

potentially result in the Company ….potentially result in the Company ….potentially result in the Company ….potentially result in the Company ….

• The Company’s The Company’s The Company’s The Company’s internal control system internal control system internal control system internal control system for for for for

inventory with regard to receipts, issue for inventory with regard to receipts, issue for inventory with regard to receipts, issue for inventory with regard to receipts, issue for

production and physical verification production and physical verification production and physical verification production and physical verification were not were not were not were not

operating effectivelyoperating effectivelyoperating effectivelyoperating effectively. Further, the internal control . Further, the internal control . Further, the internal control . Further, the internal control

system for identification and allocation of system for identification and allocation of system for identification and allocation of system for identification and allocation of

overheads to inventory overheads to inventory overheads to inventory overheads to inventory was also not operating was also not operating was also not operating was also not operating

effectively.effectively.effectively.effectively. These could potentially result ….These could potentially result ….These could potentially result ….These could potentially result ….

• …Company’s internal financial controls over …Company’s internal financial controls over …Company’s internal financial controls over …Company’s internal financial controls over

financial reporting financial reporting financial reporting financial reporting were not operating effectively were not operating effectively were not operating effectively were not operating effectively


opinion on the financial statements of Companyopinion on the financial statements of Companyopinion on the financial statements of Companyopinion on the financial statements of Company


Due to Due to Due to Due to ---- Essential Essential Essential Essential

components of components of components of components of

internal controls internal controls internal controls internal controls

not adequately not adequately not adequately not adequately

consideredconsideredconsideredconsidered

in the internal in the internal in the internal in the internal

financial controls financial controls financial controls financial controls

established by the established by the established by the established by the

companycompanycompanycompany


internal financial control system over financial internal financial control system over financial internal financial control system over financial internal financial control system over financial

reporting reporting reporting reporting since the internal controls adopted by since the internal controls adopted by since the internal controls adopted by since the internal controls adopted by

the Company did the Company did the Company did the Company did not adequately consider risk not adequately consider risk not adequately consider risk not adequately consider risk

assessment, assessment, assessment, assessment, which is one of the essential which is one of the essential which is one of the essential which is one of the essential

components of internal control, with regard to components of internal control, with regard to components of internal control, with regard to components of internal control, with regard to

the potential for fraud when performing risk the potential for fraud when performing risk the potential for fraud when performing risk the potential for fraud when performing risk

assessmentassessmentassessmentassessment

• …the Company …the Company …the Company …the Company has not maintained adequate has not maintained adequate has not maintained adequate has not maintained adequate

and effective internal financial controls over and effective internal financial controls over and effective internal financial controls over and effective internal financial controls over

financial reportingfinancial reportingfinancial reportingfinancial reporting as on..as on..as on..as on..

• …these material weaknesses …these material weaknesses …these material weaknesses …these material weaknesses do not affect our do not affect our do not affect our do not affect our

opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the opinion on the financial statements of the

CompanyCompanyCompanyCompany


Resulting in Resulting in Resulting in Resulting in

modified opinion modified opinion modified opinion modified opinion

of standalone of standalone of standalone of standalone

financial financial financial financial


• The Company The Company The Company The Company did not have appropriate internal did not have appropriate internal did not have appropriate internal did not have appropriate internal

controls for reconciliation of physically inventory controls for reconciliation of physically inventory controls for reconciliation of physically inventory controls for reconciliation of physically inventory

with the inventory records, which has resulted in with the inventory records, which has resulted in with the inventory records, which has resulted in with the inventory records, which has resulted in

misstatement of inventory values in the books of misstatement of inventory values in the books of misstatement of inventory values in the books of misstatement of inventory values in the books of

account.…account.…account.…account.…

• because of the effect of the material because of the effect of the material because of the effect of the material because of the effect of the material

weaknesses described above on the weaknesses described above on the weaknesses described above on the weaknesses described above on the


criteria, the Company criteria, the Company criteria, the Company criteria, the Company has not maintained has not maintained has not maintained has not maintained

adequate and effective internal financial controls adequate and effective internal financial controls adequate and effective internal financial controls adequate and effective internal financial controls

over financial reporting as of..over financial reporting as of..over financial reporting as of..over financial reporting as of..

• …these material weakness/…these material weakness/…these material weakness/…these material weakness/eseseses has affected our has affected our has affected our has affected our


of the Company and we have issued a qualified of the Company and we have issued a qualified of the Company and we have issued a qualified of the Company and we have issued a qualified

(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion(/ adverse / disclaimer of) opinion on the on the on the on the

standalone financial statements.standalone financial statements.standalone financial statements.standalone financial statements.

ICFR REPORTING ICFR REPORTING ICFR REPORTING ICFR REPORTING ---- DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMERLunawat & Co.

Due to Due to Due to Due to ----

Framework for Framework for Framework for Framework for

internal financial internal financial internal financial internal financial

control over control over control over control over

financial reporting financial reporting financial reporting financial reporting

notnotnotnot

established but established but established but established but

does not impact does not impact does not impact does not impact

the audit opinion the audit opinion the audit opinion the audit opinion

on financial on financial on financial on financial


• the Company the Company the Company the Company has not established its internal has not established its internal has not established its internal has not established its internal

financial control over financial reporting on financial control over financial reporting on financial control over financial reporting on financial control over financial reporting on

criteria based on or considering the essential criteria based on or considering the essential criteria based on or considering the essential criteria based on or considering the essential

components components components components of internal control stated in the of internal control stated in the of internal control stated in the of internal control stated in the

Guidance Note on Audit of Guidance Note on Audit of Guidance Note on Audit of Guidance Note on Audit of IFCoFRIFCoFRIFCoFRIFCoFR issued by the issued by the issued by the issued by the

ICAI. Because of this reason, ICAI. Because of this reason, ICAI. Because of this reason, ICAI. Because of this reason, we are unable to we are unable to we are unable to we are unable to

obtain sufficient appropriate audit evidence to obtain sufficient appropriate audit evidence to obtain sufficient appropriate audit evidence to obtain sufficient appropriate audit evidence to

provide a basis for our opinion provide a basis for our opinion provide a basis for our opinion provide a basis for our opinion whether the whether the whether the whether the

Company had adequate internal financial Company had adequate internal financial Company had adequate internal financial Company had adequate internal financial

controls over financial reporting and whether controls over financial reporting and whether controls over financial reporting and whether controls over financial reporting and whether

such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating

effectively as at…effectively as at…effectively as at…effectively as at…

• …the …the …the …the disclaimer does not disclaimer does not disclaimer does not disclaimer does not affect affect affect affect our opinion on our opinion on our opinion on our opinion on

the financial statements of the Companythe financial statements of the Companythe financial statements of the Companythe financial statements of the Company


Due to Due to Due to Due to ----Auditor Auditor Auditor Auditor

unable to obtain unable to obtain unable to obtain unable to obtain

sufficient sufficient sufficient sufficient

appropriate audit appropriate audit appropriate audit appropriate audit

evidence onevidence onevidence onevidence on


controls over controls over controls over controls over


but does not but does not but does not but does not

impact auditimpact auditimpact auditimpact audit

opinion on the opinion on the opinion on the opinion on the



• The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over

financial reporting with regard to financial reporting with regard to financial reporting with regard to financial reporting with regard to one of the one of the one of the one of the

significant branches of the Company at _____ significant branches of the Company at _____ significant branches of the Company at _____ significant branches of the Company at _____

were not made available to us were not made available to us were not made available to us were not made available to us to enable us to to enable us to to enable us to to enable us to

determine if the Company has established determine if the Company has established determine if the Company has established determine if the Company has established

adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial

reporting at the aforesaid branch and whether reporting at the aforesaid branch and whether reporting at the aforesaid branch and whether reporting at the aforesaid branch and whether

such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating such internal financial controls were operating

effectively as at…effectively as at…effectively as at…effectively as at…

• …the …the …the …the disclaimer does not disclaimer does not disclaimer does not disclaimer does not affect affect affect affect our opinion on our opinion on our opinion on our opinion on

the financial statements of the Companythe financial statements of the Companythe financial statements of the Companythe financial statements of the Company


Due to Due to Due to Due to ----Auditor Auditor Auditor Auditor

unable to obtain unable to obtain unable to obtain unable to obtain

sufficient sufficient sufficient sufficient

appropriate audit appropriate audit appropriate audit appropriate audit

evidence onevidence onevidence onevidence on


controls over controls over controls over controls over


and impacting and impacting and impacting and impacting

auditauditauditaudit

opinion on the opinion on the opinion on the opinion on the



• The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over The system of internal financial controls over

financial reporting with regard to financial reporting with regard to financial reporting with regard to financial reporting with regard to the Company the Company the Company the Company

were not made available to us were not made available to us were not made available to us were not made available to us to enable us to to enable us to to enable us to to enable us to

determine if the Company has established determine if the Company has established determine if the Company has established determine if the Company has established

adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial adequate internal financial control over financial

reporting and whether such internal financial reporting and whether such internal financial reporting and whether such internal financial reporting and whether such internal financial

controls were operating effectively as at…controls were operating effectively as at…controls were operating effectively as at…controls were operating effectively as at…

• … the disclaimer has affected our opinion on the … the disclaimer has affected our opinion on the … the disclaimer has affected our opinion on the … the disclaimer has affected our opinion on the

financial statements of the standalone Company financial statements of the standalone Company financial statements of the standalone Company financial statements of the standalone Company

and and and and we have issued a qualified (/ adverse / we have issued a qualified (/ adverse / we have issued a qualified (/ adverse / we have issued a qualified (/ adverse /

disclaimer of) opinion ondisclaimer of) opinion ondisclaimer of) opinion ondisclaimer of) opinion on the financial the financial the financial the financial

statements.statements.statements.statements.

Lunawat & Co.

CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod [email protected]@[email protected]@lunawat.com

+91 9811073867+91 9811073867+91 9811073867+91 9811073867

© 2016 CA. Pramod Jain, Lunawat & Co© 2016 CA. Pramod Jain, Lunawat & Co© 2016 CA. Pramod Jain, Lunawat & Co© 2016 CA. Pramod Jain, Lunawat & Co

Caro 2016 and Internal Financial Controls

Business

Transcript of Caro 2016 and Internal Financial Controls