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Discussion > Audit > Stat Audit >

Applicability of caro on private company

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Posted On 18 March 2012 at 15:49 Report Abuse

 

         CARO will not be applicable if all the below conditions are satisfied together:-

  • Private limited company
  • Paid up capital & reserves is 50 lacs or less (Reserve Include Capital Reserve, Revenue Reserve, Revaluation Reserve)
  • Any debit balance of P&L a/c should be deducted from REVENUE RESERVE.
  • If there is no revenue reserve then debit balance in P&L a/c cannot be deducted from capital and any reserves.
  • Miscellaneous expenditure should not be deducted.
  • Outstanding loan from Banks or Financial Institutions is 25lacs or less
  • It includes Term loan, Demand loan, Export credit, Working capital limit, Cash credit, Overdraft facilities, Bill Purchased and Bank Guarantees.
  • Interests accrue and due should be included in loan.
  • Interests accrue but not due should not include in loan.
  • Loan may be short term or long term, secured or unsecured.
  • Loan taken from a private bank or foreign bank would also be taken in to consideration.
  • Turnover is 5 crores or less.

Turn Over- It includes sale of goods and services both and commission allowed to third parties. But it does not include                                                                                                   

  • Trade Discount
  • Sales Tax/Excise Duty
  • Sales Return

In case of where the principal business of the company is letting out of property or it is an investment company, the rent or dividend/interest would constitute turn over.

 

All the above limits will be considered at any time during the financial year covered under audit.


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