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Regarding caro topic

vamshi krishna (CA(Final)) (54 Points)

20 May 2014

Hello,

My query is regarding on CARO point

The Auditor has to report on Short term funds utilised for long term purpose and vice versa.

If a company purchases a FIxed Asset and paid out of OD bank a/c to such vendor. Can it be reported in CARO ?

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praveen (Chartered Accountant) (6971 Points)
Replied 20 May 2014

I always had that doubt as well.

But what I feel is you will have to see the source from which it is purchased. Though the payment has gone from the OD account was it that the company had requested increase in OD limit and then purchased it or whether some money came in and it was used to purchase has to be checked.

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vamshi krishna (CA(Final)) (54 Points)
Replied 22 May 2014

If they have only one bank a/c.and that is OD A/c. then can they do so? or

if they dont have long term sources they have only short term sources then can they do so?

Iam not getting clarity on this point .Please any one try to get resolve my doubt?

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 23 May 2014

Hi Vamshi,

Caro 2003 states use of Short term funds for long term Investments. I dont think fixed asset will fall under long term investments and you need not report the same.