What should contain in Auditor Report for one year completed Software Company. Our total turnover is 88Lakhs only? There are no fixed assets.....One of my friends told there is no applicable of "CARO". What is this? What should contain in director reports and Auditor Reports Please guide me in this regard...........
15 March 2010
CARO means Companies (Auditor's Report) Order, 2003 issued by Govt. of India and applicable to Companies. CARO deals with the matters to be included in the Auditors Report for companies. CARO is not applicable to your co. if the following conditions are satisfied:
1. Paid up capital and reserves does not exceed Rs. 50 Lakhs,
2. Co. has not accepted public deposits,
3. Co. does not have loan from bank / financial institution for Rs.10 Lakhs or more; and 4. Turnover of Co. does not exceed Rs.5 Crores. (You may download CARO from internet and please go through the provisions). As per Sec. 217 of Companies Act, 1956 in Directors Report you shall mention the following in general ; state of the Company's affairs, reserves and dividends, material changes after the BS date, energy conservation, technology absorption etc. Also please go through Companies (Disclosure of Particulars in the Report of Board of Directors)Rules,1988. In Auditors Report the auditor decides what should be included and excluded and you have no role in his report. But you shall make a reply through the Directors report about any qualifications / adverse remarks of auditor in his report. I suggest you to go through some reputed listed comapnies' annual reports (RIL, TCS, HLL etc). Since your co. is a pvt limited co., corporate governance and other listing agreement reporting need not be in your directors report.
CAclubindia
