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Caro reporting

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This query is : Resolved

CA Shashikant Lonikar (Querist)

30 September 2011 The Company sold goods to its dealer on valid orders received from the dealer. However subsequently the the few dealers returned these goods to the company. To maintain the relations with dealers company accepted the goods, however did investigation against the sales team to find out whether the sale was "Forced sale or not". Nothing could be found in the investigation. The company informed about the investigation and its results to the auditors
The auditors construed this as a fraudulent activity and reported as such in the CARO reporting.
Is it right to report this as a fraudulent activity.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

30 September 2011 If the auditor is not satisfied with the written reply of the auditee, necessarily, the auditor has to qualify the report. Whether the referred activity is a 'fraud' or not is a matter of judgement which can't be precicely answered with the given piece of information.

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