Applicability of CARO 2004 for Private limited Cos

A pvt. ltd. company is facing losses since 2005 & fulfills all the 3 conditions of non applicability of CARO.

I have to prepare its return from FY2005-06.

Can u please tellme applicability of CARO or MAOCARO?????

IF COMPANY IS PVT LTD & FOLLOWING IS THE STATUS OF COMPANY

1.PAID UP CAPITAL OF RS 19566460

2.LOAN OUTSTANDING OF RS 192590000

3.TURNOVER RS NIL

PLZ TELL ME THE CARO IS APPLICABLE OR NOT AND HOW ?

if any condition does not fulfill then CARO will be applicable

Originally posted by : Nishana
	What is the definition for reserves in CARO? whether free reserves are to be included with this?

Reserves include capital and revenue resreves. Revaluation reserves, if any also include in the reserves. If Debit balance in p&l a/c is to reduce from only revenue reserves. The Credit balance in p&l a/c can also be considered as the part of reserves since the balance in p&l a/c is available for declaration of dividend.

The Order also exempts from its application a private limited company which fulfils all the following conditions throughout the reporting period covered by the audit report:

(i) its paid-up capital and reserves are rupees fifty lakh or less;
(ii) its outstanding loan from any bank or financial institution are rupees twenty five lakh or less; and
(iii) its turnover does not exceed rupees five crore.

14. A private limited company, in order to be exempt from the applicability of the Order, must satisfy all the conditions mentioned above cumulatively. In other words, even if one of the conditions is not satisfied, a private limited company’s auditor has to report on the matters specified in the Order

Originally posted by : Srinivas
	Hi shekar: Thanks for your reply, let me be clear, if company has - paidup capital - Rs.50 lacs - turnover - Rs.25 crores - loans from bankers - NIL is CARO applicable for this private limited company?

You have described all the conditions of CARO Non Applicability and u say that At least one Condition should be fulfiled for CARO. according to this, in this qus CARO should be applicable because it fulfil one Condition out of them that is turnover should exceed 5 crore for CARO Applicability. May i Right??

This should be interpreted as below.

CARO wll be applicable in following cases to private company.

1.Paid up capital+resvs>50 Lacs OR

2.Loan o/s from bank/financial institution>25 Lacs OR

3.Turnover>5 crores.

Applicability OF CARO (Companies Auditor Report Order)

The Order applies to all companies except certain categories of companies specifically exempted from the application of the order. The order also applies to foreign companies as defined in section 591 of the act the order is also applicable to the audits of branch(es) of a company under the act.

Companies not covered by the order

The order provides that it shall not apply to:

1. A banking company

2. An insurance company

3. A company licensed to operate under section 25 of the companies act 1956

4. The order also exempts from its application a private limited company which fulfills all the following conditions:

· Its paid-up capital and reserves are rupees fifty lakhs or less;

· It has no outstanding loan exceeding rupees twenty five lakhs from any or financial institution; and

· Its turnover does not exceed rupees five crores at any point of time during the financial year.

A private limited company, in order to be exempt from the applicability of the order, must satisfy all the conditions mentioned above cumulatively. In other words, even if one of the conditions is not satisfied, a private limited company`s auditor has to report on the matters specified in the order.