co act checklist uk

8/3/2019 Co Act Checklist UK

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Private & Confidential

Checklist - Companies (Auditor's Report) OrdeClient:

Audit Period:

Clause No.Area/Requirement

4(i) (a) Fixed Assets

4(i) (b) Fixed Assets

4(i)( c) Fixed Assets

4(ii) (a) Inventories

4(ii) (b) Inventories

4(ii) ( c) Inventories

4(iii) (a) Loans grantedLoans taken

4(iii)(b) Loans granted

Loans taken

4(iii)( c) Loans granted or taken

4(iii) (d) Loans granted or taken

4(iv) Internal Controls

4(v)(a) & ( Register under Section 301etc.,

4(vi) Fixed Deposits

4(vii) Internal Audit

4(viii) Cost Records

4(xi) (a) & Statutory dues

4(x) Accumulated losses etc.,

4(xi) Dues to Banks & Fis etc.,4(xii) Loans and Advances granted

4(xiii)(a) Chit Fund company

4(xiii)(a) to Nidhi/mutual benefit fund/society

4(xiv) Dealing or Trading in Securities

4(xv) Guarantees

4(xvi) Term Loans

4(xvii) Funds raised

4(xviii) Allotment of shares

4(xix) Debentures

4(xx) Money raised on public issue

4(xxi) Fraud

I have staisfied myself that the above checklist

Completed by:

I have reviewed the work done by the assistant

Reviewed by:



, 2003

Guidance and Audit Procedures Conclusion

Proper records No Reportable Issues

Physical verification-FA No Reportable Issues

Disposal of Fixed Assets No Reportable Issues

Physical verification- Inv. No Reportable Issues

Procedures of Verification No Reportable Issues

Proper records of Inventory No Reportable Issues

Loans granted No Reportable IssuesLoans taken No Reportable Issues

Loans granted No Reportable Issues

Loans taken No Reportable Issues

Repayment N/A

Overdue amounts No Reportable Issues

Internal controls on purchases,sales etc., No Reportable Issues

301 Register and transactions No Reportable Issues

Public deposits No Reportable Issues

Internal Audit No Reportable Issues

Maintenance of Cost Records No Reportable Issues

Statutory dues No Reportable Issues

Losses etc., No Reportable Issues

Default in repayment of dues No Reportable IssuesLoans and Advances granted No Reportable Issues

Chit fund company No Reportable Issues

Nidhi/mutual benefit fund etc., No Reportable Issues

Dealing etc.,in Securities No Reportable Issues

Guarantees given No Reportable Issues

Utlisation of Term Loans No Reportable Issues

Utlisation of funds No Reportable Issues

Preferential allotment No Reportable Issues

Securities on Debentures No Reportable Issues

End use of monies No Reportable Issues

Fraud No Reportable Issues

Issue Sheet

has been properly completed ( refered Statement on CARO whereever relevant) and all matters requiring the atte

Date:

-in charge and have satisfied myself that the above checklist has been satisfactorily completed in line with the Stat

Date:



tion of the Audit Partner are set forth in the Issue sheet.(Refer the No. of the issue sheet).

ment on CARO issued by ICAI. Working papers were reviewed and agree with the conclusions above.



Price Waterhouse & Co

Choksey Bhargava & Co

Lovelock & Lewes

Price Waterhouse

No Reportable Issues

Refer Issue Sheet

N/A



General Instructions

1 The home page contains the detailed description of the requirements of CARO under the

2. Please select the name of the audit firm from the dropdown menu on the home page.Ple

like name of the client, audit period etc., The home page also contains affirmations as to woetc., Please fill in necessary details on completion and review of the checklist.

3. Critical matters and matters for reporting to management and other exceptions should be

Issue sheet' (last work sheet in the workbook). Issue sheet can also be accessed through th

4. Please click on the respective clause under the 'Guidance and Audit Procedures' column

for the detailed checklist containing audit steps to be performed, notes, responses and spac

for the respective clauses.The conclusion column on the home page has a drop down men

option.

5. Please complete the details as to prepared/reviewed by etc., on the individual checklist s

home page from the individual checklist sheet.

6. The Responses column contains a drop down menu with possible responses. Please sel

from the options as applicable. Create a Working paper for work done under individual clau

if any, created in MYClient in this regard. Specific representations, where required, should b

firm's standard representation letter.

7. This checklist cannot be construed as a substitute for the Statement on CARO issued by

be made to the Statement for guidance and help in specific cases.

8. The words 'Act' as used in the checklist refer to the Companies Act,1956 unless otherwis

Introduction

Applicability of the Order

1.This order applies to all the companies including-

a. Companies incorporated outside India, which established a place of business in India;

b. All the Branches of Companies (section 228 (3) (a) of the Act).

2. This order does not apply to Banking Companies, Insurance Companies,

Companies licensed to operate under section 25 of the Act and Private companies

fulfilling the following criteria-

a. having paid up capital and reserves less than Rs 50 lakhs;(beginning of the year or at anytime during the year);and

b. no deposits are accepted from the public; and

c. no outstanding loans in excess of Rs10 lakhs from banks and financial

institutions; (at anytime during the year); and

d. turnover less than Rs 5 crores ( not to exceed the limit either in the year or in the

immediately preceding year).



0



espective clauses.

se fill in other details

rk done, review made

summarised in the

e link on home page.

on the home page

e for comments, if any,

for choosing the appropriate

eets. You can get back to

ct the appropriate response

es or link to working papers,

e obtained as a part of

ICAI. Reference should

stated.



Completed by:

Date:

Reviewed by:Date:

Fixed Assets

Audit Proc Response Remarks

1. Whether records of fixed assets are

maintained showing the following

particulars:-

a).Year of acquisition

b).Sufficient description of the assets

to make identification possible.

c).Classificaton, that is, the head underwhich it is shown in accounts eg. Land,

Building, Plant and Machinery etc.

d).Location

e).Quantity,i.e number in units.

f).Original cost

g).Adjustment for revaluation or for

increase or decrease in cost consequent

on revaluation of Foreign currency Liabilities

if any.

h).Depreciation written off to date.

i).Written down value.

j)Rate of depreciation and particulars regarding amortisat

k) Particulars regarding sale, discarding, demolition, destl) Particulars of fixed assets that have been retired from a

m). Whether fixed assets as per Register/Records

agree with General Ledger balances. If not, note

the disagreements in respect of each class

of assets e.g.

- Land freehold

- Land leasehold

- Building

- Land

- Plant and Machinery

- Vehicles- Furniture and Fixtures

- Office Equipment etc.



ion and impairment

uction etc.ctive use and held for disposal.



Yes

No

N/A



Lovelock & Lewes

Price Waterhouse



Completed by:

Date:Reviewed by:

Date:

Fixed Assets


1. Has a substantial portion of fixed assets been

disposed off during the year? "Substantial" has to be

judged in the backgorund of factors such as

proportion of assets disposed off to that category of

assets and also total assets of the company in value terms

terms.

2. Determine whether such disposal affected the going concern statu

procedures such as- analysis and discussion with the

management of the significance of such assets to the

company as a whole, reading the minutes of the

meetings of the Board of directors and others to

understand the entity's future business plans, review

of the post balance sheet events to analyse the

affect of such disposal on the going concern status

of the company.

3. Consider any adverse implications on account of

the same in the main report.



s of company or not by carrying out



Completed by:Date:

Reviewed by:

Date:

Inventories


1. Has the management physically verified the

following items of inventory during the year ?

i)Finished Goods

ii) Raw Materials and Components

iii) Stores & Spares

iv) Work-in-Progressv) Maintenance Supplies

vi) Consumables and Loose Tools

vii) Packing Materials

2. Review firm's completed stock take questionnaire and conclude o

reasonable.



the effectiveness of the process and whether the frequency of such verification is





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Inventories


1 Have we observed the physical verification?

2. If so, have we completed the check list for attendance at

physical stock taking?

3. Are we satisfied that stock taking procedures were

reasonable and adequate in relation to the size of the

Company, nature of its business and volume of stock? If not,

list out the inadequacies/weaknesses observed by us.

4. In case we have not observed the physical verification, have

we studied the stock taking instructions issued by the client?

(Attach a copy where available)

5.Do these instructions cover, inter alia, the following key

control points-

-The independence of persons taking stock

- Proper stacking/arrangement of stocks to facilitate identification an-Usage of counting tags or identification marks etc in order to preven

-Control of stock taking sheets/tags (e.g. numerical sequencing) and

-Control over movement of stocks during the course of stock taking (

-Collection of cut-off details viz. last challan No., GRN No., Excise G

-Comparison of rough stock sheets with bin cards and preparation of

- Signing of stock sheets by the client’s staff (both by the counter and

-Identification of damages, obsoletes and slow moving stocks

- Proper segregation of goods invoiced and sold but yet to be despat

-Checking of the serviceability and adequacy of the

measuring instruments

6. Is there any report/certificate from the client’sofficial-in-charge of stock taking evidencing that the stock

taking instructions were followed? (Attach a copy)

7. In case the client does not have any instructions in writing,

is there any report from the client’s official-in-charge of stock

taking outlining the procedures followed during the course of

stock taking? (Attach a copy)



8. On the basis of our findings, are we satisfied that stock taking

procedures were reasonable and adequate in relation to the size

of the Company and nature of its business? If not, list out the

inadequacies/weaknesses.



counting?t double counting?

reconciliation of the sheets/tags at the conclusion of stock taking

Stoppage of movements during stock taking is highly desirable).

te Pass No. etc.

shortage/excess list

by the supervisor)

hed and other stocks of third parties




Choksey Bhargava & CoLovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Inventories


1.Whether the records of the Inventory show the following

particulars:

(i) details regarding dates of transactions;

(ii) relevant document number and department identification, if any;(iii) identification code of the item;

(iv) quantity of the receipts and issues and balances;

(v) physical verification quantities;

(vi) location;

(vii) particulars of the item, like nomenclature, nature, etc.

(vii) valuation details; etc.

2. Are the stock registers are updated as and when the

transactions occur?

3. Verify that the transactions entered in stock registers are duly

supported by relevant documents.

4. Verify whether inventories as per Register/Records

agree with General Ledger balances.

5. Obtain a statement of descrepancies obtained

and consider if they are material, whether the same

have been properly adjusted in the books of

account.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Loans granted


1.Has the company granted any loans to companies,firms and other

2. Obtain a statement containing the name of the company, firm or ot

3. Examine the above statement with necessarydocuments and records on a reasonable test check basis.

4. Report information as per the table below in the case of all loans g

5. Check and conclude that the rate of interest and other terms and

prejudicial to the interest of the company or otherwise by considerati

nature of security, the availability of alternative sources of finance, th

purpose of the loan, prevailing market rates of

interest etc.,

Number of Amount in Year end balance (In Rupees)

Notes:1. The requirement of this clause also covers advances which

2. Loan transactions that have been squared up during the year also



parties covered in the Register maintained under Section 301 of the Act?

her Party, nature of relationship, amounts and dates of loans granted, amounts and dates of loans refu

ranted.

onditions are not prima facie

n of factors such as- loan agreements, borrower's financial standing, its ability to lend,

urgency of borrowing,

are in the nature of loans.

would get covered under the requirement.



ded amounts and dates of interest received, closing balance at year end, particulars of instalments (a



Price Waterhouse & CoChoksey Bhargava & Co

Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done

ount and period outstanding for) of overdue principal and interest together with the details regarding th



rate of interest, if any, and brief terms and conditions like security, repayment particulars (principal and



interest) etc.,



Completed by:

Date:

Reviewed by:

Date:

Loans taken


1.Has the company taken any loans from companies,firms and other

2. Obtain a statement containing the name of the company, firm or ot

3. Examine the above statement with necessarydocuments and records on a reasonable test check basis.

4. Report information as per the table below in the case of loans

all loans taken.

5. Check and conclude that the rate of interest and other

terms and conditions are not prima facie prejudicial

to the interest of the company or otherwise by

consideration of factors such as- loan agreements,

company's financial standing, its ability to borrow,

nature of security, the availability of alternative sources

of finance, the urgency of borrowing, purpose of the

loan, prevailing market rate of interest etc.,

Number of Amount in Year end balance (In Rupees)

Notes:1. The requirement of this clause also covers advances which

2. Loan transactions that have been squared up during the year also



parties covered in the Register maintained under Section 301 of the Act?

her Party, nature of relationship, amounts and dates of loans taken, amounts and dates of loans repaid,

are in the nature of loans.

would get covered under the requirement.



amounts and dates of interest paid, closing balance at year end, particulars of instalments (amount a





Lovelock & Lewes

Price Waterhouse

N/A

Yes

No

d period outstanding for) of overdue principal and interes Done



Completed by:

Date:

Reviewed by:

Date:

Repayment of Loans

Audit Proc Response Remarks1. The regularity of payment of principal

amount and interest should be considered

in the light of procedures such as-review of repayment schedule,loan

2. The following partic (In Rupees)

Name of th Overdue P Overdue InYear end Balance

Notes: 1. If a due date for payment of interest is not specified, it woul

on each anniversary of the loan.

2. Where no stipulations have been made for repayment of the loan,

comments in the absence of terms of repayment.



agreements and other relevant documents, actual dates of payment of principal and interest.

d be reasonable to assume that it falls due

the auditor should state his inability to make





Lovelock & Lewes

Price Waterhouse

Yes

Done

N/A



Completed by:

Date:

Reviewed by:

Date:

Loans overdue


1. Obtain a statement with the names of the companies, firms or oth

2. The reasonableness of steps taken by the company forrecovery and payment should be judged in the light of

factors such as issue of reminders, sending advocate's

notice, management's representations, follow up with the

borrowers, arrangement for raising finances, restructuring

proposals, arrangement with lenders for compromise

proposals etc., as the case may be.

3. If not satisfied about the reasonability of steps taken,

consider the name of the party, overdue amount of

principal and interest for reporting.



r parties, amount of loan granted or taken, outstanding amount at the year end and steps taken for the



recovery or payment thereof.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Internal controls procedures


1. On the basis of our understanding,

documentation and validation thereof in the

Myclient file-control activities in the areas ofInventory cycle,property, plant and equipment

cycle,revenue and receivables cycle, review of

internal audit reports are we satisfied that there

are adequate internal control procedures

commensurate with the size of the company

and the nature of its business for the purchase

of inventory and fixed assets and for the sale of

goods? If not document the inadequacies and

weaknesses thereof and consider implications

for reportin Yes

2. Review the reports of internal audit, minutes

of the Board, Audit committee, managementcommittee, if any and anyother relevant internal

reports to identify major weaknesses in internal

controls and whether there is any continuing

faliure to c Done

3. In the case of continuing failure to correct

any major weakness identified, report the

weakness and steps taken by the management to

correct such weakness or the failure to correct

as the cas Done

4. Consider the implications of such controlweaknesses on the nature, extent and timing of

audit procedures in those areas and implications

if any on the adequacy or reliability of the books

of account Done

Notes: 1. Ordinarily, any weakness in internal controls that may resul

company or may result in a material misstatement in the financial sta

weakness.



2. Continuing failure should be judged with reference to the weaknes

previous year's audit.

3. If any major weakness is corrected by the date on which the audit

correction subsequently must also be reported.



into a significant loss to the

tements is considered a major



s that existed at the time of

report is issued the fact of such





Lovelock & Lewes

Price Waterhouse

Yes

No

Done



Completed by:

Date:

Reviewed by:

Date:

Completeness of Register maintained under Section 301 of the Act a


1.Has the company entered into transactions that need to be entered

2.Obtain a list containing the name of the party, nature of relationshi

3. Check the list for completeness of information with

reference to- knowledge from previous year's audit, review of

entity's procedures for identification of entries to be made in

301 register, inquiries as to the affiliation of directors and key

management personnel, officers with other entities, review of

shareholders records to identify the principal shareholders,

review of entity's income tax returns, review of joint venture

and other relevant agreements, minutes of board meetings, Form 24

4. In the case of transactions exceeding the value of Rs. five

lakhs in respect of any party and in any one financial yearexamine information such as price lists, quotations and records relati

parties at the relevant time.

5.In cases where transactions are entered with sole suppliers exam

6. The reasonableness of the prices should be determined

taking into account factors such as delivery period, quality

of the product, quantity, credit terms, past performance of the

party etc.,

Notes: 1. The requirement of this clause does not cover transactions

directors of the company are interested in the subsidiary.



nd transactions thereof

into the register maintained under Section 301 of the Act?

, description of transaction and amount and date of each such transaction individually for all the transac

As submitted etc.,

ng to prices for similar transactions with other

ine the reasonableness of prices paid with reference to list prices of the supplier concerned, other trade

with subsidiaries perse unless one or more of the



tions during the year.

terms of the supplier, etc. and where required consider the same appropiately in the report.





Lovelock & LewesPrice Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Public Deposits

Audit Proc Response Remarks1. Has the Company accepted any deposits from

public within the meaning of Section 58A, 58AA and

the rules framed thereunder?

2. Obtain a general understanding of Section 58A,

58AA and the relevant rules and ascertain the

system and procedures in place to ensure

compliance with the provisions of the said sections

and the rules made thereunder.

3.Check the compliance with the requirements of the

Act and the rules framed thereunder by completing

the firm's checklist on Acceptance of deposit rules and Companies A

4. Examine the internal controls in place for intimating

the Tribunal (Company Law Board) any default in

repayment of deposit made by small investors or part

or any interest thereupon. Based on the

understanding so gained, perform a reasonable test

check of the deposits received from small investors.

5. Enquire of the management possible instances of

non-compliances with Section 58A, 58AA and

relevant rules and about any order passed by the

Company Law Board for contravention of Section 58A,58AA and the rules.

6. Examine the correspondence and documents filed

with the Registrar of companies to ascertain whether

there is any contravention or whether the Company

Law Board has passed and order. If an order has been

passed, examine the steps taken by the company to

comply with the order.



ct 1956.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Internal Audit


1. Is the company a listed company or having paid up capital

and reserves exceeding Rs. 50 lakhs as at the commencement

of the financial concerned or having an average annualturnover exceeding five crores rupees for a period of three

consecutive financial years immediately preceding the

financial year?

2.Consider the following factors to determine whether the

internal audit system is commensurate with the size of the

and the nature of its business-

-Size of the internal audit department;

- Qualifications of the internal audit staff;

-Reporting levels of internal audit;

- Areas of coverage;

-Adequacy of technical assitance available to the internal

audit department;-Reports submitted by the internal audit and follow up

procedures thereof.

Notes: 1. The date of the balance sheet must be considered in recko

2. While evaluating the adequacy of internal audit system, existence

be taken into account.



ning the listing status of the company.

or otherwise of other forms of internal controls must also





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Maintenance of Cost Records


1. Has maintenance of cost records prescribed

by central government under Section 209(1)(d)

to the company?

2. Obtain a list of books and records madeand maintained by the company under Section

209(1)(d) of the Companies Act,1956.

3. Conduct a general review of the cost records

to ensure that the records as prescribed are

made and maintained.





Lovelock & Lewes

Price Waterhouse

Yes

N/A

Done

No



Completed by:

Date:

Reviewed by:

Date:

Statutory Dues


1. Obtain a statement containing the list of various statutes under wh

2. Obtain a general understanding of various

statutes governing the entities and dues payableunder those statutes. Make enquiries of the

management about the statutes under which

the company is required to pay dues and the

policies and procedures in place for

identifying and payment of such dues.

3. Verify the statement under 1 above, with the

general understanding obtained and gained,

underlying documents and records.Compile the

the following details in the case of arrears of statutory dues-

-Name of the statute

- Nature of the dues

- Amount- Due date

-Date of payment

4.Whether the Company has been generally regular in depositing sta

5. In the case of disputed statutory dues, compile

the following details-

- Name of the Statute

- Nature of the dues

- Amount

- Forum where dispute is pending

Information under this clause should be given

separately for each period eventhough the

dispute relates to the same nature of statutory dues, like income tax

Notes: 1. The scope under this clause is restricted to only those stat

required to be paid regularly to a body.

2. Reporting under this clause is required irrespective of the fact whe

arrears as at the balance sheet date.



3. For a matter to be considered as "disputed" there must be a positi

on the part of the company to show that it has not accepted the dem

duty or tax. Auditor need not make a judgement about the sustainabil

claim. A mere representation to the department shall not constitute a

4. Penalites or interest would be covered under "amounts payable".



ich the company is required to make payments to appropriate authorities, the nature and amounts of pa

tutory dues or otherwise, report the same appropriately.

s etc.,

tory dues which are

ther or not there are any



e evidence or action

nd for payment of

lity or otherwise of the

dispute.



ments under each statute, the due dates for making such payments, the dates on which the payments





Lovelock & Lewes

Price Waterhouse

Yes

N/A

were made by the Company, the aDone



Completed by:Date:

Reviewed by:

Date:

Accumulated Losses etc.,


1.Has the company been registered for a period of five or

more years as at the balance sheet date?

2.Compute the accumulated losses and net worth of the company as

whether the accumulated losses as at that date are more

than 50% of company's net worth.

3. Compute and check whether the company has incurred

cash losses for the period under review and in the

immediately preceding financial year.

Notes: 1.The impact of qualifications which can be quantified must b

net worth, as at the balance sheet date and in arriving at the cash los

in reporting under this clause.Where the qualifications are not quantif

effect of such unquantified qualifications has not been taken into con

2. Net worth is the sum total of paid up capital and free reserves afte

prescribed. Free reserves means all reserves created out of profits a

revaluation reserve, write back of depreciation provisions and amalg

3. Loss shown by the profit and loss account is adjusted for the effecDepreciation, amoritisation, any deferrals or accruals of past or futur



at the end of the financial year. Verify

adjusted in computing the accumulated losses and

ses. The fact of such adjustment must be indicated

iable, the report should state the fact that the

sideration in computing the above amounts.

deducting the provisions or expenses as may be

nd share premium account but does not include

mation.

s of transactions of a non-cash nature such ascash receipts or payments in determining the cash losses.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Default in repayment of dues to Banks,Financial Institutions or deben


1. Obtain a statement containing the names of the

institution/bank/debenture holder, the period

and amounts of default, due dates thereof and

dates and amounts of subsequent payments, if any.

2. Verify the statement in 1 above, with documents such as agreem

Notes: 1. The requirement covers all the defaults exisiting on the bal

defaults have occurred.

2. Dues cover all amounts including interest and principal.

3. Applications for reschedulement/resturcturing will not be binding u

4. Dues not paid by the company on account of unilateral disputes ta



tureholders

nts, other terms and conditions, debenture trust deed as the case may be. Identify the period and amo

nce sheet date, irrespective of when the

less approved.

ntamount to default.



nt of default for reporting.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:Date:

Reviewed by:

Date:

Maintenace of documents and records for loans and advances grant


1. Whether the company has granted any

loans and advances on the basis of security

by way of pledge of shares, debentures and

other securities?

2. If yes, examine whether documents and

records include details such as- name and

address of the borrower, amount, terms and

conditions such as period, rate of interest,

security etc.,; disbursements, repayments,

recovery of interest; full particulars of

security- names of the companies, number and

class of shares, distinctive numbers, particulars

as to title etc; documents needed for transfer,

details as to periodical ackowledgements of the

parties, proof to establish the power of the

party to borrow- e.g. board resolution etc.,

3. Obtain a statement containing the details of

such loans granted-name of the party, amount

of loan/advance granted, amount outstanding

as the balance sheet date and type and nature of

security and verify the same on a reasonable

test check basis with documents and records

mentioned in 2 above.

4. Verify the securities pledged by reference to

physical securities or statements from

depository participants.In the case of

dematerialized form of securities confirm thatthe company has a valid right to sell the

shares in the event of default.

5.Whether security is in the custody of company and market value of

6. List the deficiencies for reporting.

Notes: 1. The requirement of this clause does not extend to other for



hypothecation, guarantee etc.,

2. Other securities may be construed to mean bonds or promissory n

or semi-government authority.



d

security is adequate to cover the outstanding amount of loan and interest?

ms of security like



otes issued by a government




Choksey Bhargava & CoLovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:Date:

Reviewed by:

Date:

Chit Fund Company


1. Is the Company a chit fund company?

2. Gain an understanding of the relevant Acts and the

rules applicable to the company situated in a particular

state/union territory.

3. Test check compliance with the requirements under

the Act and the rules as applicable.

3. Ensure that the requirements of the rules regarding

the records to be maintained, returns to be filed etc.,

are complied with, where applicable.

Notes: 1. The requirement only applies to checking compliance with t

as they have application to the accounts of the chit fund company.

2. If the company's branches are situated in more than one state, leg

applicability and compliance with the relevant provisions of the Acts/



he provisions of special statutes in so far

al opinion may be sought regarding the

ules.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:Date:

Reviewed by:

Date:

Nidhi/mutual benefit fund/societies


1. Is the Company a nidhi/mutual benefit fund/

society?

2. Check complaince with the following-

a) whether the net ownedfunds to depositliability ratio is more than 1:20 as on the

date of balance sheet;

b) whether the company has complied with

the prudential norms on income recognition

and provisioning against sub-standard /

default / loss assets;

c) Whether the company has adequate

procedures for appraisal of credit proposals

/ requests, assessment of credit needs and

repayment capacity of the borrowers by examination

of the policies and procedures a reasonable testcheck of the transactions effected during the year

with relevant documents such as individual borrower

files, loan application forms,supporting

documentation, sanctions, security documents etc.,

d) Whether the repayment schedule of

various loans granted by the nidhi is based

on the repayment capacity of the borrower

and would be conducive to recovery of the

loan amount by examination of the system of

granting of loans and making a reasonable test

check of transactions.

3. Ensure that the requirements of the rules regarding

the records to be maintained, returns to be filed etc.,

are complied with, where applicable.

4. Consider the implications of non-compliances

under 2 a) and b) above also in the auditors' report

on the financial statements.



Notes: 1. Net owned funds means the aggregate of paid up equity ca

by accumulated losses and intangible assets appearing in the last au

i.e. balance sheet of the current year.

2. Deposit liability would mean aggregate of deposits accepted by th



pital and free reserves as reduced

dited balance sheet of the company

company.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Dealing or Trading in Securities


1.Is the company dealing or trading in shares, securities,

debentures and other investments?

2.Whether the records of the Investments show the following

particulars:(i) details regarding dates of transactions-purchases and sales.

(ii) classes of investments

(iii) distinctive numbers and the face value ;

(iv) quantity of the receipts and issues and balances;

(v) physical verification quantities;

(vi) cost, valuation details;

(vii) profit/loss arising on sale

(viii) amounts receivable/payable.

3. Examine the timeliness of updation of the records by adpoting

procedures such as surprise inspection of the records, system of

internal controls over updation, review of internal audit and other

reports for exceptions, if any, in this regard.

4. Verify that the transactions entered in the registers are duly

supported by relevant documents.

5. Verify whether the aggregate of balance as per the Registers/Rec

agrees with General Ledger balances.

6. Obtain a statement containing details of investments not held in th

name of the company and those where exemption under Section 49 i

available. Check the statement with necessary supporting document

as in 4 above and with the requirements of Section 49 of the Act.

7.In case investments which are intended to be sold immediately ma

Notes:1. The requirement does not apply to companies which are no

investments with a view to hold such investments and earn income fr

in this regard include-objects of the company, period for which invest

internal approvals covering such purchase and sale, method of valua

of profits/gains in the tax assessments etc.,



rds

e

is

not have been transferred in the name of the company, whether, in the circumstances of each case, th

dealing or trading in investments but purchase

om dividend or interest.Factors to consider to decide

ments are normally held, reasons for purchase/sale,

tion-cost or lower of cost or market value, treatment



e failure to transfer the investments to the company’s name is understandable.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed Date:

Date: Date:

Reviewed by:

Date:

Guarantees given


1. Has the company given any guarantees for loans taken by others f

2. Obtain a list containing the name of the party, nature

of relationship, if any, amount of loans taken, closing

balance as at the balance sheet date together with brief

terms and conditions like description of security given,

estimated amount of such security, default action

conditions, if any.

3. Understand and document the internal controls over

issue of guarantees and confirm its operation during the

year. Consider implications, if any, on reporting or in

management letter.

4. Verify the above statement with documents such asmemorandum of association- to confirm whether the

company can issue guarantees, maximum permissable

amounts, the parties in respect of whom and the types

of guarantees that can be given; minutes of the board of

directors, compliance with the requirements of Section 372A of the C

295/372A of the Companies Act, letters of borrowing

parties requesting the guarantee, company's letters,

guarantee documents etc.,

5. If the company has issued a guarantee in contravention

of the clauses of the memorandum of association, consider

the same appropriately in reporting.

6.Whether the tangible/ intangible benefits flowing to the company d

7. If in judgement and conclusion it was established that

the terms are prejudicial to the interest of the company,

obtain an explanation from the company why the company

considers the same as not prejudicial.



8. If not convinced by management's explanation, consider

appropriately in reporting disclosing the amount of such

guarantee.

Notes:1. The requirement only applies to guarantees given for loans

financial institutions and not from other sources.

2. The requirement only relates to guarantees given during the year.3. In determining whether the any guarantees given are prejudicial to

factors such as financial standing of the party, its ability to borrow, na

availability of alternate sources of finance, urgency of the borrowing f



rom bank or financial institutions?

ompanies Act, letters of borrowing parties requesting the

e to furnishing of guarantee are commensurate with risk undertaken by the company in doing so?



aken by others from banks or

the interest of the company,

ture of security offered,

or which the guarantee was given etc.,





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:Date:

Reviewed by:

Date:

Utlisation of Term Loans


1. Has the company obtained any term loans or made any utilisation

2.Obtain a statement containing the specific terms of

loans and the details of application-amounts, dates and

the purpose.

3.Verify the statement with documents such as sanction

letters and other documents containing the terms and

conditions and those relating to actual utilisation.

4. If term loans were not applied for the purpose for

which they were obtained, indicate the amount and the

purpose for which it was ultimately utilised.

5. In the case of temporary application of funds for other

purposes before they were utilised for the stated purpose,

mention such fact in the report.

6.Whether the funds flow statement has been reviewed where one to

Notes: 1. Working capital term loans are not within the scope of this

2. The reporting requirement under this clause also covers temporar

3. It is not necessary to establish a one to one relationship with the a



during the year?

one correlation is not possible?

lause.

use of surplus funds.

ount of term loan and its utilisation.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Utlisation of Funds


1.Obtain a statement containing the specific

terms of funds and details of use-amounts and

nature.

2. Compare the quantum of long term funds

with the long term application of funds.

3. Compare the quantum of short term funds

with the short term application of funds.

4. If the differences point towards use of short

term funds for long term investment and vice

versa , consider appropriately in reporting.

Notes: 1. Long-term sources of funds would include share capital, re

for depreciation, long term debt securities, long term loans. Long terinclude investment in fixed assets, long term investments and other

repayment of long term loans and advances or redemption of debt s

capital etc., Short term sources of funds include temporary credit faci

overdraft, reduction in current assets or increase in current liabilities

funds includes all application otherwise than for long term use, incre

decrease in current liabilities etc.,

2. The requirement has to be determined on the basis of the overall

application of funds based on the balance sheet of the company unle

relationship can be established between a particluar source and appl



erves and surplus, provision

application of funds wouldssets of similar nature,

curities, use for core working

lities like cash credits,

tc., Short term application of

se in current assets or

icture of the sources and

ss a one to one direct

ication.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Preferential allotment of shares


1. Has the company made any preferential allotment of shares to

parties and companies covered in the Register maintained underSection 301 of the Companies Act,1956?

2. Obtain a statement containing the names of the parties and comp

3. In the case of listed companies check whether the price

for shares issued on a preferential basis is not less than

higher of the following-

-the average of the weekly high and low of the closing prices

of the related shares quoted on the stock exchange during the

six months preceding the relevant date.

- the average of the weekly high and low of the closing prices

of the related shares quoted on the stock exchange during the

two weeks preceding the relevant date.

4. In the case of listed companies, confirm and verify that the

company has complied with the requirements of guidelines

laid down in this regard by SEBI.

5. In the case of private company and an unlisted public company ,

examine the method used for valuation of the shares and also

ascertain the reasonableness of the assumptions underlying the

calculation.

6.If in the judgement and conclusion it was eastablished that the pric

charged is not fair, obtain a representation from the management aswhy such price charged is not prejuducial to the interest of the

company and consider appropriately in reporting.

7. Consider compliance with the requirements of AAS-9 "Using the

work of an Expert" if the valuation report of an expert is used as the

basis.

8. If the company has made preferential issue by passing an ordinar



resolution, also examine the relevant order of the Government passe

in this regard. If on the basis of order it is concluded that the price

charged is not prejudicial, state the fact of reliance on such order

for the purpose of reporting.

Notes: 1.The term "shares" includes both preference as well as Equit

2. In the case of a listed company allotment of shares under Sectionpreferential allotment of shares.



nies, nature of relationship, description of allotments made-equity/preference, number of shares, price

to



d

y.

81(1A) of the Companies Act,1956 is known as



nd terms and conditions of the allotments made during the year.





Lovelock & Lewes

Price Waterhouse

Yes

No

N/A

Done



Completed by:

Date:

Reviewed by:

Date:

Securites for Debentures


1. Has the company issued any debentures and the same outstandin

2.Verify the debenture trust deed executed under Section

117A of the Act in respect of debentures issued during the

year with particular reference to security requirements.

3.Verify whether such security is created as required under

section 125 and 130 of the Act by examining the documents

evidencing the charge-forms filed with ROC etc.,



g at the end of the year?





Lovelock & Lewes

Price Waterhouse

Yes

N/A

Done

No



Completed by:

Date:

Reviewed by:

Date:

End use of Public issue Monies

Audit Proc Response Remarks1. Has the company made any public issue or made utilisation during

2.Obtain a statement containing the quantum of money

raised on public issue of any security made by the company

during the year and details of end use of money so raised.

3. Verify such statement with reference to end use as set

out in the Prospectus. Where the issue exceeds Rs. 500

Crores, refer the half yearly reports of the monitoring

agency as submitted to SEBI.

4. Verify the disclosure made by the company in the

financial statements in this regard.

5. If we are not satisfied with the disclosures made in the

financial statements, consider the matter for reporting

setting out clearly the information which should have

been dislosed.

6.Whether the cash flow statement has been reviewed where

one to one correlation is not possible?

7. If we are unable to determine the end use of money

raised from public issues state the fact together with the

reasons thereof in our report.



the year?





Lovelock & Lewes

Price Waterhouse

Yes

N/ADone

No



Completed by:

Date:

Reviewed by:

Date:

Fraud


1.Complete our understanding and assessment of

fraud considerations as per steps given under

"Fraud Risk" in MYClient file.

2. On the basis of work carried out as above, arewe satisfied that there are no indications

of fraud on or by the company noticed or reported

during the year?

3. If any fraud is noticed or if there is a doubt about the

existence of fraud, carry out procedures as mentioned

in AAS-4 "The Auditor's Responsibility to consider

fraud and error in an audit of Financial Statements"

4.If the response to 2 above is "No" determine the .

nature and extent of such frauds and implications on

our reporting.

Note: The following are the indicative sources relating to identificatio



of Fraud- i. the reports of internal reviews conducted, if an



.ii.Inquiries of the management about any frauds on or by the company that its has noticed or that have





Lovelock & LewesPrice Waterhouse

Completed

Yes

No

Done

been reported to it. iii. discussions with other employees of the company. iv. Examination of the minutes



book of the meetings of Board, audit committee etc.,



Clause No.Area/Requ Brief DescrHow addressed in the Audit

4(i) (a) Fixed Assets

4(i) (b) Fixed Assets

4(i)( c) Fixed Assets

4(ii) (a) Inventories

4(ii) (b) Inventories

4(ii) ( c) Inventories4(iii) (a) Loans granted

Loans taken

4(iii)(b) Loans granted

Loans taken

4(iii)( c) Loans granted or taken

4(iii) (d) Loans granted or taken

4(iv) Internal Controls

4(v)(a) & ( Register under Section 301etc.,

4(vi) Fixed Deposits

4(vii) Internal Audit

4(viii) Cost Records

4(xi) (a) & Statutory dues

4(x) Accumulated losses etc.,4(xi) Dues to Banks & Fis etc.,

4(xii) Loans and Advances granted

4(xiii)(a) Chit Fund company

4(xiii)(a) to Nidhi/mutual benefit fund/society

4(xiv) Dealing or Trading in Securities

4(xv) Guarantees

4(xvi) Term Loans

4(xvii) Funds raised

4(xviii) Allotment of shares

4(xix) Debentures

4(xx) Money raised on public issue

4(xxi) Fraud



Lovelock & Lewes

Price Waterhouse

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