[Illustrative Checklist] Clause 3(x) & 3(xi) of the Companies (Auditor’s Report) Order, 2020
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- Last Updated on 11 July, 2022
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The Central Government, in exercise of the powers given, under section 143 (11) of the Companies Act, 2013, issued the CARO, 2020. It is applicable from financial year 2021-22. Further, in this regard, ICAI has issued an Exposure Draft on CARO 2020, to provide guidance to auditors. Appendix V of this guidance note contains an Illustrative Checklist on the CARO, 2020. In this writeup, we covered the checklist on clauses 3(x) & 3(xi) of CARO 2020.
Clause (x)(a): whether moneys raised by way of initial public offer or further public offer (including debt instruments) during the year were applied for the purposes for which those are raised, if not, the details together with delays or default and subsequent rectification, if any, as may be applicable, be reported;
Therefore, for the fulfillment of the requirement of this clause the auditor has to check and comment on the following:
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- Whether the company raised money by way of IPO or FPO of equity shares, convertible securities or debt securities?
- Check the terms and conditions of the offer document on the basis of which the company has raised the above-mentioned money.
- Whether the end use of above-mentioned money is determined by the company? If not, state the fact for the same.
- Whether the above-mentioned money used for the stated purpose? If not, state the fact for the same.
- To check whether the funds raised have been utilized for the purpose for which they were raised, examine various documents like: offer document & board report etc.
- Whether management representation has been obtained to the completeness of the disclosures with regard to the end-use of moneys raised through IPO and FPO?
- Whether the fund flow statement has been reviewed in detail in the case where the one-to-one correlation is not possible.
- Whether the money raised during the year has been applied in the same year? If not, state the fact.
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