Illustrative Checklist on Clause 3(VIII) & 3(IX) of CARO 2020
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 2 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(viii) & 3(ix) of CARO 2020.
Clause 3(viii): whether any transactions not recorded in the books of account have been surrendered or disclosed as income during the year in the tax assessments under the Income-tax Act, 1961 (43 of 1961), and if so, whether the previously unrecorded income has been properly recorded in the books of account during the year;
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 listing of sources of income and financial statements have been obtained.
- Whether details of any assessment made during the financial year were obtained during the audit.
- Whether written representation is obtained from the management:
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- Specifying the income which are not recorded in the books of account and have been disclosed by the assesse.
- Containing year-wise listing of amount disclosed.
- Containing reasons for non-disclosure earlier and source of income.
- Containing the impact of such unrecorded transactions on the financial statements.
- Containing the completeness of the information provided by the management.
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