Reporting of Statutory Dues under CARO | Observations by FRRB

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The Financial Reporting Review Board (FRRB) of the ICAI conducts reviews of financial statements and audit reports of various enterprises to determine whether the compliance with the Generally Accepted Accounting Principles (GAAP), auditors reporting obligations, disclosure requirements of applicable rules and regulations relevant to the reporting enterprise has been done or not.

While reviewing the Companies (Auditor’s Report) Order, 2016, the Board has noted non-compliance w.r.t. clause 3(vii) of CARO in reporting of statutory dues and extended its observations and views on the matter of reporting. It is recommended that the Auditors while reporting under CARO 2020 should consider the following points. Some of the observations along with the reporting done by the auditors’ on para 3(vii) of CARO 2016 have been discussed below:

Para 7: Reporting of Statutory Dues

(a) whether the company is regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated

(b) where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute)

Matter contained in the Auditor’s Report

The company is regular in depositing with appropriate authorities undisputed statutory dues including investor education protection fund, income tax, sales tax, wealth tax, service tax & custom duty and other material statutory dues applicable to it. According to the information and explanations given to us , no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, custom duty, VAT, Cess and other material statutory dues were in arrears as at 31st March 20XX for a period of more than six months from the date they became payable.

FRRB Observation

Board noted the auditor did not report whether the company is regular in depositing dues of provident fund, employee state insurance, duties of excise, value added tax and cess. Further reporting included investor education and protection fund and wealth tax which was not in line with the requirements given under paragraph 3 (vii) (a) CARO 2016.

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