APPLICABILITY OF CASH
FLOW STATEMENT, CARO (2016 & 2020) & INTERNAL FINANCIAL CONTROL.
v Applicability of Cash Flow
Statement:-
According
to Section 2(40) of Companies Act, 2013, The Financial statements of a company
include Cash Flow Statement. Cash Flow Statement is governed by The Companies
(Accounting Standards) Rules, 2006 (AS 3)
and The Companies (Indian Accounting Standards) Rules, 2015 (Ind AS 7), as applicable.
The
following companies are given exemption from filing Cash Flow Statement:-
— One
Person Company 1
— Dormant
Company 2
— Small
Company 3
v Applicability of The
Companies (Auditor’s Report) Order:-
For Financial Year 2019-20,
The Companies (Auditor’s Report) Order, 2016 would be applicable.
The
CARO, 2016 would not be applicable to the following companies:-
— A
Banking Company as per section 5(c) of The Banking Regulation Act, 1949.
— An
Insurance Company as per The Insurance Act, 1938.
— A
Company licensed to operate under Section 8 (Company with charitable purpose).
— One
Person Company
— Small
Company
— A
Private Company not being a subsidiary or holding company of a Public company
Ø Having
Paid up capital and reserves and surplus upto one crore rupees.
Ø Having
borrowings upto one crore rupees.
Ø Which
does not have a total revenue as disclosed in Scheduled III to the Companies
Act (including revenue from discontinuing operations) exceeding ten crore
rupees during the financial year.
According
to order number S.O.
849(E) of MCA dated 25th March,
2020, For Financial Year 2020-21,
The Companies (Auditor’s Report) Order, 2020 would be applicable.
The
CARO, 2020 would not be applicable to the following companies:-
— A
Banking Company as per section 5(c) of The Banking Regulation Act, 1949.
— An
Insurance Company as per The Insurance Act, 1938.
— A
Company licensed to operate under Section 8.
— One
Person Company
— Small
Company
— A
Private Company not being a subsidiary or holding company of a Public company
Ø Having
Paid up capital and reserves and surplus upto one crore rupees.
Ø Having
borrowings upto one crore rupees.
Ø Which
does not have a total revenue as disclosed in Scheduled III to the Companies
Act (including revenue from discontinuing operations) exceeding ten crore rupees
during the financial year.
v Applicability of Internal
Financial Control:-
Reporting
of Internal Financial Control shall be as per section 143(3)(i) of Companies
Act, 2013 and Rule 10A of The Companies (Audit & Auditors) Rules, 2014.
Reporting
on Internal Financial Control is applicable to all companies except:-
— One
Person Company
— Small
Company
— A
company whose turnover is less than fifty crores as per latest audited
financial statement.
— A
company whose borrowing from banks, financial institutions or body corporate is
less than twenty five crores.
Ø Definitions:-
1.
One
Person Company :-
According
to section 2(62), One Person Company means a company which has only one person
as a member.
2
Small
Company:-
According
to section 2(85), Small company means a company, other than public company
whose
(i)
Paid up share capital of which does not exceed fifty lakh rupees or such higher
amount as may me prescribed which shall be not be more than ten crore rupees.
(ii)
Turnover of which as per profit and loss account for the immediately preceding
financial year does not exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than one hundred crore rupees.
Provided
that nothing shall apply to –
[A] a
holding or a subsidiary company
[B] a
company registered under section 8
[C] a
company or body corporate governed by any special Act.
3 Dormant Company:-
According
to section 455(1) of Companies Act, 2013, Where a company is formed and registered
under this Act for a future project or to hold an asset or intellectual
property and has no significant accounting transaction, such a company or an
inactive company may make an application to the Registrar in such manner as may
be prescribed for obtaining the status of a dormant company.
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