Companies (Auditor’s Report) (Amendment) Order, 2004 - Amendments in paragraphs 1, 2 and 4 of Companies (Auditor’s Report) Order, 2003 - GSR 766(E). - Companies Law

MINISTRY OF COMPANY AFFAIRS NOTIFICATION New Delhi, the 25 th November, 2004 Subject:- Companies (Auditor s Report) (Amendment) Order, 2004 - Amendments in paragraphs 1, 2 and 4 of Companies (Auditor s Report) Order, 2003 GSR 766(E).- In exercise of the powers conferred by sub-section (4A) of section 227 of the Companies Act, 1956 (1 of 1956) and after consultation with the Institute of Chartered Accountants of India [constituted under the Chartered Accountants Act, 1949 (38 of 1949)], the Central Government hereby makes the following amendments in Companies (Auditor s Report) Order, 2003, namely : 1. (1) This Order may be called the Companies (Auditor s Report) (Amendment) Order, 2004. (2) It shall come into force on the date of its publication in the Official Gazette. 2. In the Companies (Auditor s Report) Order, 2003, - (1) In paragraph 1, in sub-paragraph (2), for clause ( iv ), the following clause shall be substituted, namely : ( iv ) a private limited company with a paid up capital and reserves not more than rupees, fifty lakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year . (2) in paragraph 2, the clauses ( c ) to ( i ) shall be omitted; (3) in paragraph 4, ( a ) for clause ( iii ), the following clause shall be substituted, namely : ( iii ) ( a ) has the company granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and amount involved in the transactions; and ( b ) whether the rate of interest and other terms and conditions of loans given by the company, secured or unsecured, are prima facie prejudicial to the interest of the company; and ( c ) whether receipt of the principal amount and interest are also regular; and ( d ) if overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for re-covery of the principal and interest; ( e ) has the company taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and the amount involved in the transactions; and ( f ) whether the rate of interest and other terms and conditions of loans taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company; and ( g ) whether payment of the principal amount and interest are also regular. ( b ) for clause ( iv ), the following clause shall be substituted, namely : ( iv ) is there an adequate internal control system 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 and service. Whether there is a continuing failure to correct major weaknesses in internal control system; ( c ) in clause ( v ), for sub-clauses ( a ) and ( b ) the following clauses shall be substituted, namely : ( a ) whether the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section; and ( b ) whether transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time; ; ( d ) in clause ( vi ), ( i ) for the words, figures and letters sections 58A and 58AA of the Act , the words, figures and letters sections 58A, 58AA or any other relevant provisions of the Act shall be substituted. ( ii ) for the words Company Law Board , the words Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal shall be substituted; ( e ) in clause ( ix ) ( i ) in sub-clause ( a ), for the words Wealth tax , the words Wealth tax, Service tax shall be substituted; ( ii ) for sub-clause ( b ), the following sub-clause shall be substituted; namely : ( b ) in case dues of Income-tax/Sales-tax /Wealth-tax/Service tax/Custom duty/Excise duty/cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. ( f ) in clause ( x ), for the words, in the financial year immediately preceding such financial year also the words in the immediately preceding financial year shall be substituted; ( g ) in clause ( xiii ); ( i ) in sub-clause ( b ), for the word default the word doubtful shall be substituted; ( ii ) in sub-clause ( d ), the words and would be conducive to recovery of the loan amount shall be omitted; ( h ) in clause ( xiv ), for the words other securities , the words other investments shall be substituted; ( i ) in clause ( xvii ), the words and vice versa shall be omitted. ( j ) in clause ( xix ), for the words securities have , the words security or charge has shall be substituted. [F. No. 2/28/2002-CL-V] JITESH KHOSLA, Jt. Secy Note:- The Principal Order was issued vide notification Number G.S.R. 480(E), dated the 12 th June, 2003.