[Checklist] Clause 3(xvii) to 3(xix) of CARO 2020

Clause 3(xvii): whether the company has incurred cash losses in the financial year and in the immediately preceding financial year, if so, state the amount of cash losses;

Therefore, for the fulfillment of the requirement of this clause the auditor has to check and comment on the following:

• • Check whether the auditor follows the following guidance provided for computing the cash losses of the company:

a) If the company follows accounting standards (AS), the figure of net profit/loss after taxes is adjusted for the effects of transactions of non-cash nature provided as per provisions of AS 10 (Revised), Property, Plant & Equipment, amortization as per AS 26, Intangible Assets and impairment loss or its reversal as per AS 28, Impairment of Assets etc.

b) In the case a company follows Indian accounting standards (Ind AS), the figure of profit or loss (excluding other comprehensive income) is adjusted for the effects of transactions of non-cash nature provided as per provisions of Ind AS 16, Property, Plant and Equipment, Ind AS 116, Leases, amortization as per Ind AS 38, Intangible Assets and impairment loss or its reversal as per Ind AS 36, Impairment of Assets etc.

c) cash profits/ cash losses realized and recognized in OCI before their reclassification to SPL, should be considered in determination of cash losses but its subsequent reclassifications into SPL, being a non-cash adjustment, should not be considered.

• • Check whether the company has incurred any cash loss during the current financial year and/or immediately preceding financial year.
  • Whether cash losses considered while making qualifications in audit report? If not, state the fact in audit report.

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