Statutory Audit Preparation Checklist for Private Limited Companies: Books, CARO 2020 & Finalisation

For finance directors, CFOs, and accountants managing Private Limited Companies in Raipur, Bhilai, Sambalpur, and Kalahandi, the annual Statutory Audit under Section 139 of the Companies Act, 2013 is the primary audit obligation of the financial year.

Incomplete trial balances, un-reconciled GST/TDS ledgers, or non-compliance with Accounting Standards (AS / Ind AS) result in delayed audit finalisation, qualified audit reports, or severe penalties during annual ROC filing (Form AOC-4 and MGT-7).

Statutory Due Date Framework: Board approval of audited financial statements must occur before the Annual General Meeting (AGM) held by 30th September. Form AOC-4 must be filed within 30 days of AGM (by 30th October) and Form MGT-7 within 60 days (by 29th November).

1. Master Pre-Audit Preparation Checklist

Before presenting books of account to statutory auditors, finance teams should complete the following reconciliation schedules:

2. CARO 2020 Compliance (Companies Auditor's Report Order)

CARO 2020 applies to all private limited companies (unless exempt based on paid-up capital ≤ Rs. 1 Crore, reserves ≤ Rs. 1 Crore, borrowings ≤ Rs. 1 Crore, and turnover ≤ Rs. 10 Crores).

Auditors must report on 21 specific clauses under CARO 2020, including:

[Fixed Asset & Title Verification] ➔ [Working Capital Limit > 5 Cr Scrutiny] ➔ [Loans & Guarantees (Sec 185/186)] ➔ [Statutory Dues Payment] ➔ [Cash Losses Reporting]

Key CARO 2020 Clauses to Review:

1. Clause (i) — Fixed Assets: Reporting whether title deeds of all immovable properties disclosed in financial statements are held in the name of the company.
2. Clause (ii)(b) — Working Capital Limits > Rs. 5 Crores: If the company has sanctioned working capital limits from banks on the basis of security of current assets, reporting whether quarterly statements/returns filed with banks agree with books of account.
3. Clause (vii) — Statutory Dues: Reporting whether undisputed statutory dues (GST, PF, ESIC, Income Tax, TDS) outstanding for more than 6 months have been deposited.
4. Clause (ix) — Default in Repayment: Reporting whether the company has defaulted in repayment of loans or payment of interest to any lender.
5. Clause (xvii) — Cash Losses: Reporting whether the company has incurred cash losses in the financial year and immediately preceding financial year.

3. Related Party Transactions (Section 188) & Loans to Directors (Section 185)

Transactions between the company and directors, key managerial personnel (KMP), or relative-held entities face strict regulatory scrutiny:

A. Section 185 — Loans to Directors

• Prohibits private companies from granting loans, advances, or guarantees to directors or entities in which directors are interested, unless exempted under specified conditions (e.g., passed by special resolution).

B. Section 188 — Related Party Transactions

• All transactions with related parties (purchases, sales, leases, service fees) must be conducted at Arm's Length Price (ALP) and in the ordinary course of business.
• Requires prior approval of the Audit Committee / Board of Directors and disclosure in Form AOC-2.

4. Financial Statement Finalisation & Signing Protocol

[Draft Audit Report & Financials] ➔ [Audit Committee Review] ➔ [Board Meeting Approval & Director Signing] ➔ [Statutory Auditor Signing] ➔ [AGM Adoption]

1. Board Report Preparation: Drafted under Section 134 containing Director's Responsibility Statement, web link to annual return, and disclosures on risk management.
2. Director & Auditor Signatures: Financial statements must be signed by at least 2 Directors (one being Managing Director, if any) and certified by the Statutory Auditor carrying their ICAI Unique Document Identification Number (UDIN).
3. AGM Adoption: Financial statements are formally adopted by shareholders at the Annual General Meeting.

5. Penalty for Late Filing of ROC Returns (Form AOC-4 & MGT-7)

Failing to submit annual financial returns within statutory deadlines triggers heavy penal consequences:

• Late Fee under Section 403: Mandatory late fee of Rs. 100 per day per form for every day of delay, without any maximum ceiling limit.
• Director Disqualification (Section 164(2)): Failing to file financial statements or annual returns for 3 consecutive financial years results in automatic disqualification of all directors for 5 years.

Statutory Audit & Corporate Finalisation Services

Our audit and assurance practice at Rabi Agrawal & Associates provides statutory company audits, CARO 2020 compliance reporting, Schedule III financial statement finalisations, and ROC Form AOC-4/MGT-7 filing services for private limited companies in Raipur, Bhilai, Durg, and Kalahandi.

Consult our audit team at Raipur Head Office or Jayapatna Branch for pre-audit preparation.