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**Descriptive Auditing Case Study — CARO 2020 Reporting on Clause (i) PPE, Clause (ix) Loan Default, and Clause (xi) Fraud (Marks: 5)** State the reporting requirements under the Companies (Auditor's Report) Order, 2020 (CARO 2020) for the statutory auditor of Trident Cotton Ltd. in the following independent situations during the financial year 2023-24: (a) The company has title deeds of all immovable properties held in the name of erstwhile directors and not transferred to the company's name. (b) The company defaulted in repayment of loans to a public financial institution amounting to ₹49,000,000 which remained outstanding for 4 months as on 31st March 2024. (c) A fraud of ₹19,800,000 was committed by an accounts manager and reported to the Audit Committee.

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Detailed Solution & Explanation

### Suggested Solution — CARO 2020 Reporting #### (a) Clause (i)(c) - Title Deeds of Immovable Property: Under Clause (i)(c) of CARO 2020, whether the title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the company. If not, the auditor shall provide the details in the specified format including description of property, gross carrying value, held in name of, whether promoter/director, and reason for not being held in company's name. #### (b) Clause (ix)(a) - Default in Repayment of Borrowings: Under Clause (ix)(a), whether the company has defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender. The auditor must report the default in the prescribed tabular format showing nature of borrowing, lender name, amount not paid on due date, whether principal or interest, and number of days of delay. #### (c) Clause (xi)(a) & (b) - Fraud Reporting: The auditor must report whether any fraud by the company or any fraud on the company has been noticed or reported during the year. If yes, the nature and amount involved must be stated, and whether any report under Section 143(12) in Form ADT-4 was filed with the Central Government.

Key Concepts to Understand

Fraud

A false representation of a material fact made by a party to a contract knowingly, without belief in its truth, or recklessly, with intent to deceive the other party or induce them to enter a contract (Section 17, ICA 1872). Contract is Voidable + right to claim damages.

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