CA Ekant Toshniwal
CORPORATE FRAUD and AUDITOR
FRAUD!!!!
This word is giving sleepless nights to almost all the Auditors now – a – days. With more & more stringent provisions, penalties and more responsibility on auditors to report fraud; all the auditors are trying their best to be more vigilant during audits. This is a good sign, though!
However, on the one hand the authorities want us to report any mischief occurred in the Company and on the other hand they are striking off various clauses from our reports through which we could report “POSSIBLE FRAUD” circumstances, which can become “ACTUAL FRAUD” ingredients later in future.
Confused……!
Recall clause XVII of CARO, 2003 which is reproduced below:-
“whether the funds raised on short term basis have been used for long term investment and vice versa; If yes, the nature and amount is to be indicated”
Bank & Financial Institutions are MAJOR STAKEHOLDERS in any Company and this clause was of utmost importance for them as any short term funds used for long term investment could affect the cash liquidity of the company severely and have major impact on day to day operations. In normal word, the company could face CASH CRUNCH. Also, while sanctioning short term loans, banks do mention in the T&Cs that the borrower undertakes that these funds shall not be used for long term purposes.
But in CARO, 2015 we do not find any mention of this clause!!!
Though we have the power to report such cases in “Emphasis of matter paragraph in our main report”; the logic behind striking off the aforesaid clause is still not known.
Mr. Ekant… I think the word “not” is missing in the statement “But in CARO, 2015 we do find any mention of this clause!!! “. Needs a minor correction please.