Are the procedures of physical verification of stocks followed by the anagement reasonable and adequate in relation to the size ot the company and nature of its business?If not, the inadequacies in such procedures should be reported; Amendment 4 (it) (b) Are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported; No change except, the word 'stocks' is replaced by the word 'inventory. Comment The term 'stocks' in 'MAOCARO' was used in generic sense to include all types of stocks of he company.
But, the term 'inventory is wider in its meaning and as mentioned in Para 4 (a) above, all types or categories of inventories including that which are excluded from application of AS 2 would get covered. (A) (v) Whether any material discrepancies have been noticed on physical verification of stocks as compared to book records, and if so, whether the same have been properly dealt with in the books of account; 4 (it) (c) Whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, hether the same have been properly dealt with in the books of account; Amendment New assertion: Whether the company is maintaining proper records of inventory. Deletion of 'as compared to book records' in relation to material discrepancies noticed on physical verification of stocks. Comment 'Proper records of inventory has not been specified.Generally such records should record the movement of stocks giving details of : Item description, classification thereof Receipts Issues, dispatches , transfers, adjustments Inventory on hand 4 (A) (vi) Whether the auditor, on the basis of his examination of stocks, is atisfied that such valuation is fair and proper in accordance with the normally accepted accounting principles? Is the basis of valuation of stocks same as in the preceding year; if there is any deviation in the basis of valuation, the effect of such deviation, if material should be reported; Amendment Auditors comment on valuation of stocks, as to whether fair and proper and the effect (if material) of any deviation in the basis of valuation, has been deleted.
Comment As reporting on compliance with accounting standards is also covered in Auditors Report, the reporting under this Para in 'MAOCARO' was redundant. Deleted CARO, 2003If the company has taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1 t 1956), and/or trom the companies under the same management as defined under sub-section (1 B) of section 370 of the Companies Act, 1956 (1 of 1956), whether the rate of interest and other terms and conditions of such loans are prima facie prejudicial to the interest of the company; 4 (A) (viii) If the company has granted any loans, secured or unsecured to companies, firms or other arties listed in the register maintained under section 301 and/or to the companies under the same management as defined under sub-section (1 B) of section 370 of the Companies Act, 1956 (1 of 1956), whether the rate of interest and other terms and conditions of such loans are prima facie prejudicial to the interest of the company; Amendment 4 (iii) (a) Has the company either granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301
