# Section 143(3) — Mandatory Reporting in Audit Report
Under "Report on Other Legal & Regulatory Requirements", the auditor MUST report on the following:
## Clauses (a) to (j)
| Clause | Matter |
|---|---|
| (a) | Whether all information sought was obtained — if not, details & effect on FS |
| (b) | Whether proper books of account are kept; whether proper returns received from unvisited branches |
| (c) | Whether branch audit report (by other auditor) is received & how dealt with |
| (d) | Whether B/S and P&L agree with books & returns |
| (e) | Whether FS comply with Accounting Standards |
| (f) | Observations on transactions having an adverse effect on the company |
| (g) | Whether any director is disqualified u/s 164(2) |
| (h) | Any adverse remark on maintenance of accounts |
| (i) | Whether company has adequate Internal Financial Controls and their operating effectiveness |
| (j) | Other matters prescribed under Rule 11 |
## Clause (i) — IFC Exemption
IFC reporting does NOT apply to a private company that is:
(i) A One Person Company or Small Company, OR
(ii) Has:
- Turnover < ₹50 crore (latest audited FS), AND
- Aggregate borrowings from banks/FIs/any body corporate < ₹25 crore at any point during the FY
## Clause (j) — Rule 11 Matters
(i) Disclosure of impact of pending litigations on financial position
(ii) Provision for material foreseeable losses on long-term contracts
(iii) Delay in transferring amounts to Investor Education & Protection Fund
(iv) Funds routed through Intermediaries / Funding Parties — auditor reports on management representations regarding:
- (a) Outward leg — No funds advanced to intermediaries with understanding they invest for Ultimate Beneficiaries on company's behalf
- (b) Inward leg — No funds received from funding parties with understanding the company will invest for their Ultimate Beneficiaries
- (c) Nothing has come to auditor's notice that the above representations contain material misstatement
(v) Whether dividend declared/paid is as per Section 123
(vi) Whether company used accounting software with audit trail feature, operated throughout the year for all transactions, not tampered with, and preserved
(vii) Statement on whether director remuneration is per the Act
## Reasons for Qualification
Where any matter is answered in the negative or with qualification, the report must state the reasons.