(a) Brown Enterprises Limited, an unlisted public company, has granted loans to two of its subsidiaries, stood as a guarantor for loans taken by a…

(a) (i) Reporting Requirements Under Clause (iii) of Para 3 of CARO 2020 Loans and Advances provided: Report the aggregate amount of loans provided during the year to subsidiaries (15crore) and other parties (3crore).Disclose the outstanding balance as of March 31, 2025: Subsidiary A:6 crores.Subsidiary B: Nil (fully repaid).UR & Co., Partnership firm:1.5 crore overdue for 120 days.Guarantees and Security Offered: Disclose the guarantee of 7crore provided to Milestone LLP and confirm whether it was prejudicial to the company's interest.Investments Made: Report the 4 crore equity investment and ensure compliance with terms and disclosure requirements.Overdue Loan: In the case of UR & Co., disclose the overdue amount of 1.5 crore for more than 90 days and assess the company's recovery actions. Mention if legal proceedings are progressing adequately.Loan Renewal: Report the renewal of the 2crore loan to Subsidiary A as a fresh loan granted to settle existing dues.Include this amount and its proportion in the total loans granted during the year. (ii) In view of above it can be concluded that the contention of management of Brown Enterprises Limited is not correct as the auditor is required to report the overdue loan amount in respect of UR & Co. and Subsidiary A under Clause (iii) of Paragraph 3 of CARO 2020. Alternative Answer: (a) (i) Clause (iii) of Para 3 of CARO, 2020, requires the auditor to report whether during the year the company has made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties, if so- (a) whether during the year the company has provided loans or provided advances in the nature of loans, or stood guarantee, or provided security to any other entity [not applicable to companies whose principal business is to give loans], if so, indicate- (A) the aggregate amount during the year, and balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures and associates; (B) the aggregate amount during the year, and balance outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to parties other than subsidiaries, joint ventures and associates; (b) whether the investments made, guarantees provided, security given and the terms and conditions of the grant of all loans and advances in the nature of loans and guarantees provided are not prejudicial to the company's interest; (c) in respect of loans and advances in the nature of loans, whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular; (d) if the amount is overdue, state the total amount overdue for more than ninety days, and whether reasonable steps have been taken by the company for recovery of the principal and interest; (e) whether any loan or advance in the nature of loan granted which has fallen due during the year, has been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties, if so, specify the aggregate amount of such dues renewed or extended or settled by fresh loans and the percentage of the aggregate to the total loans or advances in the nature of loans granted during the year [not applicable to companies whose principal business is to give loans]; (f) whether the company has granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment, if so, specify the aggregate amount, percentage thereof to the total loans granted, aggregate amount of loans granted to Promoters, related parties as defined in clause (76) of section 2 of the Companies Act, 2013; In the given situation, the auditor of Brown Enterprises Limited, an unlisted public company, is required to report under Clause (iii) of Paragraph 3 of CARO 2020: aggregate amount of loans provided to subsidiaries [i.e.,10 crore to Subsidiary A & 5crore to Subsidiary B] and 6crore for the loan outstanding from subsidiary A at the balance sheet date.the loans provided to Partnership firm UR & Co. of 3crore and Guarantee provided to Milestone LLP of 7crore.an amount of 1.5 crore in respect of the loan given to the partnership firm UR & Co., as the amount has been overdue for 120 days i.e., more than 90 days] and reports that Brown Enterprises Ltd. has taken reasonable steps initiated legal proceedings for the recovery, but no settlement has been achieved.loan of 2crore to Subsidiary A, was renewed upon maturity without repayment, adjusting the overdue balance. (ii) In view of above it can be concluded that the contention of management of Brown Enterprises Limited is not correct as the auditor is required to report the overdue loan amount in respect of UR & Co. and Subsidiary A under Clause (iii) of Paragraph 3 of CARO 2020.