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24 Oct2020
  • By Admin
  • Category Company and LLP Compliances
  • Views 4479
Company Auditor’s Report Order (CARO) 2020 is the new format for issue of audit report, in case of statutory audits of companies under the Companies Act, 2013 which includes the additional reporting requirements after the consultations with the National Financial Reporting Authority (NFRA). Its main motive is to enhance the overall quality of reporting by the company auditors and will be applicable from April 1, 2020. 

List of Amendments

The CARO 2020 has overall 21 clauses against 16 clauses in the CARO 2016. Seven new clauses have been inserted, one clause has been merged and one deleted.
The below-mentioned are the amendments that have been made in CARO 2020:
S. No. List of Clauses Alterations in CARO 2020    
1 Non –current Assets a) The word “Fixed Assets” not replaced with Property, Plant, Equipment and Intangible Assets (PPEIA).
b) If title deed of the immovable property not in the name of the company, then all such instances must be reported. Any Benami Proceedings initiated must be reported as well.
c) Revaluation of property, plant/ equipment/ intangible property to be reported.
2 Inventory and Other Current Assets If current working capital on assets is above Rs. 5 crores (sanctioned by any financial institution) then, the quarterly returns by the company should be in agreement with the books of accounts. If the same is not followed - the details of the same are to be declared under this head.    
3 Investments, Loans or Advances by Company a) The reporting of investments provided any security or guarantee or granted any loan or advance in the nature of loan to subsidiaries, joint venture, associate and also to parties other than subsidiaries, joint ventures and associate amount outstanding as on the balance sheet date.
b) Any loan or advance of the nature of loan granted which has fallen due during that year, has been extended or renewed or fresh loan granted to settled the overdue of the existing loans given to same parties, then to specify the aggregate amounts of such dues renewed or are extended or are settled by fresh loans and the percentage of the aggregate to the total loan or advances in the nature of loans granted during the year.
c) Where there are loan and advances in nature of repayable on demand, without any terms or conditions or period of payments then to specify the amount of loans or advances given to promoters and related parties.
4 Loan to the Directors and Investment by the Company -    
5 Deposits Accepted by the Company -    
6 Maintenance of Cost Records -    
7 Statutory Dues -    
8 Disclosure of Undisclosed Transactions The auditor shall report on -
a) Transaction not recorded in the books but is disclosed in income tax assessment.
b) Whether or not the unrecorded income have been disclosed in books of accounts or not.
9 Loans or Other Borrowings a) The details of funds borrowed by holding company for the purpose of discharging obligations of group entities - usage of long term and short term funds.
b) The details of funds borrowed by pledging the securities held in its group entities and defaults in its repayment.
c) Whether the company is a declared willful defaulters, diversion of loan taken for the other purpose or not.
10 Money Raised by IPOs, FPOs The compliance in relation to preferential allotment or private placement of shares.    
11 Fraud Any fraud report filed by the auditor in Form ADT 4 u/s 143(12) to the CG or any complaints from the informers considered by the auditors while submitting the reports.    
12 Nidhi Company -    
13 Related Party Transactions -    
14 Internal Audit System If the company has an audit system equivalent to the size and nature of its business. The reports by the Internal Auditor for the audit period were duly considered by the statutory auditor.    
15 Non-cash Transactions -    
16 RBI Registration -    
17 Cash Losses In case, there is any cash losses in the current financial year or preceeding financial year.    
18 Consideration of Outgoing Auditor If at the time of departure of statutory auditor, he has taken into consideration the objections, issues or concerns raised by the outgoing auditor.    
19 Material uncertainty in relation to the realization of financial assets and payment of financial liabilities Whether the auditors is of the opinion that there is no material uncertainty exist as on the date of audit report and that company is capable of meeting its all liabilities existing as at date of the balance sheet as and when they will fall due within a period of a year from the date of balance sheet.    
20 Compliance of CSR a) Whether in respect of other than the ongoing projects, the company has transferred the unspent amount to a Fund specified in the Schedule VII to the Companies Act, 2013 within a period of 6 months from expiry of the FY in compliance with second proviso to Section 135 (5) of the Act;
b) Whether any amount remaining unspent under Section 135 (5) of the Companies Act, 2013 , pursuant to any ongoing project, has been transferred to a special account while complying with the provision of Section 135 (6) of the Act.
21 Qualification or adverse remarks in the consolidated financial statements If there are any qualification or adverse remarks in the consolidated financial statements of a particular firm given by the auditors. If yes, then it is must to mention the details of the company and the clauses of the CARO report having qualifications.    
In conclusion, the Company Auditor's Report Order (CARO) 2020 introduces additional reporting requirements for statutory audits of companies under the Companies Act, 2013. The amendments include new clauses and alterations to enhance reporting quality and will be applicable from April 1, 2020.

Stay updated with the amendments in the Company Auditor’s Report Order (CARO) 2020, enhancing the quality of reporting for statutory audits. Understand the new reporting requirements and ensure compliance with the revised clauses. If you wish to know more about the Amendments in CARO 2020, kindly contact us at

Disclaimer:The information given above is to provide general guidance to the readers. This information should not be sought as a substitute for legal opinion

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