- CA. Deepanshu Soni
Companies Audit Report Order (CARO) is a format prescribed by the ministry of corporate affairs (MCA) for the issue of Statutory Audit reports of companies as per the Companies Act, 2013. The MCA has announced a new format for CARO on 25th February 2020 that is CARO 2020 and it will replace the earlier version of CARO 2016 effective from 1st April 2021.
CARO 2020 will be applicable for all the statutory audits starting after 1st April 2021. It is applicable to all the companies except the ones given below:
Clause-1 Property, Plant, Equipment, and Intangible Assets
Clause-3 Investments, Loans, Guarantees, Securities and Advances
Word Deemed to be deposits is added.
Clause-7 Statutory Dues
Word Goods and Service Tax (GST) is added.
Clause-8 Disclosed and Surrendered Income
Whether any transaction not reported is disclosed in the income tax assessments and auditor to report whether the same is correctly accounted for in the books of the current year.
Clause-12: Nidhi Company
Disclosure of whether the Nidhi company has defaulted in payment of interest on deposits or repayment thereof for any period.
Clause-14: Internal Audit
Clause-16: RBI Regulations
Disclosure on whether the company has conducted any Non-Banking Financial or Housing Finance activities without a valid Certificate of Registration from the Reserve Bank of India.
Clause-17 Cash Losses
Disclosure on whether the company has incurred cash losses in the financial year and the immediately preceding financial year.
Clause-18 Auditor’s Resignation
Whether there is any resignation of statutory auditor during the year and whether the auditor considered the objections raised by the going auditor.
Clause-19 Capability to pay Liabilities
To ascertain whether the company is capable of meeting its liabilities existing at the date of the balance sheet when they fall due within a period of one year from the date of the balance sheet.
Clause-21 Consolidated Financial Statement
Whether there are any adverse remarks by the respective auditors in the Companies Auditor’s Report Order (CARO) reports of the companies included in the consolidated financial statements. If yes, details of the companies and the paragraph numbers of the CARO report containing the qualification or adverse remarks should be reported.