CARO 2020 Stands for Companies Auditor’s Report Order, 2020.
CARO is applicable to every company including a foreign company except the following:
- A banking company;
- An insurance company;
- A company licensed to operate u/s 8 of the Companies Act;
- A-One Person Company
- A private limited company, not a subsidiary or holding of a public company,
If the following condition is a breach so CARO is applicable to private companies also.
- having a paid-up capital & Reserves & surplus not more than One Cr.
- The total borrowings not exceeding One Cr. from any financial institution or a bank.
- The total revenue not exceeding Ten Crore during the financial year.
Matters to be included in the auditor’s report are as following
|CARO 2020||CARO 2016|
|Fixed Assets: AmendmentThe Verification of the title deeds of the immovable properties and also disclosure in financial statements.The specific format for maintaining the details of the fixed asset.Revaluation of Property, Plant, and Equipment or intangible assets, whether the revaluation is based on the valuation made by a Registered Valuer, if the change is 10% or more of the net carrying value.||Fixed Assets: – the company is maintaining proper records and quantitative details Physical Verification of fixed assets by the management at reasonable intervals for any material discrepancies and if found some, whether the same have been properly dealt with in the books of accountWhether the company holds the title of immovable property held by the company, If not provides the details thereof|
If discrepancies of 10% or more were noticed whether the same have been properly dealt with in the books of account
If the working capital Loan based on current assets more than 5 crore rupees is sanctioned from the financial institutions,
the quarterly returns or statements filed by the company are in the books of accounts, if not, give full details.
|Inventory: Physical verification of inventory has been conducted at reasonable intervals by the management and if any discrepancies have been noticed are properly dealt with or not.|
|Loans and Advances: Amendment|
Whether the Company has provided loans or advances or security to any other entity;the aggregate amount during the year and the balance outstanding at the balance sheet with regard : to subsidiaries, joint ventures, and associatesto parties other than subsidiaries, joint ventures, and associates
|Loans and Advances:Whether any secured or unsecured loan has been granted by the company to:companies,firms,LLPs orother parties Maintained their registration under section 189.|
a) the terms and conditions of the grant of loans are not prejudicial to the interest of the companyb) the repayment of principal and interest has been specified.
c) If the amount is overdue for more than 90 days, and what reasonable steps have been taken by the company for recovery of the principal and interest.
|Disclosure of undisclosed transactions: (Inserted)Any transactions which are not recorded in the books of account or disclosed the income during the tax assessments, whether the previously unrecorded income has been properly recorded in the books of account or not.|
|Repayment of Dues: Amendment|
The specific format for reporting the details of the default in repayment of loans and advances. Reporting under clauses of sec 143 is inserted as in the of term loans, short term loans, funds raised, etc.
|Repayment of Dues:Whether the company has defaulted in repayment of loans or borrowings from a financial institution, ● If yes,○ the period and○ amount of default to be reported○ in case of defaults to banks, financial institutions, lender wise details to be provided|
|Money raised by IPOs, FPOs: Amendment|
Any compliance in relation to preferential allotment or private placement of shares.
|Money raised by IPOs, FPOs:Whether money raised by way of○ initial public offers or○ further public offer ○ terms loans■ were applied for the same purposes for which those are raised.● If not, then provide the details of delays or defaults.|
|Internal Audit System: (Inserted)whether the company has an internal audit system keeping with the size and nature of its businesswhether the reports of the Internal Auditors for the period under which the audit was considered by the statutory auditor;|
|Cash losses: (Inserted) The number of cash losses, in case of cash losses incurred during the financial year and in the immediately preceding financial year.|
|Consideration of outgoing auditor : (Inserted)Any resignation of the statutory auditors during the year, whether the auditor has pointed out the issues, objections or concerns raised by the outgoing auditors;|
|Material uncertainty in relation to realization of financial assets and payment of financial liabilities: (Inserted)the auditor opinion that no material uncertainty exists as on the date of the audit report and whether the company is capable to meet his liabilities existing at the date of balance sheet and also when they fall due within a period of one year from the balance sheet date|
|Compliance of CSR: (Inserted)The company has transferred unutilized amounts other than on-going projects and on-going projects to specified funds.|
| Qualifications or adverse remarks in the consolidated financial statements: (Inserted)Any qualifications or adverse remarks by the auditors in the CARO reports of the companies included in the consolidated financial statements, if yes, indicate the details of the companies and the clauses of the CARO report containing the qualifications or adverse remarks|