CARO 2020-Companies Audit Report Order

Applicability of CARO

Companies Auditors Report 2020 is applicable from 1 April 2020 to all companies from financial year 2019-20 expect those specified below. After consultation with National Financial Reporting Authority certain changes has been made in Companies Auditors Report Order.

Non Applicability of CARO 

Companies Auditor Report Order Rules not applicable to the following companies. Company auditor not required to report under CARO for these companies-

1. Banking Companies defined under section of Banking Regulation Act, 1949
2. Small Companies (Companies with paid up capital less than or equal to Rs. 50 lakh and with a last reported turnover which is less than or equal to Rs. 2 crore)
3. Insurance Companies defined under Insurance Act, 1938
4. Companies registered for charitable purpose under section 8 of Companies Act
5. One Person Company defined under clause 62 of section 2 of Companies Act
6. Private Limited Company whose gross receipts or revenue (including revenue from discontinuing operations) is less than or equal to Rs. 10 crore in the financial year or Whose paid up share capital plus reserves is less than or equal to Rs. 1 crore as on the balance sheet date (i.e. usually at the end of the FY) or Not a holding or subsidiary of a Public company or whose borrowings is less than or equal to Rs. 1 crore at any time during the FY

Reporting under CARO

1. Reporting on Tangible and Intangible assets
2. Detail of inventory and working capital
3. Reporting on investments, any guarantee or security or advances or loans given
4. Compliance in respect of a loan to directors
5. Compliance in respect of deposits accepted
6. Maintenance of costing records
7. Deposit of statutory liabilities
8. Unrecorded income
9. Default in repayment of borrowings
10. Funds raised and utilisation
11. Fraud and whistle-blower complaints
12. Compliance by a Nidhi
13. Compliance on transactions with related parties
14. Internal audit system
15. Non-cash dealings with directors
16. Registration under section 45-IA of RBI Act, 1934
17. Cash losses
18. Resignation of statutory auditors
19. Material uncertainty on meeting liabilities
20. Transfer to fund specified under Schedule VII of Companies Act, 2013
21. Qualifications or adverse auditor remarks in other group companies

Reporting under CARO

Reporting on Tangible and Intangible assets

• Company is maintaining proper record of property and plant & equipment having full particular including quantitative detail and situation.
• Company is maintaining proper record showing full detail of intangible assets
• Physical verification of property and plant & equipment being conducted at reasonable interval by the management and discrepancies has been accounted in books properly, if found any.
• The title of all the immovable property (except where lease agreement executed) disclosed in the financial statement held with company.
• Company has revalued its property, plant & equipment and intangible assets during the year and revaluation has been done by registered valuer.
• Any proceeding started or pending against company for holding benami property under Benami Transaction (Prohibition) Act and the same has been properly disclosed in the financial statement.

Reporting on inventory and working capital

• Physical verification of inventory has been conducted by management at regular interval and according to auditor such procedure is appropriate. Any discrepancy found has been properly disclosed in financial statement.
• The company has been sanctioned working capital limit of Rs. 5 Crore or more from bank or financial institution on the basis of current assets. Company filed quarterly return or statement with bank or financial institution has been in agreement with financial statement.

Reporting on investments, any guarantee or security or advances or loans given

Compliance in respect of a loan to directors

Compliance in respect of deposits accepted

Maintenance of costing records

Deposit of statutory liabilities

Unrecorded income

Default in repayment of borrowings

Funds raised and utilisation

Fraud and whistle-blower complaints

Compliance by a Nidhi

Compliance on transactions with related parties

Internal audit system

Non-cash dealings with directors

Registration under section 45-IA of RBI Act, 1934

Cash losses

Resignation of statutory auditors

Material uncertainty on meeting liabilities

Transfer to fund specified under Schedule VII of Companies Act, 2013

Qualifications or adverse auditor remarks in other group companies