Company Auditor’s Report Order (CARO) is the list of reporting requirements that are needed from the Auditor who audits a company/business. Ministry of Corporate Affairs (MCA) has issued Company Auditor’s Report Order (CARO) 2020 
Latest Update in CARO 2020
- The Institute of Chartered Accountants of India (ICAI) has published a new guidance note on CARO 2020. Read more
CARO 2020 is applicable for reporting the financial statements of liable firms for the Financial Years staring from 1st April 2019.
List of Amendments
There are no alterations in the applicability of CARO 2020. CARO 2020 comprises of overall 21 clauses against 16 clauses in 2016. 7 new clauses were entered, 1 clause merged with other and 1 deleted.
Mentioned below are the amendments that are made in CARO 2020 with regards to CARO 2016 
| List of Clause | Alterations in CARO, 2020 |
|---|---|
| I. Non–current Assets | Amended Laws Title deeds of the immovable properties need validation and should be mentioned in the financial statement. A pre-set format for maintaining the details of the fixed assets. For revaluation of property, plant or equipment or intangible property. If the revaluation is based on the valuation by a Registered Valuer, if the change is 10% or more of the net carrying value. |
| II. Inventory and Other Current Assets | Amended Laws If the current working capital on assets is more than Rs. 5 Crore (sanctioned by any financial institution(s)) and the quarterly returns by the company should be in agreement with the books of accounts. If not then details of the same are to be mentioned here. |
| III. Investments, Loans or Advances by Company | Amended Laws If there are any investments, supply of loans or advances in the form of a loan grant, or stood guarantee, or provided security, indicate the aggregate amount during the year, and balance outstanding at the balance sheet date. Loan or advances to subsidiaries, joint ventures and/or associates. Loan or advances to third parties other than subsidiaries, joint ventures and/or associates. In case of loan supply or advances in the form of loan redeemable when demanded (without any terms or period of payment). Such information is subject to specification under the section. The loans or advances are given to the promoters or related parties. |
| IV. Loan to Directors and Investment by the Company | Similar to CARO 2016 |
| V. Deposits Accepted by the Company | Similar to CARO 2016 |
| VI. Maintenance of Cost Records | Similar to CARO 2016 |
| VII. Statutory Dues | Similar to CARO 2016 |
| VIII. Disclosure of Undisclosed Transactions | Newly entered Provisions Transactions that are not reported in the Books of Accounts and have been surrendered or disclosed in the books of accounts as income during the year in the tax assessments. Whether the unrecorded income is disclosed in the books of accounts. |
| IX. Loans or Other Borrowings | Amended Laws Mentioned here is the format of reporting the information related to the repayment of loans or other liabilities (lender-wise). The reporting clause of sec 143 is inserted here as part of the CARO related to term loans, short-term loans, and funds raised to meet the obligations of the subsidiaries. |
| X. Money Raised by IPOs, FPOs | Amended Laws Merged clause (xiv) of CARO 2016 – compliance in relation to preferential allotment or private placement of shares. |
| XI. Fraud | Amended Laws Any fraud report is filed by the Auditor in ADT 4 u/s 143(12) to the Central Government or any complaints from the informers considered by the auditors while submitting the reports. |
| XII. Nidhi Company | Similar to CARO 2016 |
| XIII. Related Party Transactions | Similar to CARO 2016 |
| XIV. Internal Audit System | Newly entered Provisions If the company has the Audit System equivalent to the size and nature of its business. Reports by the Internal Auditors for Audit Period were duly considered by the statutory auditor. |
| XV. Non-cash Transactions | Similar to CARO 2016 |
| XVI. RBI Registration | Similar to CARO 2016 |
| XVII. Cash Losses | Newly entered Provisions Reported are the cash losses. In case there are any cash losses in the current financial year or the immediately preceding financial year. |
| XVIII. Consideration of Outgoing Auditor | Newly entered Provisions If, at the time of departure of the statutory auditor, he has taken into consideration the issues, objections or concerns raised by the outgoing auditors. |
| XIX. Material uncertainty in relation to realisation of financial assets and payment of financial liabilities | Newly entered Provisions whether the auditor is of the opinion that no material uncertainty exists as on the date of the audit report that the company is capable of meeting its liabilities existing at the date of the balance sheet as and when they fall due within a period of one year from the balance sheet date |
| XX. Compliance of CSR | Newly entered Provisions The funds transferred by the company (as per sections 135(5) and 135(6)) other than those designated for the ongoing CSR projects must be specified here. New concept:135(5) If the accumulated/unspent amount is in no way related to the ongoing CSR project, then such an amount is subject to direct transfer to the fund mentioned in Schedule VII of the Act. The deadline for which is within 6 (six) months from the end of the relevant financial year. 135(6): any accumulated/unspent amount that was earlier allotted to the ongoing CSR projects in accordance with its CSR policy. The company hereby is obliged to transfer such accumulated/unspent amounts to a special account with the name Unspent Corporate Social Responsibility Account. The deadline for which is within a period of thirty (30) days from the end of the financial year. The value that is amounted in the CSR account is required to be spent in accordance with the CSR policy within the designated time period of 3 financial years starting from the date of transfer. If failed to do so then the company should transfer this unspent amount to a fund specified under Schedule VII of the Act. |
| XXI. qualifications or adverse remarks in the consolidated financial statements | Newly entered Provisions Inserted If there are any qualifications or adverse remarks in the consolidated financial statements of a particular firm given by the auditors. If yes then mentions the details of the company here and the clauses of the CARO report having qualifications or adverse remarks. |
