Tag: CARO

ICAI Issues Guidance Note On Companies (Auditor’s Report) Order, 2020

ICAI’s Guidance Note on the Companies (Auditor’s Report) Order, 2020

The Ministry of Corporate Affairs (MCA) issued the Companies (Auditor’s Report) Order, 2020 (CARO 2020) in February 2020. CARO 2020 contains many new reporting requirements for auditors such as revaluation of property, plant and equipment (including right of use assets) or intangible assets, benami property, working capital limits on basis of security of current assets, granting loans or advances in the nature of loans which are either repayable on demand or without specifying any terms or period of repayment, undisclosed income, company declared as wilful defaulter, material uncertainty in meeting liabilities, CSR activities. The Auditing and Assurance Standards Board (AASB) of the ICAI has issued the “Guidance Note on the Companies (Auditor’s Report) Order, 2020” (Guidance Note on CARO 2020) in July 2020 to provide detailed guidance on various clauses of CARO 2020 and reporting requirements for auditors.

To ensure that the management of companies provide various disclosures which pertain to clauses of CARO 2020 especially the aforesaid new reporting requirements, the MCA has brought out corresponding amendments in Schedule III (Division I, Division II and Division III) to the Companies Act, 2013 vide its notification dated 24th March 2021 for preparation of the financial statements. In addition to the said amendments, various other disclosure requirements have also been added in Schedule III to the Companies Act, 2013.

The members may note that in light of the said amendments, a comprehensive revision of the Guidance Note on CARO 2020 is being initiated by AASB. In the interregnum, the members should read CARO 2020 in conjunction with the corresponding amendments made in Schedule III to the Companies Act, 2013 for presentation and disclosure requirements stated therein and perform the audit procedures accordingly.

Annexure to this Announcement summarises interplay of some of the clauses in CARO 2020 and consequential amendments to Schedule III to the Companies Act, 2013.

To Download PDF Copy of Guidance Note, Please Click Here

QUICK REFERENCER CARO & XBRL Under the Companies Act, 2013

CARO – Company Auditor’s Report Order

XBRL – eXtensible Business Reporting Language

The Ministry of Corporate Affairs (MCA) issued Company Auditor’s Report Order (CARO), 2016 on 29th March 2016 in supersession of the Companies (Auditor’s Report) Order, 2015, and is applicable for reporting on financial statements of companies whose financial year commences on or after 1st April 2015.

CARO 2015 was issued by MCA in supersession of CARO 2003 which was issued earlier in pursuance with the provision of Section 227 (4A) of Companies Act 1956. The auditors of all other class or classes of companies are required to report on the matters specified in this order. This order applies to foreign companies also.

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CARO, 2020 Applicable w.e.f. 01.04.2021 – MCA Notification

CARO, 2020 Applicable w.e.f. 01.04.2021 – MCA Notification

Ministry of Corporate Affairs (MCA) Updates:

Ministry of Corporate Affairs (MCA) has issued the Companies (Auditor’s Report) Second Amendment Order, 2020 {CARP, 2020} vide Gazette Id CG-DL-E-19122020-223784 published in NIOG on 19th December, 2020.

Applicable: from the date of its publication in the Official Gazette.

Key Highlight:

In the Companies (Auditor’s Report) Order, 2020, in paragraph 2, for the figures, letters and word “1st April, 2020”, the figures, letters and word “1st April, 2021” shall be substituted.

Kindly note that: The principal order was published in the Gazette of India, Extraordinary, Part II, section 3, subsection (ii), vide number S.O. 849(E), dated the 25th February, 2020 and was subsequently amended vide number S.O. 1219 (E), dated the 24th March, 2020.

Link of this Notification: http://egazette.nic.in/WriteReadData/2020/223784.pdf

Disclaimer:Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.