The Ministry of Corporate affairs has notified the Companies Auditors Report Order 2020 (CARO 2020) on 25th February 2020.
This is applicable for the financial year commencing from 1st April 2019. (i.e,) This is applicable from the F.Y.2019-20 onwards.
Accordingly, every audit report of the Company (if applicable) shall contain the details as specified in the CARO 2020 and the relevant qualifications, if any shall be provided along with reasons.
Few of the Key Changes in the CARO 2020 are as follows :-
- Comment on whether the Company is maintaining proper records showing full particulars of intangible assets shall be provided in addition to the comment on the tangible assets
- Additional details to be provided for leased assets, if the leased assets are held without properly executed Lease agreements in the name of the Company.
- If any revaluation of the assets was done, additional details of the same to be provided.
- Additional information to be provided if any proceedings against the Company has been initiated or pending under the “Benamy Transactions (Prohibition) Act 1988” & also provide if the same has been properly disclosed in the financial statements.
- In verification of the inventory, if more than 10% discrepancy is found, comment to be given whether the same has been properly dealt by the Company
- If the company has been sanctioned working capital limits in excess of Rs. 5 crores, from banks or financial institutions, on the basis of security of current assets (ie., Stock, Book debts etc.,), whether the quarterly returns or statements filed by the Company with such banks/Financial institutions are in agreement with the books of accounts of the company and deviations if any, shall be reported.
- Additional information shall be provided if the Company has provided loans and advances in the nature of loans, stood guarantee or provided security to any other entity.
- If the company has incurred cash losses, the information regarding the same shall also be provided.
- If there has been a resignation of the statutory auditor during the year, additional details shall be provided with regard to objections, concerns of the outgoing auditor.
- Company’s ability to repay its liabilities shall also be commented.
The relevant notification is attached herewith