This document summarizes the key points of the Companies (Auditor's Report) Order, 2020 (CARO 2020) in India. It applies to all companies except for banking, insurance, Section 8 companies, and small/private companies meeting certain criteria. CARO 2020 contains 21 clauses requiring auditors to report on matters like fixed assets, inventory, loans and investments, statutory dues, fraud, related party transactions, internal audits, cash losses, auditor resignations, and consolidated financial statements. The order is effective from April 1, 2020 and aims to improve transparency in company financial reporting.

1. COMPANIES
(AUDITOR’S
REPORT)
ORDER, 2020

2. APPLICABILITY
CARO, 2020 is applicable on each company, except:
- Banking Companies
- Insurance Companies
- Companies incorporate under Section 8 of CA-2013
- Small Companies*
- Private Limited Companies#

3. * Small Companies
 Paid Up Share Capital – 50 Lakh
(INR)
 Turnover – 2 Cr. (INR)
#Private Limited Companies
 Paid Up Share Capital – 1 Cr.(INR)
 Net Borrowing – 1 Cr. (INR)
 Revenue – 10 Cr. (INR)
This Private Limited Companies is not
the subsidiary and holding company of
any public Limited Company.

4. CLAUSES OF
CARO, 2020
- Total number of clauses – 21
- Applicable – Form the date of April 1, 2020

5. CLAUSE -1: REPORTING ON
PROPERTY. PLANT & EQUIPMENT
- Proper Records and Title deed of the property
- Description of property & Assets
- Gross carrying value
- Property & asset: name of promoter, directors or their relatives of director or
employees
- Period during which it was not held in the name of Company, reasons
- Disputed ownership

6. CLAUSE- 2: REPORTING OF
INVENTORY
- Physical verification
- Discrepancies of 10% or more in the aggregate for each class of inventory
- Company has been sanctioned- working capital limit in excess of INR 5 Cr., in
aggregate from bank and FIs on the basis of securities of current assets.

7. CLAUSE-3: REPORTING OF LOAN,
INVESTMENT, GUARANTEES,
SECURITIES AND ADVANCE OF
LOAN- Aggregate amount during the year
- Balance amount
- Not prejudicial to the company interest
- Schedule of repayment of principal and interest
- Not overdue in 90 Days, after that it is declare as NPA.
- Renew & Extend
- Repayable on demand
Exception : If the principle business of the company – Providing Loan, then this clause
is not applicable.

8. CLAUSE – 4: REPORTING ON
SECTION 185-186 OF CA-2013
CLAUSE -5: REPORTING ON THE
DEPOSITED UNDER SECTION 73-76
OF CA-2013
CLAUSE - 6: REPORTING ON COST
RECORDS

9. CLAUSE 7: REPORTING ON
STATUTORY DUES
- In this also including the statutory dues relating to the goods and services tax.
- PF
- Income Tax
- Others

10. CLAUSE - 8: REPORTING ON
UNRECORDED INCOME

11. CLAUSE-9: REPORTING ON
REPAYMENT AND USAGE OF
BORROWING
Clause-10: Reporting on use of money
raised through issue of own funds
- Initial Public Offer and Private Placement

12. CLAUSE – 11: REPORTING OF
FRAUD
Clause – 12: Reporting of Nidhi
Companies
Clause – 13: Reporting on related
party transaction U/s 177 to 188 of

13. CLAUSE -14: REPORTS ON
INTERNAL AUDIT
Clause -15: Reporting on Non- Cash
transaction with Directors Section 192
of CA-2013

14. CLAUSE -16: REPORTING ON
REGISTRATION U/S OF 45-IA, RBI
ACT
Clause -17: Reporting on Cash
Losses

15. CLAUSE -18: REPORTING ON
AUDITORS’ RESIGNATION
CLAUSE -19: REPORTING OF
FINANCIAL POSITION

16. CLAUSE -20 REPORTING ON
CSR
Clause -21: Reporting on
Consolidated financial statement

17. This presentation is giving just an idea of the topic. There is no legal status
of this presentation with this not the complete study of the topic. For any
omission, error, and deficiency, then writer is not legally responsible for any
liability.