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Companies (Auditor’s Report) Order, 2020

Published on February 28, 2020
Current context: The Corporate affairs ministry has notified the Companies (Auditor’s Report) Order, 2020 (CARO, 2020) on 25th February 2020.
Companies (Auditor’s Report) Order, 2020 
  • The objective of the CARO 2020 is to strengthen the corporate governance framework under the Companies Act, 2013 to attain the national objective of becoming a $ 5 Trillion economy.
  • The CARO, 2020 is applicable for an audit of financial statements of eligible companies for the financial years commencing on or after the 1st April 2019.
  • The CARO, 2020 shall be applicable to all those companies on which CARO, 2016 was applicable.
  • Some Important Features of the CARO, 2020 include:
    1. It will include certain additional clauses, as compared to CARO, 2016 with 21 clauses as compared to 16 clauses in CARO 2016.
    2. It made the companies mandatory to disclose all whistle-blower complaints to the auditor, and these will have to be mentioned in the audit reports.
    3. A specific format has been provided for reporting the details of such immovable properties whose title deeds are not held in the name of the company but are disclosed in the financial statements.
    4. Disclosure of details of proceedings against the company for holding Benami Property.
    5. The auditor is to provide specific details if, at any point of time of the year, 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.
    6. In clause 3(iii) of CARO, 2020, the auditor is to report in detail on the investments made by the company in, any guarantee or security provided or any loans or advances in the nature of loans granted, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties during the year, that they are not prejudicial to the interests of the company.


Q.1 The Companies (Auditor’s Report) Order, 2020 (CARO, 2020) is applicable for audit of financial statements of eligible companies for the financial years commencing on or after the _________________? 
a. 1st June, 2019
b. 1st March, 2019
c. 1st April, 2019
d. 1st March, 2020
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