Companies (Auditor’s Report) Order, 2020 (CARO 2020)

Companies (Auditor’s Report) Order, 2020 (CARO 2020)

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Created By Admin Last Updated Mon, 20-Jul-2020

Companies (Auditor’s Report) Order, 2020 (CARO 2020)


As per Section 143(11) of the Companies Act, 2013, the Auditor’s report of a specified class of companies should include a statement on the prescribed matters. These reporting requirements have been prescribed under the Companies (Auditor’s Report) Order (hereafter referred to as CARO), 2015 issued by the Ministry of Corporate Affairs (MCA) on 10th April 2015. On the basis of the recommendation of the Committee set up by MCA, CARO, 2016 was issued on 9th February 2016. With the objective to curb corporate fraud & misstatement, the MCA has now issued CARO,2020 on 25th February 2020.

The new CARO has the following objectives:

• To enhance the quality of reporting by Auditors 

• To show a true and fair view of financial statements

• To bring transparency in the financial statements 

• To ensure corporate governance

Highlights of CARO, 2020

• 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.

• There are no changes in the applicability of CARO, 2020.

• There are a total of 21 clauses as compared to 16 clauses in CARO 2016, 7 clauses inserted, 1 clause fused with other, and 1 clause deleted.

• CARO, 2016 is not applicable to Consolidated Financial Statements (CFS). But now in CARO, 2020 comprises a clause which is now applicable to report on CFS.