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Applicability of The Companies (Auditor’s Report) Order, 2020.

This order shall come into force from  the date of issuing of this Order i.e. 25th February 2020. Hence the Audit Report under section 143 ,made for the year ended on 31.03.2020, will be prepared as per CARO 2020. 

Matters to be included in auditor’s report made under CARO 2020. –

The auditor’s report on the accounts of a company to which this Order applies shall include a statement on the following matters, namely:-


The Auditor in their Audit Report prepared under Section 143 has to verify the Property, Plant and Equipment of the Company.

The Auditor has to report whether the company is maintaining proper records of the property, plant and equipment and situation of these.

Record of Intangible Assets:

whether the company is maintaining proper records showing full particulars of intangible assets;

Physical Verification:

whether these Property, Plant and Equipment are being physically verified by the management at reasonable interval of time and material discrepancies , if any;

Title Deeds of all the immovable properties:

whether the title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the company, if not, provide the details thereof.

If the immovable properties are not held in the name of the Company, than the following details like Description of property, Gross carrying value Held in name of Whether promoter, director or their relative or employee,    Reason for not being held in name of company to be mentioned’

Revaluation its Property, Plant and Equipment :

whether the company has revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year and, if so, whether the revaluation is based on the valuation by a Registered Valuer;

Also, it is the duty of the Auditor to specify the amount of change, if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment or intangible assets;

Benami Property :

whether any proceedings have been initiated or are pending against the company for holding any benami property under The Benami Transactions (Prohibition) Act, 1988 and rules made thereunder,


whether physical verification of inventory has been conducted at reasonable intervals by the management and whether,and  any discrepancies of 10% or more in the aggregate for each class of inventory were noticed and if so, whether they have been properly dealt with in the books of account;

Working Capital Limits:

If the Company has exposures of Working Capital Loan, than the audit report shall carry the following:

(a)whether during any point of time of the year, the company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets;

(b)whether the quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company, if not, give details;


whether during the year the company has made investments, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties than prescribed details to be checked and recorded

Loan granted, which has fallen due during the year :

whether any loan or advance in the nature of loan granted which has fallen due during the year, has been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties, if so, specify the aggregate amount of such dues renewed or extended or settled by fresh loans

Statutory dues : The Auditor has to dealt with the statutory dues of the Company, if remains un paid.

The extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated;

Disputed Statutory Duties :

where statutory dues referred to in sub-clause (a) have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned

Undisclosed Income:

whether any transactions not recorded in the books of account have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961;

Moneys raised by way of Initial Public Offer or further public offer:

whether moneys raised by way of initial public offer or further public offer (including debt instruments) during the year were applied for the purposes for which those are raised,

Fraud Reporting Under Section 143:

(a) If any fraud by the company or any fraud on the company has been noticed or reported during the year, than the nature and the amount involved is to be reported;

(b) if any report under sub-section (12) of section 143 of the Companies Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, tha it to be reported;

(c) whether the auditor has considered whistle-blower complaints, if any, received during the year by the company;

Internal Audit :

The Auditor has to mentioned  whether the company has an internal audit system commensurate with the size and nature of its business;

Non-Cash Transaction with Directors:

whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether the provisions of section 192 of Companies Act have been complied with;

Company with cash losses:

cash losses in the financial year and in the immediately preceding financial year, the amount of cash losses to be reported;

Changes of Statutory Auditor by way of resignation of Auditors:

whether there has been any resignation of the statutory auditors during the year, if so, whether the new auditor has taken into consideration the issues, objections or concerns raised by the outgoing auditors;


If  in respect of other than ongoing CSR projects , the company has transferred unspent amount to a Fund specified in Schedule VII to the Companies Act 2013 within a period of six months of the expiry of the financial year in compliance with second proviso to sub-section (5) of section 135 of the said Act-that is to be reported;

the unspent amount pursuant to any ongoing project under sub-section (5) of section 135 of the Companies Act, 2013 pertaining to CSR Activities has been transferred to special account in compliance with the provision of sub-section (6) of section 135 of the said Act;

Auditors basis for unfavorable / qualified report:

Basis of the unfavorable / qualified Audit report to be stated.

(Author can be reached at Email Id : & Mobile : +91-9899797126)

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April 2024