MCA Notified the Companies (Auditor’s Report) Order, 2020 (CARO 2020)
Applicability: The The CARO, 2020 is applicable for audit of financial statements of eligible companies for the financial years commencing on or after the 1st April, 2019.
1. There are no changes in the applicability of CARO, 2020.
2. There are in total 21 clauses as compared to 16 clauses in CARO 2016, 7 clauses inserted, 1 clause merged with other and 1 clause deleted.
3. Clause by clause changes CARO 2020 vis a vis Previous CARO 2016 are given below for reference.
|Clause||Changes in CARO, 2020|
|I. Non –current assets||Modified
|II. Inventory and other current assets||Modified
|III. Investments, loans or advances by company||Modified
|IV. Loan to Directors and Investment by the Company||No change|
|V. Deposits accepted by the company||No change|
|VI. Maintenance of cost records||No change|
|VII. Statutory dues||No change|
|VIII. Disclosure of undisclosed transactions||Inserted
|IX. Loans or other borrowings||Modified
|X. Money raised by IPOs, FPOs||Modified
|XII. Nidhi company||No Change|
|XIII. Related party transactions||No Change|
|XIV. Internal Audit System||Inserted
|XV. Non-cash transactions||No Change|
|XVI. RBI registration||No Change|
|XVII. Cash losses||Inserted
|XVIII. Consideration of outgoing auditor||Inserted
|XIX. Material uncertainty in relation to realisation of financial assets and payment of financial liabilities||Inserted
|XX. Compliance of CSR||Inserted
135(5): if the unspent amount does not relate to an ongoing CSR project, such unspent amount should be directly transferred to the fund mentioned in Schedule VII of the Act, within 6 (six) months from the end of the relevant financial year
135(6): any unspent amount from the total allocated amount for CSR remains, pursuant to any ongoing CSR project in accordance with its CSR policy, the company is then required to transfer such unspent amount to a special account called Unspent Corporate Social Responsibility Account within a period of thirty (30) days from the end of the financial year.
The amount that has been carry forwarded to the Unspent CSR Account must be spent in consonance with the CSR policy within the stipulated time period of three (3) financial years from the date of such transfer. On failure to do the same, the company should transfer this unspent amount to a fund specified under Schedule VII of the Act
|XXI. Qualifications or adverse remarks in the consolidated financial statements||Inserted
Clause related to the managerial remuneration is omitted i.e., clause (xi) of CARO 2016.