The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi

Guidance Note on The Companies (Auditor’s Report) Order, 2020

Foreword

The Ministry of Corporate Affairs (MCA) has issued the Companies (Auditor’s Report) Order, 2020 (CARO 2020) on 25th February 2020, which was initially applicable for statutory audits of financial statements for periods beginning on or after April 1, 2019. Subsequently, vide notification dated 24th March 2020, applicability of CARO 2020 was deferred by one year. Accordingly, CARO 2020 would be applicable for statutory audits of financial statements for periods beginning on or after April 1, 2020. CARO 2020 contains several changes including many additional reporting requirements vis-à-vis CARO 2016 to further enhance overall quality of reporting by the auditors. These changes necessitated the revision of the Guidance Note on CARO 2016 earlier issued by ICAI.

I am happy to note that the Auditing and Assurance Standards Board (AASB) of ICAI has brought out this Guidance Note on the Companies (Auditor’s Report) Order, 2020 for providing appropriate guidance to the members so that the requirements of the Order can be fulfilled in letter and spirit by them. The Guidance Note is developed to provide detailed guidance on various clauses of CARO 2020 and various issues involved therein in an easy to understand language. This Guidance Note is quite comprehensive and self-contained reference document to assist the members in discharging their duties efficiently.

I compliment CA. G. Sekar, Chairman, CA. (Dr.) Debashis Mitra, Vice-Chairman and all members of the Auditing and Assurance Standards Board of ICAI for their efforts in bringing out this Guidance Note for the benefit of the members and other stakeholders at large.

I am confident that the members would find this Guidance Note highly useful in their professional assignments.

June 13, 2020
New Delhi

CA. Atul Kumar Gupta
President, ICAI

Preface

The Ministry of Corporate Affairs issued the Companies (Auditor’s Report) Order, 2020 (CARO 2020) on 25th February 2020. The Order was initially applicable for audits of financial year 2019-20 and onwards but subsequently its applicability was deferred by one year vide notification dated 24th March 2020. Now, the Order would be applicable for audits of financial year 2020-21 and onwards. The Order contains several significant changes and several new reporting requirements vis-à-vis earlier Order i.e. CARO 2016. The Auditing and Assurance Standards Board of ICAI undertook the revision of the Guidance Note on CARO 2016 to provide appropriate guidance to the members on CARO 2020.

We feel immense pleasure in placing in hands of the members this Guidance Note on the Companies (Auditor’s Report) Order, 2020 issued by the Board under the authority of the Council of ICAI. The Guidance Note was initially developed by six study groups constituted by the Board for this purpose and thereafter it was finalised with the contribution of the Board members and the Central Council members. The Guidance Note has been written in easy to understand language and contains detailed guidance on all clauses of CARO 2020. The Guidance Note will supersede the Guidance Note on CARO 2016 for audits of financial statements for periods beginning on or after April 1, 2020.

At this juncture, we wish to place on record our sincere gratitude to convenors of all study groups and their team for revising the Guidance Note viz. CA. M. P. Vijay Kumar (Central Council Member and Convenor of Chennai study group), CA. Shriniwas Y. Joshi (Central Council Member and Convenor of Mumbai study group), CA. Chandrashekhar V Chitale, (Central Council Member and Convenor of Pune study group), CA. Sanjeev Kumar Singhal, (Central Council Member and Convenor of Delhi 1 study group), CA. Pramod Jain (Central Council Member and Convenor of Delhi 2 study group).

We express our sincere thanks to CA. Atul Kumar Gupta, Honourable President, ICAI and CA. Nihar Niranjan Jambusaria, Honourable Vice-President, ICAI for their guidance and support to the activities of the Board.

We also express our sincere thanks to all the Board members and all the Central Council members for their suggestions, support and guidance in finalising this Guidance Note.

We appreciate the efforts made by CA. Megha Saxena, Secretary, AASB, CA. Rajnish Aggarwal, Assistant Director and other staff of AASB in finalizing this Guidance Note. We are confident that the members would find this Guidance Note immensely useful.

CA. (Dr.) Debashis Mitra
Vice Chairman, AASB

CA. G. Sekar
Chairman, AASB

Download Guidance Note on Companies (Auditor’s Report) Order, 2020

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