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 Auditing and Assurance Standards Board (AASB) has been constituted by the Institute of Chartered Accountants of India (ICAI) for formulation of Engagement and Quality Control Standards (Standards on auditing, review, other assurance, quality control and related services). AASB also develops Guidance Notes, Technical Guides, Implementations Guides and other publications on generic as well as industry specific issues in auditing, with the prime objective of providing guidance to the auditors. The Board organizes regular awareness programmes across the country on auditing standards and other auditing aspects to update the knowledge of the members.
In July 2020, the AASB issued the “Guidance Note on the Companies (Auditor’s Report) Order, 2020 (CARO 2020) to provide detailed guidance on reporting requirements of CARO 2020. The Ministry of Corporate Affairs vide notification dated 24th March 2021 issued amendment to Schedule III to the Companies Act, 2013. The Schedule III, as amended, requires various disclosures in financial statements some of which are corresponding to the reporting requirements of CARO 2020. I am happy to note that in light of aforesaid amendments, the AASB has undertaken revision and brought out this “Guidance Note on the Companies (Auditor’s Report) Order, 2020 (Revised 2022 Edition)” to provide guidance on various clauses of CARO 2020 in easy to understand language.
I wish to place my appreciation for CA. (Dr.) Sanjeev Kumar Singhal, Chairman, CA. Vishal Doshi, Vice-Chairman and all other members of the Auditing and Assurance Standards Board 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 very useful in their professional assignments.
July 1, 2022
New Delhi
CA. (Dr.) Debashis Mitra
President, ICAI
Preface
The Ministry of Corporate Affairs (MCA) issued the Companies (Auditor’s Report) Order, 2020 (CARO 2020) on 25th February 2020. CARO 2020 was initially applicable for audits of financial year 2019-20 and onwards. Subsequently its applicability was deferred two times vide notification dated 24th March 2020 and 17th December 2020. CARO 2020 is applicable for audits of financial year 2021-22 and onwards. CARO 2020 contains several significant changes and several new reporting requirements vis-àvis CARO 2016. In July 2020, the Auditing and Assurance Standards Board of ICAI issued the Guidance Note on the Companies (Auditor’s Report) Order, 2020 (“Guidance Note on CARO 2020”) to provide detailed guidance to auditors on various reporting requirements of CARO 2020.
The MCA vide notification dated 24th March 2021 issued the amendment to Schedule III to the Companies Act, 2013. The Schedule III, as amended, requires various disclosures in financial statements. Some of these disclosure requirements are corresponding to clauses of CARO 2020. The Auditing and Assurance Standards Board felt it necessary to undertake revision of the Guidance Note on CARO 2020.
We feel immense pleasure in placing in hands of the members this revised 2022 edition of the Guidance Note on CARO 2020 issued by the Board under the authority of the Council of ICAI. The Guidance Note has been revised to provide guidance on the corresponding disclosure requirements of Schedule III to the Companies Act, 2013 which pertain to the clauses of CARO 2020 and to align guidance with latest provisions of Companies Act, 2013 and Rules thereunder and other relevant laws & regulations which are referred to in the Guidance Note. The Guidance Note has been written in easy to understand language and contains detailed guidance on all clauses of CARO 2020.
At this juncture, we wish to place on record our sincere gratitude to convenors of all study groups and their team members for revising the Guidance Note viz. CA. Sushil Kumar Goyal (Central Council Member and Convenor of Kolkata study group), CA. Prasanna Kumar D (Central Council Member and Convenor of Chennai study group), CA. Durgesh Kabra (Central Council Member and Convenor of Mumbai study group), CA. Chandrashekhar V Chitale, (Central Council Member and Convenor of Pune study group), CA. Abhay Chhajed, (Central Council Member and Convenor of Delhi 1 study group), CA. Pramod Jain (Central Council Member and Convenor of Delhi 2 study group). A consolidating group was also constituted to consolidate and finalise all the guidance received from various
study groups.
We would like to thank our Honourable President, CA. (Dr.) Debashis Mitra and Honourable Vice-President, CA. Aniket Sunil Talati for their guidance and support in various activities of the Board.
We 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 Ms. P. Anitha in finalizing this Guidance Note.
We are confident that the members would find this Guidance Note immensely useful.
CA. Vishal Doshi
Vice Chairman, AASB
CA. (Dr.) Sanjeev Kumar Singhal
Chairman, AASB
Download Guidance Note on Companies (Auditor’s Report) Order, 2020
