Companies (Auditor’s Report) Order, 2020 has been notified and following are the major changes vis-a-vis CARO,2016.
- Number of reporting clauses in paragraph 3 have been increased to 21 from the earlier 16 clauses.
- CARO,2020 focuses on reporting of “Property, Plant & Equipment”. Earlier reporting was required on all fixed assets.
- Reporting on “Revaluation of PPE” by the company.
- Reporting of proceedings under the Benami Transactions (Prohibition) Act,1988
- Reporting in respect of compliance in case of company being sanctioned working capital exceeding Five crore rupees or more from banks or financial institutions.
- Whether the quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of accounts of the said company.
- Reporting of investments in or providing of guarantee or security or granting any loans or advances to companies, firms, LLPs or any other parties.
- Reporting of compliances with the RBI directives and the provisions of Companies Act in regard to deemed deposits.
- Reporting with respect to transactions not recorded in the books of accounts surrendered or disclosed as income in the Income Tax proceedings.
- Comprehensive reporting requirement for default in the repayment of loans/other borrowings or in the payment of interest.
- Reporting on treatment by auditor of whistle blower complaints received during the year by the company.
- Whether the company has revalued its PPE (including Right to use assets) or intangible assets or both during the year.
- Auditor also needs to specifically comment on coverage and procedure adopted for inventory management.
- Materiality has been taken as 10% or more in each class of inventory.
You can access the full CARO 2020 pdf here