CARO 2020 Applicability Audit Report

CARO 2020 applicability is a new audit report format for statutory audits of firms conducted under the Companies Act, 2013. CARO 2020 is consisting of some additional reporting requirements after discussion and consultation with the National Financial Reporting Authority (NFRA). NFRA is a kind of independent regulatory body made for regulating the audit and accounting profession in India. The main aim of CARO 2020 is to give structure to the overall quality of reporting by the auditors of the company. It is applicable to all statutory audits commencing on or after 1st April 2021 corresponding to the financial year 2019-20. The order is applicable to all the companies which were covered by CARO 2016. We will discuss the applicability of CARO 2020 in this article. CARO 2020 stands for Companies Auditors Report order 2020 rules includes extra reporting obligations with consultation of National Financial Reporting Authority (NFRA). As a result, the order applies to all types of companies except the following: The new reporting order has a total of 21 clauses as against the 16 clauses of CARO, 2016, where 10 new clauses are added, 7 clauses of CARO 2016 are changed and 4 clauses are mentioned as it is in CARO 2020. Some of the key differences between CARO 2016 and CARO 2020 Applicability are listed below: The Ministry of corporate affairs has amended the Applicability of CARO 2020. The CARO 2020 shall be applicable from FY 2021-22 as announced earlier on 1st April 2020. The Auditor’s report; CARO 2020 shall comprise a statement on the below-mentioned matters: 1. Details of tangible and intangible assets 2. Details of inventory and working capital 3. For CARO 2020 Applicability MCA: Details of investments, any guarantee or security or advances or loans given 4. Compliances of a loan given to directors 5. Compliance in respect of deposits accepted 6. Maintenance of cost records 7. Deposit of statutory liabilities 8. Unrecorded income 9. Default in repayment of borrowings 10. Funds raised and utilisation 11. Fraud and whistle-blower complaints 12. Compliance by a Nidhi company 13. Compliance on transactions with related parties 14. Internal audit system 15. Registration under section 45-IA of RBI Act, 1934. 16. Non-cash dealing with directors 17. Cash losses 18. Resignation of statutory auditors 19. Material uncertainty on meeting liabilities 20. Transfer to fund mentioned under Schedule VII of the Companies Act, 2013 21. Qualifications or adverse remarks of auditors in other group companies. In CARO 2020 Applicability, where the auditor’s remark to any of the requirements mentioned above is unfavourable or negative, then the auditor’s report shall also state the basis for such an unfavourable or qualified answer. In any case, where the auditor is unable to express any opinion on any specific matter, the report shall indicate such fact along with the reasons why the auditor can't give an opinion on the same. You can find and download CARO 2020 pdf on google. The CARO 2020 Notification of the amendment has brought in major changes, leading to a stringent and vigilant approach to Auditor’s quality of reporting. The importance has been given to the efficiency and effectiveness of Internal controls, going concern assumptions, whistle-blower policies, and risk mitigation strategies adopted by management. In this article, we have discussed the applicability of CARO 2020 and the reporting requirement under CARO 2020. Online XBRL is the notable platform for Compliance & Legal Services in India. So join us to get more updates. Which Companies Are Under CARO 2020 Applicability?
Difference Between CARO 2016 and CARO 2020
CARO 2020
CARO 2016
Reporting on all immovable assets title deeds (other than properties where the company is the lessee and the lease agreements are properly executed in the lessee’s favour) There is a specified format in Note 1.
Reporting on Title deeds of all types of Immovable properties
The property, plant, and equipment along with the intangible assets are required to be reported. The property, Plant, and equipment of the company are being re-evaluated.
All the fixed assets of the company are needed to be reported. No format is given for disclosing a financial statement
Reporting of Investments in guarantee or security was provided, and no loans or advances were granted under CARO 2020 Applicability
Granting of loans or advances, secured or unsecured, must be reported
Reporting on if the company has raised loans through finances using securities pledged by its subsidiary companies, joint ventures, and partners, and providing information with any defaults in repayment.
There is no such type of information that is required to be reported in CARO 2016.
Reporting Requirement under CARO 2020
Points To Remember
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