ICAI’s Guidance Note on CARO 2020 of MCA (2022 Edition)

After notifying CARO 2020 on 25/02/2020, MCA has made certain amendments in Schedule III (Division I, Division II and Division III) to the Companies Act, 2013 vide Notification dt. 24/03/2021 for preparation of the financial statements, to ensure that companies management make requisite disclosures for the new reporting requirements of CARO 2020. In addition, various other disclosure requirements have also been added in Schedule III to the Companies Act, 2013.

In light of above amendments in the CA 2013, ICAI has carried out comprehensive revisions in it’s Guidance Note on CARO 2020 (Updated 2022 edition), as detailed here-under:

ICAI’s Guidance Note on CARO 2020 of MCA (Revised/ Updated 2022 Edition)

MCA had notified CARO 2020 on 25/02/2020, applicable w.e.f. FY 2019-20 and onwards, which however was deferred twice for one year each time, vide Notifications dt. 24/03/2020 and 17/12/2020, i.e. applicability thereof was finally deferred from FY 2019-20 to 2020-21 to 2021-22 and onwards.

CARO 2020 was introduced to make several amendments over CARO 2016 and to stipulate several new reporting requirements. Accordingly, ICAI also issued it’s Guidance Note on CARO 2020 in June 2020 edition. However, in view of subsequent Notification of amendments in schedule III and new reporting requirements by MCA, the ICAI has released this Revised/ Updated Guidance Note on CARO 2020 (July 2022 Edition), for guidance of the Members 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.

ICAI’s Guidance Note on CARO 2020 (Revised/ Updated July 2022 Edition)

ICAI’s Guidance Note on CARO 2020 of MCA

ICAI Announcement dt. 02/04/2022: Guidance Note on CARO 2020 of MCA (Update)

ICAI had earlier advised Members to read CARO 2020 in conjunction with the corresponding amendments made in Schedule III to the Companies Act, 2013 for presentation and disclosure requirements stated therein and perform the audit procedures accordingly, till revised edition of Guidance Note on CARO 2020 is released.

In the above publication, the ICAI has summarised interplay of some of the clauses in CARO 2020 and consequential amendments to Schedule III to the Companies Act, 2013, along with it’s commentary thereon, for help and guidance of the Members.

ICAI’s Guidance Note on CARO 2020 of MCA

ICAI has released Guidance Note on CARO 2020 to provide detailed guidance on reporting requirements for auditors, in view of MCA notification dt. 25/02/2020 on the Companies (Auditor’s Report) Order (CARO) 2020, superseding CARO 2016.

ICAI’s Guidance Note on CARO 2020 (June 2020)

CARO 2020 was initially applicable for statutory audits of financial statements for periods beginning on or after 01/04/2019, which was deferred to 01/04/2020, i.e. by one year, vide MCA Notification dt. 24/03/2020. Therefore, this Guidance Note  (on CARO 2020) will supersede the earlier Guidance Note (on CARO 2016) for audits of financial statements for the periods beginning on or after 01/04/2020.

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. CARO 2020 contains many new reporting requirements for auditors such as revaluation of property, plant and equipment (including right of use assets) or intangible assets, benami property, working capital limits on basis of security of current assets, granting loans or advances in the nature of loans which are either repayable on demand or without specifying any terms or period of repayment, undisclosed income, company declared as wilful defaulter, material uncertainty in meeting liabilities, CSR activities. These changes necessitated the revision of the Guidance Note on CARO 2016 earlier issued by ICAI.

The purpose of this Guidance Note is to enable the members to comply with the reporting requirements of CARO 2020. It should, however, be noted that the clarifications and explanations contained in this Guidance Note are not intended to be exhaustive and the auditors should exercise their professional judgment and experience on various matters on which they are required to report under CARO 2020.

ICAI’s Guidance Note on CARO 2016 (April 2016)

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CARO 2020 Applicability Timeline Extended to FY 2021-22: MCA

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