Companies (Auditor’s Report) Order, 2020 (CARO) – Key Facts
The Government of India has deferred the implementation of Companies (Auditor’s Report) Order, 2020 (CARO) by 1 year due to COVID-19. Earlier, CARO was to be implemented from April 1, 2020; now it will be implemented from April 1, 2021. This delay in the implementation of CARO 2020 was notified by the Ministry of Corporate Affairs (MCA).
Key Points
- Companies (Auditor’s Report) Order, 2020 is a new format for issuing audit reports in case of statutory audits of companies under the Companies Act, 2013.
- Additional reporting requirements have been included in CARO 2020 on the recommendations of the National Financial Reporting Authority (NFRA).
- Under CARO 2020, auditors have to provide detailed disclosures about the amount of cash losses, loan defaults, immovable properties, investments, and all other aspects about companies in the yearly reports.
- It was initially notified on February 25, 2020.
- CARO 2020 has replaced Companies (Auditor’s Report) Order, 2016.
National Financial Reporting Authority (NFRA)
Established in October 2018, NFRA is an independent regulator that looks after the auditing profession and accounting standards in the country under the Companies Act 2013.
Companies Act, 2013
Companies Act, 2013 or Indian Companies law is an act of Indian Parliament that regulates the establishment of a company, responsibilities of a company, its directors and dissolution of a company. The Companies Act, 2013 came into existence by replacing the Companies Act, 1956. The Companies Act, 2013 contains 438 sections and 7 schedules. The 2013 act introduced a new term “one-person company” and that it will be considered as a private company.