An ever-increasing Conundrum of Reporting or a move towards early warning signals?
The Central Government, in consultation with the NFRA, has issued the revised Companies (Auditors’ Report) Order, 2020, (‘CARO 2020’ or the ‘Order’) on 25th February, 2020, vide order number S.O.
849(E). It replaces the erstwhile Companies (Auditors’ Report) Order, 2016 (’CARO 2016’). It has been made applicable in respect of audit reports issued by the statutory auditor for the reporting periods beginning from 1st April, 2021.
Reporting under CARO 2020 is applicable to all companies other than the following:
The scope of reporting is widely extended and puts an onus on the companies covered to maintain additional documentation to enable the auditor to report under the Order. As the reporting requirement will apply from current financial year 2021-22, it will be necessary for the companies to be aware of maintaining the details beforehand to avoid absence of documentation and explanation at the time of audit.
Following are the a dditional requirements of CARO 2020 as against the erstwhile CARO 2016: