Introduction
1. The Central Government, in exercise of the powers conferred, under sub-section (11) of section 143 of the Companies Act, 2013 (hereinafter referred to as “the Act”), issued the Companies (Auditor’s Report) Order, 2020, (CARO 2020/ “the Order”) vide Order number S.O. 849(E) dated 25th February 2020. CARO 2020 was initially applicable for audits of financial year 2019-20 and onwards. Subsequently, vide notifications dated 24th March 2020 and 17th December 2020, its applicability was deferred by one year each. Accordingly, CARO 2020 is applicable for audits of financial year 2021-22 and onwards. CARO 2020 contains certain matters on which the auditors of companies (except auditors of those categories of companies which are specifically exempted under the Order) have to make a statement in their audit reports. The text of the CARO 2020 is given in Appendix I to this Guidance Note.
2. This Order is in supersession of the earlier Order issued in 2016, viz., the Companies (Auditor’s Report) Order, 2016 (CARO 2016). Appendix II to this Guidance Note contains a clause-by-clause comparison of the reporting requirements of the Order and the CARO 2016.
3. The purpose of this Guidance Note is to enable the auditors to comply with the reporting requirements of the Order. It should, however, be noted that the guidance contained in this Guidance Note is not intended to be exhaustive and the auditors should exercise their professional judgement and experience on various matters on which they are required to report under the Order.
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