Background
The MCA has issued the Companies (Auditor’s Report)
Order, 2020 (CARO 2020), on 25th February 2020. This order has been issued in
supersession of the Companies (Auditor’s Report) Order, 2016, and is applicable
for reporting on financial statements of companies whose financial year
commences on or after 1st April 2019. CARO 2016 was issued by MCA in
supersession of CARO 2015.
Now, the MCA has kept the applicability of CARO 2020
to companies same as CARO 2016. The CARO 2020 will not apply to the auditor’s
report on consolidated financial statements except for clause (xxi) of Clause 3
in regard to any qualifications or adverse remarks by the respective auditors
in the Companies (Auditor's Report) Order (CARO) reports of the companies
included in the consolidated financial statements. If there is any such remark, then the auditor
of CFS, has to indicate the details of the companies and the paragraph numbers
of the CARO report containing the qualifications or adverse remarks. The
exemption to small companies has been removed and instead CARO 2020 has defined
small company itself.