Can U provide Short Notes in CARO2020
CLAUSE 1 TO 21
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CARO 2020
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The Companies (Auditor's Report) Order, 2020 (CARO 2020) requires statutory auditors to report on 21 specific matters in a separate annexure to their audit report. Below is a concise summary of these clauses.
Summary of CARO 2020 Clauses (1–21)
| Clause | Subject Matter | Brief Reporting Requirement |
| (i) | PPE & Intangible Assets | Records maintained, physical verification, title deeds of immovable properties, and revaluation (if $\ge$ 10%). |
| (ii) | Inventory | Physical verification procedures and any discrepancies ($\ge$ 10%). Reconciliation of quarterly statements filed with banks. |
| (iii) | Investments, Loans, Advances | Guarantees, security, and loans provided to parties. Terms, repayment schedules, and overdue status ($\ge$ 90 days). |
| (iv) | Loans, Investments, Guarantees, Security | Compliance with Sections 185 and 186 of the Companies Act, 2013. |
| (v) | Deposits | Compliance with directives by the RBI and Sections 73 to 76 of the Act. |
| (vi) | Cost Records | Maintenance of cost records as specified by the Central Government. |
| (vii) | Statutory Dues | Regularity in depositing undisputed statutory dues; details of disputed amounts. |
| (viii) | Unrecorded Income | Whether any previously unrecorded income was surrendered or disclosed as income during the year in tax assessments. |
| (ix) | Default in Repayment | Defaults in repayment of loans/borrowings or payment of interest to any lender. Reporting as a "wilful defaulter." |
| (x) | IPO/FPO/Private Placement | End-use of funds raised through public offers or private placements; compliance with Section 42 and 62. |
| (xi) | Fraud | Whether any fraud by or on the company has been noticed; filing of Form ADT-4; whistle-blower complaints. |
| (xii) | Nidhi Companies | Compliance with Net Owned Funds to Deposits ratio (1:20) and maintenance of 10% unencumbered term deposits. |
| (xiii) | Related Party Transactions | Compliance with Sections 177 and 188 of the Act; appropriate disclosures in financial statements. |
| (xiv) | Internal Audit | Whether the internal audit system is commensurate with the size and nature of the business. |
| (xv) | Non-Cash Transactions | Compliance with Section 192 regarding non-cash transactions with directors or connected persons. |
| (xvi) | NBFC Activities | Registration under the RBI Act, 1934; whether the company is a Core Investment Company (CIC). |
| (xvii) | Cash Losses | Whether the company incurred cash losses in the current and preceding financial year. |
| (xviii) | Auditor Resignation | Whether there has been any resignation of the statutory auditor during the year. |
| (xix) | Material Uncertainty | Capability of the company to meet its liabilities existing at the date of the balance sheet. |
| (xx) | CSR | Compliance with spending requirements for ongoing and other than ongoing projects under Section 135. |
| (xxi) | Consolidated Financials | Reporting on any qualifications or adverse remarks by auditors in the CARO reports of subsidiary companies. |
Summary
CARO 2020 is a comprehensive reporting mandate under the Companies Act, 2013, applicable to most companies (excluding banking, insurance, Section 8, OPC, and certain small private companies). It requires auditors to provide specific disclosures across 21 clauses, covering everything from asset management and internal controls to fraud and financial stability, ensuring greater transparency in corporate governance.
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