{"id":14256,"date":"2020-10-16T11:46:10","date_gmt":"2020-10-16T06:16:10","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=14256"},"modified":"2020-10-20T17:38:05","modified_gmt":"2020-10-20T12:08:05","slug":"company-auditors-report-order-caro-2016","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/","title":{"rendered":"Company Auditor&#8217;s Report Order (CARO), 2016-Reporting Requirements"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Company Auditor\u2019s Report Order (CARO) 2016, is a reporting requirement order which was added by the Central Government under section 143(11) of the Companies Act, 2013. The Ministry of Corporate Affairs (MCA) has issued the Companies Audit Report Order, 2016 on 29th March 2016. This order supersedes the earlier order of the Companies Audit Report Order, 2015.<\/p>\n\n\n\n<p> The CARO applies to private companies thus increasing its applicability threshold. CARO, 2016 is an order which lists the matters on which an auditor is required to report. This order does not limit the duties and responsibilities of auditors but also requires statements which are to be included in the audit report.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a54f064360e2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a54f064360e2\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Applicability\" title=\"Applicability\">Applicability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Exemptions_Under_CARO_2016\" title=\"Exemptions Under CARO, 2016\">Exemptions Under CARO, 2016<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Reporting_Requirements_OF_CARO_2016\" title=\"Reporting Requirements OF CARO, 2016\">Reporting Requirements OF CARO, 2016<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Fixed_Assets\" title=\"Fixed Assets-\">Fixed Assets-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Inventory\" title=\"Inventory\">Inventory<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Loan_to_Directors\" title=\"Loan&nbsp; to Directors\">Loan&nbsp; to Directors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Loan_and_Guarantees_Made_by_The_Company\" title=\"Loan and Guarantees Made by The Company-\">Loan and Guarantees Made by The Company-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Deposits\" title=\"Deposits\">Deposits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Cost_Records\" title=\"Cost Records\">Cost Records<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Statutory_Dues\" title=\"Statutory Dues\">Statutory Dues<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Undisputed_Statutory_Dues_%E2%80%93\" title=\"Undisputed Statutory Dues \u2013&nbsp; \">Undisputed Statutory Dues \u2013&nbsp; <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Disputed_Statutory_Dues\" title=\"Disputed Statutory Dues-\">Disputed Statutory Dues-<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Default_in_Repayment_of_Loans\" title=\"Default in Repayment of Loans-\">Default in Repayment of Loans-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Nidhi_Company\" title=\"Nidhi Company-\">Nidhi Company-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability\"><\/span>Applicability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>CARO 2016 is applicable to all the companies which include\nforeign companies as well. This Order is applicable for Financial Year 2015-16,\nFinancial Year 2016-17 and the subsequent years. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemptions_Under_CARO_2016\"><\/span>Exemptions Under CARO, 2016<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/EXEMPTIONS-UNDER-CARO-2016-Heading.ai_.jpg\" alt=\"CARO Exemptions\" class=\"wp-image-14257\" width=\"424\" height=\"423\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/EXEMPTIONS-UNDER-CARO-2016-Heading.ai_.jpg 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/EXEMPTIONS-UNDER-CARO-2016-Heading.ai_-150x150.jpg 150w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/EXEMPTIONS-UNDER-CARO-2016-Heading.ai_-300x300.jpg 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/EXEMPTIONS-UNDER-CARO-2016-Heading.ai_-768x768.jpg 768w\" sizes=\"(max-width: 424px) 100vw, 424px\" \/><\/figure><\/div>\n\n\n\n<p>Below mentioned are the classes of companies which are exempted and are outside of the purview of the specified order:<\/p>\n\n\n\n<ul><li>Banking Company as per section 5(c) of Banking Regulation Act, 1949.<\/li><li>Insurance Company as mentioned under Insurance Act, 1938.<\/li><li>Companies which are incorporated and licensed to operate as per section 8 of the Companies Act, 2013.<\/li><li>A <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/swaritadvisors.com\/one-person-company-registration\">One Person Company Registration <\/a><\/span><\/strong>(OPC) as per Clause 62 of section 2 of Companies Act, 2013.<\/li><li>A Small Company as defined under section 2 Clause 85 of the Companies Act, 2013.<\/li><li>A <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/swaritadvisors.com\/private-limited-company-registration\">Private Limited Company<\/a><\/span><\/strong> which is neither a subsidiary company nor a holding company of any public company , does not have a paid up capital or reserve exceeding rupees 1 Crore as mentioned in the balance sheet, total borrowing should not exceed rupees 1 Crore from any bank or financial institution at any point of time during the financial year.<\/li><\/ul>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/all-you-need-to-know-about-section-8-company-in-india\/\">Section 8 Companies in India<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reporting_Requirements_OF_CARO_2016\"><\/span>Reporting Requirements OF CARO, 2016<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In comparison of CARO 2015 the reporting requirements under <strong>CARO 2016<\/strong><sup><a href=\"http:\/\/www.mca.gov.in\/Ministry\/pdf\/CoOrder_30032016.pdf\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> have been increased. Matters which are to be included under the Company Auditor\u2019s Report Order, 2016 are listed below:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fixed_Assets\"><\/span>Fixed Assets-<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li>Whether the proper records of the company are being maintained showing full particulars which include quantitative details along with the situation of fixed assets.<\/li><li>Physical verification of these fixed assets has been conducted by the management at reasonable intervals.<\/li><li>Whether any title deeds of immovable property are mentioned in the name of the company. If so, provide the details, thereof.<\/li><li>Whether any material discrepancies were found and noticed and the same has been accounted for in books of accounts.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inventory\"><\/span>Inventory<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li>Whether\nany physical verification of inventory has been conducted by the management at\nreasonable time with reasonable intervals.<\/li><li>Whether\nany material discrepancies were found during the process of this verification\nand the same has been accounted for in books of accounts.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Loan_to_Directors\"><\/span>Loan&nbsp; to Directors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li>Whether the provision of section 185 and 186 of the Companies Act, 2013 has been complied with in respect of a loan, investment, guarantees. <\/li><li>If not, provide the details of the same.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Loan_and_Guarantees_Made_by_The_Company\"><\/span>Loan and Guarantees Made by The Company-<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Whether any loan has been granted by the company secured or unsecured to companies firms, limited liability partnership or any other parties mentioned in the register under section 189 of the Companies Act, 2013.If any such loan has been granted, following things must be taken under consideration:<\/p>\n\n\n\n<ul><li>The terms of such loans are detrimental to company\u2019s interest.<ol><li>Proper repayment should be there if any along with the receipt.<\/li><li>In case of overdue of amount for more than 90 days whether any reasonable steps has been taken by the company for the recovery of principal and interest.<\/li><\/ol><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deposits\"><\/span>Deposits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In case the Company has accepted the\ndeposits whether the following have been complied with:<\/p>\n\n\n\n<ol><li>The\ndirectives issued by the RBI or the provision of section 73 to section 76 or\nany other such provisions of Companies Act, 2013<\/li><li>If\nany order has been passed by the Company Law Board or NCLT or RBI or any other\nsuch tribunal.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cost_Records\"><\/span>Cost Records<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li>Whether\nas per section 148 (1) of the Companies Act, 2013 the Central Government has\nspecified any maintenance of cost record . <\/li><li>If\nyes, whether such accounts and records have been made and maintained.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Statutory_Dues\"><\/span>Statutory Dues<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Undisputed_Statutory_Dues_%E2%80%93\"><\/span>Undisputed Statutory Dues \u2013&nbsp; <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Whether regularity has been maintained by the company in depositing undisputed&nbsp;statutory dues including provident funds, income tax, sales tax, employees state insurance, service tax, duty of excise, duty of customs, Cess or any such other statutory dues to the appropriate authorities. If the company fails to do so, the extent of the arrears of outstanding statutory dues as on the last day of the financial year for a period of more than six months from the date they become payable, shall be indicated.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disputed_Statutory_Dues\"><\/span>Disputed Statutory Dues-<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Whether on account of any dispute\ndues related to income tax, service tax, sales tax, or duty of excise or duty\nof customs have not been deposited then the same must be mentioned.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Default_in_Repayment_of_Loans\"><\/span>Default in Repayment of Loans-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The period and the amount of default\nmust be reported if the company has defaulted in the repayment of any loan or\nborrowings to any such financial institution, bank or Government.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company\"><\/span>Nidhi Company-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In case of <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/swaritadvisors.com\/nidhi-company-registration\">Nidhi Company rules<\/a><\/span><\/strong>, in order to meet out the liability, the net owned funds to deposit should be in the ratio of 1:20. Nidhi Company should also maintain at least 10% unattached deposits in order to meet out the liability. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Ministry of Corporate Affairs was of view point that there are certain issues which are important and should be reported along with the financial statements for certain companies as a part of their audit reports. This lead towards the issuance of <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/company-auditors-report-order-caro-2016\/\">CARO, 2016<\/a><\/span><\/strong>. The order not only applied to the private companies but also extended toward the foreign companies. Thu, the auditor\u2019s of such companies are also required to report on any such matters specified in Company Auditor\u2019s Report Order (CARO) 2016, .<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/procedure-of-striking-off-company-under-companies-act-2013\/\">Procedure of Striking off Company under Companies Act, 2013<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Company Auditor\u2019s Report Order (CARO) 2016, is a reporting requirement order which was added by the Central Government under section 143(11) of the Companies Act, 2013. The Ministry of Corporate Affairs (MCA) has issued the Companies Audit Report Order, 2016 on 29th March 2016. This order supersedes the earlier order of the Companies Audit [&hellip;]<\/p>\n","protected":false},"author":23,"featured_media":14260,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[60,168],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14256"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=14256"}],"version-history":[{"count":17,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14256\/revisions"}],"predecessor-version":[{"id":14478,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14256\/revisions\/14478"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/14260"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=14256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=14256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=14256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}