EXTENSION FOR APPLICABILITY OF COMPANIES (AUDITOR’S REPORT) ORDER, 2020 – Eshwars
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EXTENSION FOR APPLICABILITY OF COMPANIES (AUDITOR’S REPORT) ORDER, 2020

Authored by Adit N Bhuva

The Ministry of Corporate Affairs has on 17th December 2020, extended the time from which the Companies (Auditor’s Report) Order, 2020 (hereinafter referred to as “CARO 2020” or “Order”) will be applicable. After this extension, CARO 2020 will be effective from the financial year 1st April 2021-2022 onwards. This means that the auditor’s report of the Companies to whom CARO, 2020 is applicable, will have to contain the matters provided in the CARO, 2020, from Financial year 2021-22 onwards.

Brief background on CARO, 2020:

CARO, 2020 was introduced by the Ministry on 25th February 2020 and the same was to replace the CARO, 2016. As per the Order, the same was applicable from 1st April 2019 onwards. However due to the Covid-19 pandemic situation, the Ministry had on 24th March 2020 provided an extenstion on applicability from 1st April 2020 onwards.

Companies exempted from applicability of CARO, 2020:

1. A banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949;

2. An insurance company as defined under the Insurance Act,1938;

3. A company licensed to operate under section 8 of the Companies Act;

4. A One Person Company as defined in clause (62) of section 2 of the Companies Act;

5. A small company as defined in clause (85) of section 2 of the Companies Act; and

6. A private limited company, which is not a subsidiary or holding company of a public company, and:

a. having a paid up capital and reserves and surplus not more than 1 crore rupees as on the balance sheet date; and

b. which does not have total borrowings exceeding 1 crore rupees from any bank or financial institution at any point of time during the financial year; and

c. which does not have a total revenue as disclosed in Scheduled III to the Companies Act (including revenue from discontinuing operations) exceeding 10 crore rupees during the financial year as per the financial statements.

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