Companies Auditor’s Report (CARO) is an annexure to auditor’s report. It is a part of independent auditor’s report and is required to be singed by statutory auditors. Information provided in this report are contained warning signs, if any.  The CARO provides information about:

1. Maintenance Of Proper Records Of Fixed Assets.

2. Maintenance Of Proper Records Of Inventory

3. Loan And Advances Given To Related Parties.

4. Loan to Directors and Investment by the Company

5. Acceptance Of Deposits

6. Cost Accounting Records

7. Information Regarding Statutory Dues

8. Repayment of Loans

9. The utilisation of funds                                                                        

10. Information About Fraud

11. Approval of Managerial Remuneration

12. Nidhi Company

13. Related Party Transactions

14. Private placement of Preferential Issues

15. Non-Cash Transactions

16. Registration under RBI Act

Applicability of CARO 2016:

The CARO 2016 would not be applicable to the auditor’s report on consolidated financial statements. The following companies are exempted from CARO 2016 reporting:

  1. Banking company as defined under Section 5(c) of the Banking Regulation Act, 1949
  2. Insurance company as defined under Insurance Act, 1938
  3. Companies incorporated with charitable objects, etc. i.e. companies licensed to operate under Section 8 of the Act
  4. One person company as defined under Section 2(62) of the Act
  5. Small companies as defined under Section 2(85) of the Act (Companies with Paid up capital less than or equal to Rs. 50 Lakhs and Last reported turnover less than or equal to Rs. 2 Crores)
  6. Private company, not being a subsidiary or holding of a public company:
  • with a paid up capital and reserves and surplus not more than INR 1 crore,
  • does not have total borrowings exceeding INR 1 crore from any bank or financial institution at any point of time during the financial year, and
  • does not have a total revenue as defined in Schedule III to the Act (including revenue from discontinuing operations) exceeding INR 10 crore during the financial year as per the financial statements.

CARO 2015 Vs CARO 2016

Retained with updating

Sr No CARO 2015 CARO 2016
1 Fixed assets Fixed Assets retained with some changes
2 Inventory Retained with some updates
3 Loans to related parties (Sec. 189) Updated
4 Adequate internal control Deleted
5 Deposits Retained
6 Cost records Retained
7 Statutory dues retained with changes
8 Accumulated losses Deleted
9 Repayment of loan Retained with changes
10 Loan Guarantee Security Deleted
11 Term loans Retained with updating
12 Fraud reporting
14 Managerial Remuneration
15 Nidhi company
16 Non Cash Transation

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