Companies Auditors’ Report Order (CARO) 2020

1. Relevance of CARO 2020 and Intent of MCA:

CARO 2020 prescribes the format of reporting by the company auditors after undergoing
statutory audit under the Companies Act, 2013 with motive to enhance quality of report with
disclosures on functioning and compliances done by the company to include a statement in their
reports on specific matters as prescribed in the Companies (Auditors’ Report) Order (CARO) to
help curb corporate scams and intends to introduce transparency and accountability in the
audited financial numbers.

Main reason behind the replacement of CARO 2016 with CARO 2020 is enhanced accountability
on the part of auditors to track the use of funds by the company in more detailed aspects and
enable the stakeholders more specifically bankers, statutory bodies and shareholders to track

the financial viability of the company and foresee the management of funds along with intention

of promoters regarding the operations of the company.


Statutory audits of all companies including foreign company commencing from 01.April.2021 i.e.
from financial year 2021-22 as per MCA order dated 17 December 2020 except to the following

We have listed some parameters to identify and to recognize a transaction as loan or not: