ICAI : Guidance Note on the Companies (Auditor's Report) Order, 2020

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ICAI : Guidance Note on the Companies (Auditor’s Report) Order, 2020

Guidance Note on the Companies (Auditor’s Report) Order, 2020

The Institute of Chartered Accountants of India (ICAI), Auditing and Assurance Standards Board, has provided a Guidance Note on the Companies (Auditor’s Report) Order, 2020.  The Ministry of Corporate Affairs (MCA) furnished the Companies (Auditor’s Report) Order, 2020 (CARO 2020) in February 2020. CARO 2020 comprises various new reporting needs for the auditors like the revaluation of the property, plant, and equipment along with the right of use assets or intangible assets, Benami property, working capital limits on the grounds of security of current assets, allotting loans or advances in the nature of loans which are either repayable on demand or without specifying any terms or repayment duration, undisclosed income, company declared as wilful defaulter, material uncertainty in meeting liabilities, CSR activities.

The Auditing and Assurance Standards Board (AASB) of the ICAI specified that “Guidance Note on the Companies (Auditor’s Report) Order, 2020” (Guidance Note on CARO 2020) in July 2020 to furnish precise guidance on different clauses of CARO 2020 and reporting needs for auditors.

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To guarantee that the management of companies furnishes several disclosures which are related to clauses of CARO 2020 particularly the aforementioned new reporting needs, the MCA has brought out related revisions in Schedule III (Division I, Division II, and Division III) to the Companies Act, 2013 vide its notification on 24th March 2021 for preparation of the financial statements. Moreover to the stated modifications, various additional disclosure needs have also sum in Schedule III to the Companies Act, 2013.

The mentioned revisions specified that a complete modification of the Guidance Note on CARO 2020 is being formed via AASB. During that period, the members must read CARO 2020 including the respective change made in schedule III to the companies act 2013 for the presentation and disclosure need to be mentioned in it and use the audit process as per that. 

The announcement circulates some of the clauses in CARO 2020 along with the consequential revisions to schedule III to the companies act, 2013. 

Check Official Guidance Note on The Companies (Auditor’s Report) Order, 2020 https://resource.cdn.icai.org/60117aasb48979-a.pdf

Read more official Guidance Notes on Auditing Aspects : Click here

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