Introduction
1.  The Central Government, in exercise of the powers conferred, under sub-section (11) of
section 143 of the Companies Act, 2013 (hereinafter referred to as “the Act”), issued the
Companies (Auditor’s Report) Order, 2020, (CARO 2020/ “the Order”) vide Order number S.O.
849(E) dated 25th February 2020. CARO 2020 was initially applicable for audits of financial year
2019-20 and onwards. Subsequently, vide notifications dated 24th March 2020 and 17th
December 2020, its applicability was deferred by one year each. Accordingly, CARO 2020 is
applicable for audits of financial year 2021-22 and onwards. CARO 2020 contains certain
matters on which the auditors of companies (except auditors of those categories of companies
which are specifically exempted under the Order) have to make a statement in their audit
reports. The text of the CARO 2020 is given in Appendix I to this Guidance Note.

2. This Order is in supersession of the earlier Order issued in 2016, viz., the Companies
(Auditor’s Report) Order, 2016 (CARO 2016). Appendix II to this Guidance Note contains a
clause-by-clause comparison of the reporting requirements of the Order and the CARO 2016.

3. The purpose of this Guidance Note is to enable the auditors to comply with the reporting
requirements of the Order. It should, however, be noted that the guidance contained in this
Guidance Note is not intended to be exhaustive and the auditors should exercise their
professional judgement and experience on various matters on which they are required to report
under the Order.
Appendix III to this Guidance Note contains the definitions of important terms used in this
Guidance Note. Appendix IV to this Guidance Note contains list of important sections/ rules/
regulations/ statutes referred to in this Guidance Note.
General Provisions Regarding Auditor’s Report

4. The requirements of the Order are supplemental to the existing provisions of section 143
of the Act regarding the auditor’s report. In this regard, the following points may be noted:
(i) the provisions of sub-sections (1), (2), & (3) of section 143 are applicable to all companies
(other than clause (i) of sub-section (3)) while the Order exempts certain categories of
companies from its application; and
(ii) the provisions of sub-section (1) of section 143 require the auditor to make certain specific
inquiries during the course of his audit. The auditor is, however, not required to report on
any of the matters specified in that sub-section unless he has any special comments to
make on the said matters. In other words, if the auditor is satisfied with the results of his
inquiries, he has no further duty to report that he is so satisfied. The Order, on the other
hand, requires a statement on each of the matters specified therein, as applicable to the company