CARO 2020 Reporting - All 21 Clauses Explained for 2026

Section 143 of the Companies Act, 2013 lays down the powers and duties of statutory auditors. Sub-section (11) specifically empowers the Central Government to specify additional reporting matters for specified classes of companies, in consultation with the National Financial Reporting Authority (NFRA). CARO is the order issued under this power. CARO has evolved through several iterations - the original MAOCARO 1988, subsequent revisions in 2003, 2004, 2015, 2016, and now CARO 2020.

The 2020 iteration adds seven entirely new clauses, redrafts nine existing clauses for deeper disclosure, and deletes the managerial remuneration clause (covered by the main audit report already). Patron treats CARO not as a separate ritual at the end of the audit, but as a structured framework woven into the audit plan from the start.

The CARO report is annexed to the statutory auditor's main report under SA 700 and signed alongside it under the same UDIN. While the main audit report opines on whether the financial statements give a true and fair view, the CARO report provides clause-wise positive or negative attestation on specific compliance and disclosure matters, with reasons for any unfavourable or qualified answers required to be stated under Para 4. The CARO report is a public document filed with the Registrar of Companies as part of Form AOC-4 and is reviewed in lender diligence, investor due diligence, regulator inspections, and tax assessments. CARO sits within the Section 143 reporting package alongside the main report under SA 700/705 (with KAM under SA 701 and Going Concern under SA 570), Annexure B IFC report under Section 143(3)(i), and Section 143(3) ten-clause reporting.

Content is reviewed quarterly for accuracy.

This pillar page on CARO 2020 reporting is the authority reference for the following readers:

• Chartered Accountants in practice conducting statutory audits under Section 143 of the Companies Act 2013 needing clause-by-clause audit procedure depth
• CFOs and finance controllers of unlisted Pvt Ltd companies preparing for first CARO audit after crossing the small-company or Pvt Ltd exemption thresholds
• Audit-firm staff and articled assistants studying clause-by-clause requirements under the ICAI Guidance Note on CARO 2020 (Revised 2022)
• Company secretaries understanding CARO applicability matrix - OPC, small company, banking, insurance, Section 8, qualifying Pvt Ltd
• NFRA-monitored listed entity finance teams tracking CARO clauses against Schedule III Additional Regulatory Information (ARI) disclosures
• NBFC CFOs evaluating CARO Clause 3(xvi) four-sub-clause RBI registration test, CIC determination, and multi-CIC group count
• Group / CFS auditors preparing CARO Clause 3(xxi) component-auditor qualification aggregation for consolidated financial statements
• CA Final students preparing for the Audit paper with practitioner-level CARO depth
• Anyone needing the Pvt Ltd three-condition exemption matrix with the small-company override clarified per Para 12 of the ICAI Guidance Note
• Anyone seeking the full 21-clause walkthrough with sub-clause-level audit procedures and common qualification triggers

Statutory Snapshot for CARO 2020

• Section 143(11) Companies Act 2013: Empowers Central Government to specify additional auditor reporting matters; statutory authority for CARO
• Companies (Auditor's Report) Order 2020: Notified by MCA on 25 February 2020; effective FY 2021-22 onwards
• 21 clauses + 50 sub-clauses: Substantively expanded from CARO 2016's 16 clauses; seven new clauses + nine redrafted
• Para 1(2) Exemptions: OPC, small company (Sec 2(85)), banking, insurance, Section 8, qualifying Pvt Ltd (Para 1(2)(v))
• Section 147 Penalty: Rs 25,000 to Rs 5,00,000 on auditor (Rs 1 lakh to Rs 25 lakh for fraudulent reporting) for non-compliance
• Form AOC-4 Filing: Complete audit report package including CARO annexure filed with MCA21 V3 within 30 days of AGM
• UDIN: Single UDIN covers main audit report + CARO annexure + IFC annexure - one ICAI portal generation

The audit working file supporting CARO 2020 reporting includes the following documents and evidence sources, mapped to specific clauses:

• Property, Plant and Equipment Register: Asset-wise register with description, location, original cost, accumulated depreciation, WDV, useful life, depreciation method - with separate intangible asset register (Clause 3(i)(a))
• Title Deed Register: Every immovable property with title deed reference, name in which held; deeds in name of related parties separately disclosed (Clause 3(i)(c))
• Revaluation Reports: Registered Valuer report; percentage change calculation against carrying value of each class of asset (Clause 3(i)(d))
• Benami Transactions Search: Any proceedings initiated under Benami Transactions (Prohibition) Act, 1988; disclosure in financial statements (Clause 3(i)(e))
• Physical Inventory Count Sheets: Year-end count with management attendance; pre-numbered sheets; sample test-count by auditor under SA 501 (Clause 3(ii)(a))
• Working Capital Limits and Bank Confirmation: Sanction letters from banks/FIs where working capital limits above Rs 5 crore obtained on security of current assets; quarterly statements filed (Clause 3(ii)(b))
• Loans and Investments Schedule: Loans/advances/guarantees/security given - to subsidiaries, JVs, associates, and others; terms; repayment schedule (Clause 3(iii))
• Section 185 / 186 Compliance Register: Loans to directors/persons connected (Sec 185); inter-corporate loans and investments (Sec 186) within limits (Clause 3(iv))
• Deposit Acceptance Records: Section 73-76 compliance; non-deposit DPT-3 filing; any deemed deposits (Clause 3(v))
• Cost Records: Section 148 cost records and Cost Audit Report under Form CRA-1/CRA-2/CRA-3/CRA-4 (Clause 3(vi))
• Statutory Dues Schedule: GST, TDS, PF, ESI, customs, excise, income tax, professional tax, cess - liability with ageing and dispute status (Clause 3(vii))
• Form 26AS and Tax Assessment Orders: Surrendered or disclosed income under search and seizure or other proceedings (Clause 3(viii))
• Default Schedule: Repayment defaults of any loan or borrowing; willful defaulter status; lender exits (Clause 3(ix))
• IPO / FPO / Private Placement Documents: Application of proceeds; Section 42 compliance for private placement (Clause 3(x))
• ADT-4 Reporting: Section 143(12) fraud reporting; Rule 13; whistleblower complaints register (Clause 3(xi))
• Related Party Transaction Register: Section 188 contracts; Audit Committee approval (Sec 177); arm's-length basis documentation (Clause 3(xiii))
• Internal Audit Reports: Section 138 internal audit reports for the year; statutory auditor consideration documentation (Clause 3(xiv))
• RBI Certificate of Registration: Section 45-IA CoR; CIC determination per Master Direction; multi-CIC group count (Clause 3(xvi))
• CSR Compliance Schedule: Section 135 board policy; spend tracker; unspent transfer to specified fund or Unspent CSR Account (Clause 3(xx))
• Previous Auditor Resignation File: Issues raised by predecessor auditor in their NoC/Section 140(2) statement (Clause 3(xviii))

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free CARO 2020 Reporting consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

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Client Coverage

Trusted by Hyundai, Asian Paints, Bridgestone and a growing roster of Pvt Ltd companies across manufacturing, financial services, real estate, e-commerce and SaaS. Patron's CARO 2020 practice spans first-year-of-CARO Pvt Ltd companies just crossing exemption thresholds, mid-size unlisted Pvt Ltd with full 21-clause depth, NBFCs with Clause 3(xvi) four-sub-clause testing, family-business-groups with CFS Clause (xxi) aggregation, and listed entities under NFRA monitoring.

4-Office Signal

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron services CARO-applicable Pvt Ltd companies, mid-size groups, and listed entities across India. Peer-reviewed ICAI workpapers; substantive Para 4 qualifications; documented SA 220 quality review; in-house CARO-report-reviewer skill applied before partner sign-off.

This CARO 2020 authority page sits within Patron's broader audit cluster, with industry-specific pages applying CARO at the sector-level clause depth:

• Statutory Audit in India (Parent): The complete Section 143 statutory audit engagement - this CARO authority page is the Annexure A reporting framework within that engagement.
• Audit Report Types in India: Sister authority page - opinion type framework (Unmodified, Qualified, Adverse, Disclaimer) under SA 700-706 with CARO qualifications cross-linked to main report.
• Internal Financial Controls Audit: Sister authority page - Section 143(3)(i) Annexure B report; separate opinion on IFC adequacy and operating effectiveness.
• Schedule III Compliance: Form of financial statements being audited; Additional Regulatory Information disclosures parallel to CARO clauses.
• Statutory Audit for Manufacturing: CARO Clause 3(ii) inventory + 3(vi) cost records industry-specific depth.
• Statutory Audit for Financial Services: CARO Clause 3(xvi)(a) to (d) RBI registration four-sub-clause test for NBFCs.
• Statutory Audit for Real Estate: CARO Clause 3(i)(c) title deeds for redevelopment SPVs and JDA properties.
• Statutory Audit for E-commerce: CARO Clause 3(vii) TCS/TDS reconciliation + Clause 3(xv) non-cash related-party transactions.
• Statutory Audit for Education Institutions: CARO Clause 3(i)(c) title deeds for Section 8 educational companies.
• Internal Audit (Section 138): Tied to CARO Clause 3(xiv) internal-audit adequacy reporting; statutory auditor consideration documentation.
• Private Limited Company Compliance: ROC annual filings - ADT-1, AOC-4 (with CARO annexure), MGT-7 with CARO cross-references in MGT-7.
• Appointment of Auditor: First auditor and AGM appointment under Section 139 - ADT-1 filing.
• Change of Auditor: Section 140 resignation with Section 140(2) statement; Clause 3(xviii) review by incoming auditor.

CARO 2020 is administered by the Ministry of Corporate Affairs under Section 143(11) of the Companies Act, 2013. Primary regulator: MCA21 V3 portal. Tax-side cross-references with Income Tax India for Clause 3(viii) surrendered income and Form 26AS. NBFC-side cross-references with Reserve Bank of India for Clause 3(xvi) Section 45-IA registration and CIC determination.

CARO 2020 Applicability Matrix

Pvt Ltd Three-Condition Exemption Test

Critical Note - Small Company Override: Paragraph 12 of the ICAI Guidance Note on CARO 2020 (Revised 2022) clarifies that if a company is covered under the definition of small company, it will remain exempted from CARO 2020 even if it falls under any of the criteria specified for private companies. The small-company test and the Pvt-Ltd-conditions test operate as independent escape routes - meeting either grants exemption.

All 21 CARO 2020 Clauses - Practitioner Walkthrough

Statutory Provisions and Cross-References

CARO 2020 reporting is mandatory for every statutory audit of every applicable company under Section 143 of the Companies Act, 2013. The CARO annexure is filed with AOC-4 within 30 days of the AGM (typically 30 October for September AGMs) - delay attracts Rs 100 per day MCA additional fees plus Section 147 penalty of Rs 25,000 to Rs 5,00,000.

CARO qualifications carry compounding consequences - lender diligence escalation, investor due-diligence red flags, NFRA monitoring for listed entities, tax assessment trigger under Section 143(2), and reputational risk in public-domain filings.

The September 2022 small-company threshold revision (paid-up Rs 4 crore plus turnover Rs 40 crore) significantly expanded the small-company exemption pool - any Pvt Ltd company that was CARO-applicable in FY 2021-22 should re-test applicability for FY 2022-23 and later years under the revised thresholds.

Action now: Engage Patron for a CARO-compliant statutory audit - +91 945 945 6700 or WhatsApp. Free initial consultation on CARO applicability and clause-level depth.

CARO 2020 reporting is the most comprehensive disclosure framework in Indian audit practice - 21 clauses with 50-plus sub-clauses spanning property records, inventory verification, financial commitments, statutory compliance, fraud, related parties, internal audit, RBI registration, cash losses, going-concern obligations, CSR utilisation, and group-level qualifications. The order was issued under Section 143(11) of the Companies Act, 2013 by the Ministry of Corporate Affairs on 25 February 2020 and applies to statutory audits of financial years commencing on or after 1 April 2021.

Exemptions are narrow - OPC, small companies under the revised Section 2(85) thresholds (Rs 4 crore + Rs 40 crore w.e.f. 15 September 2022), banking, insurance, Section 8, and qualifying Pvt Ltd companies meeting all three conditions of Para 1(2)(v). The ICAI Guidance Note on CARO 2020 (Revised 2022) is the practitioner manual. Patron handles CARO as an integral part of every statutory audit engagement, with clause-by-clause risk mapping under SA 315 from day one, an in-house CARO-report-reviewer skill that maintains ICAI Guidance Note illustrative wordings and qualification templates, and Schedule III Additional Regulatory Information reconciliation built into the review process. Our 15+ years of practice, peer-reviewed ICAI workpapers, and four-office network across Pune, Mumbai, Delhi and Gurugram bring CARO depth from first-year-of-CARO Pvt Ltd companies to listed-entity NFRA-monitored audits.