Differences Between CARO 2020 and CARO 2016 Brief Comparison By CA Lavina Vidhani


  • CARO 2020 is applicable from 01st April, 2019 i.e. audit report of every financial years commencing from 01st April, 2019 and onwards.
  • There is no change in the applicability of CARO 2020. CARO 2020 is applicable on all companies except certain companies same as CARO 2016. The CARO, 2016 would not be applicable to the auditor’s report on consolidated financial statements.

CARO 2020 is also not applicable on CFS except clause 21 (New Inserted).

Companies not covered under CARO 2016

  1. Banking Companies as defined under section 5(c) of the Banking Regulation Act, 1949.
  2. Insurance Company as defined under the Insurance Act, 1938.
  3. Companies Incorporated with Charitable objects etc, i.e. companies licensed to operate under section 8 of Act 2013.
  4. One company as defined under section 2(62) of the 2013 Act.
  5. Small Company as defined under 2(85) of the 2013 Act.
  6. Private company not being a holding or a subsidiary company of a public company:
  • with a paid a paid-up capital and reserves and surplus not more than INR 1crore.
  • does not have total borrowings exceeding INR 1crore from any bank or any financial institution at any point of time during the FY and
  • does not have total revenue as defined in schedule III, to the 2013 Act (including revenue from discontinuing operations) exceeding INR  10 crore during the financial year as per the financial statements.

Reporting Clauses

Previously in CARO 2016 there were total 16 clauses for reporting. Now few clauses are added, some are altered and some are deleted and now in CARO 2020 there are 2 reporting clauses.

Changes in clauses (Insertion, Deletion and Alteration in clauses)


CARO 2020

Clause- I-


 Non-current Assets

As per CARO 2020, asset which are covered in scope of Property, plant and equipment required to report. In CARO 2020 reporting of Intangible Asset is specifically mentioned. Previously in CARO 2016 all fixed assets were included.

Reporting in CARO 2020 are same as CARO 2016 but few additions are: -

I(c) Title Deeds of immovable property should be checked that whether it is in name of company or not. Assets on lease are specifically excluded.

If the same is not in name of company then auditor is required to provide details in specified format given in CARO 2020. (Format given in the end).

I(d) In case of revaluation of Property, Plant and Equipment (Including Right of Use assets) or intangible assets, whether the revaluation is based on the valuation by a Registered Valuer, if the change is 10% or more of the net carrying value details of each class of Property, Plant and Equipment is separately given.
I(e) In case of any proceedings have been initiated or are pending against the company for holding any Benami property under the Benami Transactions Act and rules made there under if so, whether the company has appropriately disclosed the details in its financial statements

Clause- II



Previously in CARO 2016, only a report is required to give whether management has physically verified the inventory or not and if any material discrepancies were there shall was required to report.

But in CARO 2020, auditor is required to give opinion on coverage and procedure of physical verification of inventory.

Reporting of any discrepancy of 10% or more in aggregate for each class of inventory.

In case of working capital Loan based on current assets in excess of 5 crore rupees is sanctioned from the financial institutions, the quarterly returns or statements filed by the company are in agreement with the books of accounts, if not, give details

Clause- III


Loans, Advances or Investments

Previously CARO 2016 is only about secured or unsecured loan. And this clause was only applicable to parties registered under Section 189 only.

In CARO 2020, this clause now includes Investments, provision of loans or advances in the nature of loans, or stood guarantee, or provided security, indicate the aggregate amount during the year, and balance outstanding at the balance sheet date

  1. to subsidiaries, joint ventures and associates
  2. to parties other than subsidiaries, joint ventures and associates

In case of provision of loans or advances in the nature of loans repayable on demand, without the any terms or period of payment, then specify the amount of such loans or advances given to the promoters, related parties.

All these points to be reported in this clause.

Clause- IV

Section 185, 186

Same reporting as CARO 2016

Sec 185: Loan to directors.

Sec 186: Loan and investment by company.

Clause- V


Same reporting as CARO 2016

Sec 73 to Sec 76 or any relevant provision of Companies Act, 2013 – Acceptance of deposit by company.

Clause- VI

Cost Records

Same reporting as CARO 2016


Clause- VII


Statutory Dues

In CARO 2020, the words “Goods and service Tax” is also added. Further reporting of depositing of undisputed statutory dues is same as CARO 2016.

For disputed statutory dues, in CARO 2016 reporting is done of selected statutory dues not deposited on account of dispute. 

Now in CARO 2020 reporting of all and any statutory dues not deposited on account of dispute.

Clause- VIII


Undisclosed Income

New Insertion of clause in CARO 2020

Auditor is required to report, whether unrecorded income  in books of account have been disclosed as during the year under Income Tax Act, 1961 was now properly recorded.

Clause- IX


Default in Loan

In CARO 2020, Reporting of default in repayment of loan or any borrowing or payment of interest towards any lender (Previously in CARO 2016 this was applicable on default towards banks, PFI, government or debenture holders only).

Specific format for reporting the details of the default in repayment of loans or other borrowings (lender wise). (Format given in the end).

Various reporting clauses of sec 143 is inserted as a part of this clause in respect of term loans, short term loans, funds raised to meet the obligations of subsidiaries.

Reporting if company is wilful defaulter, diversion of loan taken for some other purpose.

Clause- X


Preferential allotment of shares

Previously in CARO 2016, checking of compliance of Sec 42 was required to report in clause 14.


In CARO 2020, under clause 10 reporting and checking to be done on preferential allotment or private allotment of share all the requirement of Section 42 and Section 62.

Provision of IPO, FPO and debt instruments to be done under clause 10 in CARO 2020, previously in CARO 2016 report on any amount raised from IPO, FPO or debt instruments and term loan should be applied for same done in clause 9.  

Clause- XI



Previously in CARO 2016, clause 10 was related to fraud. Under which reporting of fraud related to employee and officers of company is to be done.


In CARO 2020, fraud related reporting is to done under clause 11 and scope of it is widened. Now it covers reporting of any fraud by company or on company related to anyone. Reporting of if any auditor has considered any whistle blower complaint or mention if any report of fraud is filed by auditor to central government under section 143(12).

Clause- XII


Nidhi Companies

Increase in the scope of reporting related to Nidhi Companies.

Report on default in payment of interest on deposit or repayment is also included.

Clause- XIII

Related party Transactions

Same reporting as CARO 2016

Sec 177 and 188 of Companies act, 2013 Related party transaction.

Clause- XIV


Internal Audit

New Insertion of clause in CARO 2020

Reporting on whether company has proper internal control system as per its size and nature of business.

Whether statutory auditor consider report of internal auditors for the period under which audit were considered.

Clause- XV

Non-Cash Transaction

Same reporting as CARO 2016

Sec 192 – Restriction on non-cash transactions with directors.

Clause- XVI


Non-Banking Financial Companies

Increase in the scope of clause 16 in CARO 2020.

Auditor should report if company has conducted any non-banking financial or housing finance activities without a valid certificate from RBI. (Sec 45-IA of RBI Act).

Reporting if company is core investment company or if any group has more than one core investment company then number of core investment company to report.

Clause- XVII


Cash Loss

New Insertion of clause in CARO 2020

Reporting is to be done of cash loss, if company has incurred cash loss in current or in previous financial year.

Clause- XVIII


Resignation of auditor

New Insertion of clause in CARO 2020

Reporting is to be done if auditor has resigned in the year and new auditor has considered concern, issues or objection raised by outgoing auditor.

Clause- XIX

Material uncertainty in relation to financial assets and liabilities

New Insertion of clause in CARO 2020

Auditor is required to give his opinion that no material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

Clause- XX


Corporate Social Responsibility (CSR)

New Insertion of clause in CARO 2020

Auditor is required to report related to CSR in case of ongoing project (Sec 135(6) that CSR fund related to ongoing project shall be transferred to special bank account within 30 days from end of financial year and shall should be used within 3 F.Y. or shall be transferred to specified fund.

In case other than outgoing project reporting should be done by auditor whether company has transferred unspent CSR money to specific funds within 6 months from end of the year. Section 135(5) and Schedule VII.

Clause- XXI


Consolidated Financial Statement

New Insertion of clause in CARO 2020

If any adverse remark or qualification reported in CARO report of any company included in CFS then same shall be reported in consolidated financial statement by auditor. 

Note: Clause (XI) of CARO 2016 related to Managerial is omitted from CARO 2020.

Format of Providing details of Immovable Assets.

Description of property

Gross carrying Value

Held in name of

Whether promoter, director or their relative or employee

Period held – indicate range, where appropriate

Reason for not being held in name of company*






*also indicate if in dispute

 Format of Reporting default in repayment of loan, borrowing or interest.

Nature of borrowing, including debt securities

Name of lender*

Amount not paid on due date

Whether principal or interest

No. of days delay or unpaid

Remarks, if any


*lender wise details to be provided in case of defaults to






banks, financial institutions and Government.






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