Applicability of CARO 2016

Applicability of CARO 2016


Applicability of CARO 2016

The Ministry of Corporate Affairs (MCA) has provided that every report made by the auditor under section 143 of the Companies Act, 2013 on or after 1st April 2015 is required to abide by CARO (Companies Audit Report Order) 2016

CARO is applicable to a few class of companies based on activity, constitution, and class of company. CARO 2016 is applicable to the foreign company as well. However, CARO, 2016 is not applicable to the auditor’s report on consolidated financial statements.

Companies which are not under the purview of CARO (Companies Audit Report Order 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 up capital and reserves and surplus not more than Rs.1crore
  • does not have total borrowings exceeding Rs.1crore from any bank or any financial institution at any point of time during the financial year
  • does not have total revenue as defined in schedule III, to the 2013 Act (including revenue from discontinuing operations) exceeding Rs 10 crore during the financial year as per the financial statements.



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