Compliance of CARO order deferred by 1YR: MCA
MCA Order dated 17.12.2020 changed the date of operation of the Order of the Companies (Auditor's Report) 2020 to the financial years starting on or after 1 April 2021. As a result, the Companies (Auditor’s Report) Order, 2020 will operate from FY 2021-22. CARO 2016 will continue to apply for the financial year 2020-21.
ROC has changed the applicability date of Companies (Auditor’s Report) Order, 2020 to the FY starting on or after the 1st April 2021. (Order order dated 17.12.2020)
The Government has postponed the introduction of stringent transparency standards for company audit reports by one year, a development that came about as a result of the disruption caused by the coronavirus pandemic.
Previously, CARO 2020 was due to enter into force from the beginning of the financial year on or after 1 April 2020. CARO needs businesses to comply with tougher disclosure standards on various topics, including whistle blower lawsuits and default on borrowing payments. “CARO 2020 would require increased due diligence and disclosure on the part of auditors of eligible companies and be designed to bring increased accountability to the financial situation of such companies," said MC.
Under that same strict structure, auditors are expected to make comprehensive statements in their annual reports on credit defaults, the amount of cash losses and immovable assets, as well as other corporate matters.
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