Companies (Auditor’s Report) Order [CARO]: Property plant, and equipment

History of Companies (Auditor’s Report) Order, 2020

Manufacturing and Other Companies (Auditor’s Report) Order, 1988 (MAOCARO).

CARO, 2003 supersedes the earlier Order issued in 1988, viz., Manufacturing and Other Companies (Auditor’s Report) Order, 1988 (MAOCARO).

The Ministry of Corporate Affairs has issued the Companies (Auditor’s Report) Order, 2016 (CARO 2016). The CARO 2016 contains several new reporting requirements which were not there in the earlier Orders i.e., CARO 2003 and CARO 2015.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Auditor’s Report) Order, 2020 (CARO 2020) on 25th February 2020, Applicable from Financial Year beginning from 1st April 2021 onwards.

A quick recap on update/ reporting requirement for Property, Plant, and Equipment”– CARO 2020

CARO 2020 replaces word “fixed assets” with “Property, Plant and Equipment” – Clause (i) (a) (A) and Clause (i) (b)

CARO 2020 added a new sub-clause “whether the company is maintaining proper records showing full particulars of Intangible assets” – Clause (i) (a) (B)

CARO 2020 amended clause related to the Title deed of immovable property to include “all the immovable properties (other than properties where the company is the lessee, and the lease agreements are duly executed in favor of the lessee) disclosed in the financial statements” – Clause (i) (c)

Reporting requirements:

If Title deeds are not held in the name of the Company, the disclosure of the same in the below format is required i.e.

• Description of property
• Gross carrying value
• Held in the name of
• Whether promoter, director or their relative or employee
• Period held – indicate the range, where appropriate.
• Reason for not being held in name of the company – also indicate if in dispute.

CARO 2020 added a new sub-clause on revaluation of Property, Plant, and Equipment (including ROU assets and intangible assets) during the year.

         Reporting requirement:

• whether the revaluation is based on the valuation by a Registered Valuer.
• specify the amount of change. if the change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant, and Equipment or intangible assets.

CARO 2020 added a new sub-clause on whether any proceedings have been initiated or are pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

         Reporting requirement:

• whether the company has appropriately disclosed the details in its financial statements.

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Posted by

CA Sachin Koria

AKGVG & Associates