Applicability of Companies (Auditor’s Report) Order, 2016 (CARO 2016)

Applicability of Companies (Auditor’s Report) Order, 2016

The Central Government, after consultation with the, committee constituted under proviso to sub-section (11) of section 143 of the Companies Act, 2013 hereby makes the following Order, namely: Companies (Auditor’s Report) Order, 2016

 Every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013) [hereinafter referred to as the Companies Act) except


(i)     a Banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(ii)    an insurance company as defined under the Insurance Act 1938 (4 of 1938);
(iii)   a company licensed to operate under section 8 of the Companies Act; and
(iv)   a One Person Company as defined under clause (62) of section 2 of the Companies Act and a Small Company as defined under clause (85) of section 2 of the Companies Act; and
(v)    a private limited company, not being a subsidiary or holding company of a public company, having a paid up capital and reserves and surplus not more than rupees one crore as on the balance sheet date and which does not have total borrowings exceeding rupees one crore from any bank or financial institution at any point of time during the financial year and which does not have a total revenue as disclosed in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing operations) exceeding rupees ten crore during the financial year as per the financial statements.


Summary of CARO 2016
It applicable to all companies including foreign companies. But it does not applicable to certain companies named as  :
(i)    Banking Company
(ii)   Insurance Company
(iii)  Not for Profit Company (Sec. 8 Company)
(iv)  One Person Company
(v)   Small Company
(vi)  Private Limited Company (not being a subsidiary or holding company of a public company)
·         Paid up capital and reserves and surplus  < 1 Crore,
·         total borrowings  < 1 Crore,
·         Total Revenue  < 10 Crore.

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