The government has deferred implementation of the strict disclosure requirements for auditor reports of companies by one year, a move that comes amid the disruptions caused by the coronavirus pandemic.
Now, the Companies (Auditor’s Report) Order, 2020 would come into effect from financial years commencing on or after April 1, 2021, according to a notification issued by the Ministry of Corporate Affairs (MCA). It is implementing the companies law.
Earlier, CARO 2020 was to come into force from financial year starting on or after April 1, 2020. The CARO requires companies to comply with stricter disclosure requirements on various issues, including whistle blower complaints and default in repayment of borrowings.
“CARO 2020 would necessitate enhanced due diligence and disclosures on the part of auditors of eligible companies, and has been designed to bring in greater transparency in the financial state of affairs of such companies,” the MCA had said in February this year.
Under this stricter framework, auditors are required to provide detailed disclosures about loan defaults, amount of cash losses and immovable properties as well as other aspects about companies in their annual reports.
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