CARO 2015 – Applicability of Companies Auditor’s Report Order 2015 on companies

Ministry of Corporate Affairs has published companies Auditor’s Report Order or CARO 2015 on 10th April 2015 which will come into force on the date of its publication in official Gazette.

As per Companies Auditor’s Report Order (CARO) 2015, this order will be applicable to companies as stated below for the financial year commencing on or after 1st April 2014. This means, auditor has to include statement as per CARO 2015 in their auditor’s report for the financial year ending 31st March 2015.

Companies Auditor’s Report Order 2015 - CARO

CARO or Companies Auditor’s Report Rule 2015 shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2O13 (18 of 2O13), except

  1. a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (1O of 1949);
  2. an insurance company as defined under the Insurance Act,1938 (4 of 1938);
  3. a company licensed to operate under section 8 of the Companies Act;
  4. 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
  5. a private limited company
    1. with a paid up capital and reserves not more than Rs 50 lakh and
    2. which does not have loan outstanding exceeding Rs 25 lakh from any bank or financial institution and
    3. does not have a turnover exceeding Rs 5 crore at any point of time during the financial year.

In comparison to earlier CARO 2003, one person company has been included in the exception list and loan outstanding limit for a private limited company has been increased from Rs 10 lakhs to Rs 25 lakhs.

Small Companies will not be covered under CARO 2015 unless the outstanding loan crosses the stipulated limits of Rs 25 lakhs.

14 thoughts on “CARO 2015 – Applicability of Companies Auditor’s Report Order 2015 on companies

  1. Neeraj nair

    Dear SIr,
    If a company has a paid up a capital of Rs.40 lacs and thus qualifies it to be a small company, but has reserves of Rs. 25 lacs, then whether the caro 2015 would be applicable to it

      1. shwetachaturvedi

        sir will you please explain me your answer as applicability of CARO includes both paid-up capital and reserves not exceeding the limit of 50 lakhs

    1. Jatin Grover

      Using the rule of Interpretation Expresio unius est exclusio alterius if a particular component is excluded from the applicability of the Law then Law can not be made applicable using the general clause. Thus in your case CARO, 2015 will not be applicable. I will give you one more example.
      If a pvt limited company which satisfies other conditions of being small company and has Paid up share capital of Rs.40 Lakhs and Turnover of Rs. 1.5 crore and outstanding loans and advances to Banks and FI of Rs. 30 lakhs. In this case also CARO will not be applicable.

  2. Jatin Grover

    Thanks for the valuable information but CARO, 2015 will not be applicable to a small company having outstanding loan from Banks and FI of more than Rs.25 lakhs. This is as per Rule of Interpretation Expressio unius est exclusio alterius.

  3. manoj yadav

    Dear Sir,

    If a company has paid up capital Rs. 40 Lakhs ,reserves Rs. 25 Lakhs,loan from bank and FI Rs. 20 Lakhs and turnover Rs. 10 Crores,than whether the CARO 2015 would be applicable to it.

  4. Hanish Agrawal

    whether CARO is applicable in the private company which fall under any one condition(i.e. paid-up cap.>50 lac , borrowings > 25lac, T/o > 5 crore) or to comply all condition??? because in provision AND is used in this Condition & in example is solved on the basis of any one condition.


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