How many clauses are there in CARO 2020?

CARO 2020 has 21 reporting clauses, numbered (i) through (xxi), several of which have multiple sub-clauses. Every applicable clause must be addressed in the auditor's report annexure — including the not-applicable reasoning.

Which companies are exempt from CARO 2020?

CARO 2020 does not apply to banking companies, insurance companies, Section 8 companies, One Person Companies, small companies, and private companies meeting the prescribed thresholds (paid-up capital ≤ ₹1 crore, borrowings ≤ ₹1 crore, turnover ≤ ₹10 crore — all conditions met).

Is CARO required for consolidated financial statements?

CARO 2020 applies only to standalone financial statements. For consolidated FS, only clause (xxi) is reported by the principal auditor — listing any qualifications or adverse remarks in the component auditors' CARO reports.

Can I report "not applicable" for a CARO clause?

Yes. Clauses that don't fire based on the company's facts should still be addressed with the not-applicable reasoning, not left blank. The ICAI illustrative format prescribes specific language for the not-applicable response of each clause.

CARO 2020 Clause Navigator — 21 Clauses, Verifications, Sample Observations

Reporting requirement

Report whether (a) the company is maintaining proper records showing full particulars including quantitative details and situation of PPE and intangible assets; (b) PPE is physically verified at reasonable intervals; (c) title deeds of immovable property are held in the name of the company; (d) any revaluation has been done by a Registered Valuer; (e) any proceedings under the Benami Transactions (Prohibition) Act 1988 have been initiated against the company.

What to verify before signing

Fixed asset register completeness — qty, location, gross block, depreciation, NBV per asset
Physical verification programme — frequency, coverage, discrepancies reconciled
Title deeds physically inspected; mortgage / pledge status confirmed
Revaluation reports — Registered Valuer credentials, recency, methodology
Inquiry of management + check of show-cause notices / proceedings under Benami Act

Sample observation — applicable

(a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of property, plant and equipment and intangible assets. (b) Property, plant and equipment have been physically verified by the management during the year and no material discrepancies were noticed on such verification. (c) The title deeds of all the immovable properties are held in the name of the Company. (d) The Company has not revalued its property, plant and equipment or intangible assets during the year. (e) No proceedings have been initiated during the year or are pending against the Company as at 31 March 20XX for holding any benami property under the Benami Transactions (Prohibition) Act, 1988.

SA 501Ind AS 16 / AS 10Schedule II Companies Act 2013

On CORAAClause (i) auto-fills from the underlying ledger work — every observation traces back to the transactions that triggered it.

From the navigator to the working paper.

This navigator is a reference — what each clause requires and how a typical observation reads. Translating it into an actual signed annexure is where the audit work happens. Two complementary assets:

CARO 2020 Checklist template — downloadable Word file, your firm letterhead, all 21 clauses formatted to drop into the audit report annexure.

Audit prompt library — five CARO-specific prompts you can use with Claude / ChatGPT to draft clause-by-clause language once the underlying work is done.

And if you’d rather have CARO clauses populate themselves from the ledger work — CORAA’s Reporting hub does exactly that. Each clause flags from the underlying scrutiny + reconciliation + procedures work already done in the engagement. Signed off in a fraction of the time.

CARO 2020 — clause by clause.

From the navigator to the working paper.