The purpose of the Statement is to enable the members of the Institute to comply with the requirements of the Companies (Auditor's Report) Order, 2003. The Central Government, in exercise of the powers conferred under section 227 (4A) of the Companies Act, 1956, had issued CARO, 2003 in June 2003. The Order contains certain matters on which the auditors of companies have to make a statement in their audit report. CARO, 2003 supercedes the earlier Order issued in 1988, viz., Manufacturing and Other Companies (Auditor's Report) Order, 1988 (MAOCARO).

The Statement also contains detailed clause-by-clause guidance on all the reporting requirements under the Companies (Auditor's Report) Order 2003. In addition, the Statement, at appropriate places also contains illustrative wordings of the report under a particular clause of the Order. The Statements also deals extensively with other significant aspects of the Order, for example, applicability to a private company, issues to consider in respect of paid up capital and reserves, outstanding loans, public deposits, financial institutions, turnover, date of determination of limits in respect of all these aspects, period of compliance, general approach to the Order. The Statement, inter alia, also contains a number of Appendices, covering areas such as comparative table of the MAOCARO, 1988 vis a vis CARO 2003, a check-list on the requirements of CARO, 2003 for easy understanding of the members, illustrative formats of audit report under the CARO 2003, list of public financial institutions, etc., for ease of reference. The significant differences in reporting requirements under the MAOCARO 1988 and CARO 2003 have also been indicated by way of footnotes within the Statement for ready reference of the members.

It may be worthwhile to note that CARO, 2003 apart from requiring the auditors to report on matters which were included in MAOCARO, 1988 included certain new clauses on which the auditors are now required to make a statement in their audit reports. Some of the significant clauses added, inter alia, by CARO, 2003 are requiring the auditor to report on maintenance of proper inventory records, disposal of significant part of fixed assets of the company affecting the going concern, the use of funds raised by companies through public issues, requiring the auditor to report whether any fraud on or by the company has been noticed or reported during the year under audit, the application of funds raised on short-term basis for long-term purposes, etc. and vice versa.

Highlights Of The Statement

• Extensive clause-by-clause guidance on CARO 2003
  
  

• Footnotes within the text for differences between CARO 2003 & MAOCARO 1988
  
  

• Illustrative wordings of report under particular clause(es)
  
  

• Deals extensively with significant aspects of CARO 2003, example:
  
  

  • date of determination of limits of loans, paid up capital, turnover etc.
    
    

  • sale of substantial part of fixed assets affecting going concern.
    
    

  • use of long-term funds for short-term purposes.
    
    

  • Frauds notices or reported.

The Statement on CARO replaces the existing Statement of the Institute on Manufacturing and Other Companies (Auditor's Report) Order, 1988.