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 corporate affairs ministry. The ministry is implementing the companies law.
Sanjeev Singhal, Partner at S R Batliboi and Co LLP, said the coronavirus pandemic has caused significant disruptions forcing the companies to focus on ensuring business continuity. “Deferral of CARO 2020 by one year will give the much-needed relief to companies and they will be able to use the additional time to prioritise allocation of resources and better prepare for the enhanced requirements. It will be equally helpful for the auditors as well,” Singhal said.
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 whistleblower 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 ministry 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.
Source : PTI