## CARO 2020 Clause (xvii) – Cash Losses
### What the Auditor Must Report
The auditor must state:
- Whether the company has incurred cash losses in the current financial year, AND
- Whether it incurred cash losses in the immediately preceding financial year.
- If yes to either: state the amount of cash losses in that year.
### Understanding Cash Loss
Cash Loss = Net loss adjusted for non-cash items (depreciation, amortisation, provisions, etc.)
> Cash Loss is essentially negative cash flow from operations (operating cash outflow).
A company may show a book profit yet suffer a cash loss (e.g., high depreciation offsetting losses), or conversely show a book loss without a cash loss.
### Why This Matters for Audit
| Situation | Auditor's Concern |
|---|---|
| Cash loss in current year only | Possible one-off — investigate cause |
| Cash loss in both current and preceding year | Persistent problem — signals going concern risk |
| Large cash losses | May trigger qualification / emphasis of matter |
### Reporting Format
| Year | Cash Loss (₹) |
|---|---|
| Current FY | Amount / Nil |
| Immediately Preceding FY | Amount / Nil |
If no cash loss in either year → simply state that no cash losses were incurred.