## CARO 2020: Companies (Auditor's Report) Order, 2020
### What is CARO?
CAR0 2020 requires auditors to report on additional specific matters beyond the standard audit report under the Companies Act. It is issued by the Central Government under Sec 143(11).
### General Rule: Who Does CARO Apply To?
CARO 2020 applies to ALL companies including Foreign Companies
EXCEPT the following (completely excluded):
| Excluded Category |
|---|
| Banking Companies |
| Insurance Companies |
| Section 8 Companies (Non-profit) |
| OPC (One Person Company) |
| Small Companies |
| Certain Private Companies (only if ALL 4 conditions met) |
### 4 Conditions for Private Company Exemption
A private company is exempt from CARO only if it satisfies ALL FOUR conditions simultaneously:
| # | Condition | Limit |
|---|---|---|
| 1 | NOT a subsidiary or holding company of a Public Company | — |
| 2 | Paid-up Share Capital + Reserves & Surplus (all reserves including revaluation) | ≤ ₹1 crore (as on BS date) |
| 3 | Total Borrowings from Bank or Financial Institution | ≤ ₹1 crore (at any time during year) |
| 4 | Total Revenue (including revenue from discontinued operations) | ≤ ₹10 crores |
> Key Rule: If even ONE condition is not met → CARO applies to that private company.
### Definition of Small Company (for reference)
A company is a Small Company if it is:
- Not a public company, AND
- Paid-up share capital ≤ ₹4 crores, AND
- Turnover ≤ ₹40 crores (as per preceding FY)
### Quick Decision Chart
```
Is company a Bank / Insurance / Sec8 / OPC / Small Co.?
→ YES: CARO not applicable
→ NO:
Is it a Private Company?
→ YES: Check all 4 conditions
All 4 satisfied? → CARO NOT applicable
Any 1 fails? → CARO IS applicable
→ NO (Public Co. / Foreign Co.): CARO IS applicable
```