## CARO Reporting: CSR Ongoing Projects & Consolidated Financial Statements

### CSR – Ongoing Project (Section 135(6))

Under CARO, the auditor must verify whether any unspent CSR amount relating to an ongoing project has been transferred to the special account as required by Section 135(6) of the Companies Act.

Check	Requirement
Is there an ongoing project?	Identify if any CSR project spans multiple years
Is there an unspent balance?	Check the CSR expense vs. prescribed amount
Transferred to special account?	Verify transfer within prescribed time-limit per Sec 135(6)

### Consolidated Financial Statements (CFS) – CARO Point 21

The auditor of the holding company must report in CARO whether any qualification or adverse remark was made by subsidiary/associate/JV auditors under their respective CARO reports that is included in the CFS.

If yes: The holding-company CARO report must indicate:

Name/details of the company concerned
Para number of the CARO report where the qualification/adverse remark appears

> Mnemonic: For CFS-CARO → Who said what, where? (Company + Para number)

Worked example

### Example 1

Example 1 – CSR Ongoing Project:

XYZ Ltd has a prescribed CSR spend of ₹40 lakhs. It spent ₹25 lakhs on an ongoing school-building project. The remaining ₹15 lakhs was NOT transferred to the special account within 30 days of the financial year end.

CARO reporting: The auditor must report this non-compliance with Section 135(6) — the unspent ₹15 lakhs for the ongoing project was not transferred to the special account as required.

### Example 2

Example 2 – CFS CARO Disclosure:

ABC Holdings Ltd has three subsidiaries. Subsidiary B's CARO report (Para 3(vii)) carries an adverse remark on non-payment of statutory dues.

CARO reporting in CFS: The auditor of ABC Holdings must state in Para 21 of its CARO report: 'Subsidiary B – Para 3(vii) – adverse remark regarding non-payment of statutory dues.'

⚠️ Common exam mistakes

Confusing 'unspent CSR amount for ongoing projects' (goes to special account) with 'unspent amount for non-ongoing projects' (transferred to PM Relief Fund) — these have different routes.
Forgetting that CARO Point 21 requires BOTH the company name AND the specific para number — giving only one is incomplete.
Assuming that if the holding company's own CARO is clean, no CFS-level CARO disclosure is required — subsidiary qualifications must still be reported.
Missing the time-limit requirement for transfer to special account (30 days from the close of the financial year per Section 135(6)).

Bare-Act text Section 135(6) · Companies Act, 2013 · click to expand

If the amount referred to in sub-section (5) is not spent within the financial year and the company has not transferred the unspent Corporate Social Responsibility amount to a Fund specified in Schedule VII, the company shall transfer the unspent amount to a special account to be opened in any scheduled bank called the Unspent Corporate Social Responsibility Account within a period of thirty days from the end of the financial year.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

CARO – CSR Ongoing Projects and Consolidated Financial Statements

Worked example

⚠️ Common exam mistakes