The MCA has issued the Companies (Auditor’s Report) Order 2020 under section 143(11) of the Companies Act 2013 (in consultation with the National Financial Reporting Authority). The Order provides for the detailed list of matters that should be included in the Auditor’s Report of every company governed by this order for financial years commencing on or after 1 April 2019. The Order also provides that where the answer to any of the matters is unfavourable or qualified, the report shall state the basis for such unfavourable or qualified answer, as the case may be. Where the auditor is unable to express an opinion on any specified matter, the report should indicate such fact, together with the reasons as to why it is not possible for him to give his opinion.

The Order applies to every company, including a foreign company as defined in clause (42) of section 2 of the Companies Act 2013, except:

• a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 ;

• an insurance company as defined under the Insurance Act,1938 ;

• a company licensed to operate under section 8 of the Companies Act;

• a One Person Company as defined in clause (62) of section 2 of the Companies Act and a small company as defined in clause (85) of section 2 of the Companies Act; and

• a private limited company, not being a subsidiary or holding company of a public company, having a paid up capital and reserves and surplus of not more than one crore rupees as on the balance sheet date and which does not have total borrowings exceeding one crore rupees from any bank or financial institution at any point of time during the financial year and which does not have a total revenue as disclosed in Scheduled III to the Companies Act (including revenue from discontinuing operations) exceeding ten crore rupees during the financial year as per the financial statements.

To refer to the notification dated 25 February 2020 of the Companies (Auditor’s Report) Order 2020, click here