Independent explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The independent auditor's report is the document in which the statutory auditor tells the members whether the standalone financial statements give a true and fair view, and answers the extra questions the Companies Act, 2013 and the Rules put to every auditor. It is signed by the auditor (the engagement partner, for a firm) and goes to the members with the financial statements. This article gives a working draft in the order that Standard on Auditing (SA) 700 (Revised) and section 143 call for, in our own wording, so that a company's accounts team can see what the report will contain and check the matching items on their side. Keeping the books and records ready for the audit is the part our books of accounts compliance service handles.
The Act is read as per the Companies Act, 2013 in the Ministry's consolidated text (last updated 29 July 2022), and the Rules as consolidated in the Ministry's e-book, consulted on 3 October 2026. Later amendments should be checked before the report is signed.
The report has two parts: "Report on the Audit of the Standalone Financial Statements" (title, addressee, opinion, basis for opinion, going concern and key audit matters where they apply, other information, responsibilities of management and of the auditor) and "Report on Other Legal and Regulatory Requirements" (section 143(3) matters, section 197(16), and the rule 11 clauses). Where the Companies (Auditor's Report) Order, 2020 applies, its statement goes in as Annexure A and the internal financial controls report in Annexure B. The auditor must comply with the auditing standards under section 143(9). An answer that is negative or qualified must carry its reasons (section 143(4)).
When you need it and the legal basis
| Source | What it requires |
|---|---|
| Section 143(2) | The auditor reports to the members on the accounts examined and on every financial statement required to be laid before the general meeting, taking into account the Act, the accounting and auditing standards, and matters under the Rules or an order under section 143(11). The report says whether the statements give a true and fair view of the state of affairs, the profit or loss and the cash flow. |
| Section 143(3)(a) to (j) | Ten further statements: information and explanations obtained, proper books and returns, branch auditor reports, agreement of the accounts with the books, compliance with accounting standards, observations on transactions with adverse effect, director disqualification under section 164(2), qualifications on maintenance of accounts, internal financial controls and their operating effectiveness, and other matters prescribed. |
| Section 143(4) | Where a matter is answered in the negative or with a qualification, the report states the reasons. |
| Section 143(9) and (10) | Every auditor complies with the auditing standards; until standards are notified, those specified by ICAI are deemed to be the auditing standards. |
| Section 143(11) | The Central Government may by order require a statement on specified matters; the CARO 2020 is such an order. |
| Section 143(12) | Fraud reporting by the auditor (to the Central Government, or to the audit committee or Board below the prescribed amount). Not a paragraph of the report itself, but the Board's report must disclose frauds reported to the Board or committee only. |
| Section 197(16) | The auditor states in the report whether remuneration paid to directors is in accordance with section 197, whether any is above the limit in that section, and gives other prescribed details. |
| Rule 11, Companies (Audit and Auditors) Rules, 2014 | Views on clauses (a) to (c), (e), (f) and (g) (clause (d) is omitted): pending litigation, provision for foreseeable losses, delay in transfer to the Investor Education and Protection Fund, management representations on intermediaries and funding parties, dividend, and audit trail in the accounting software. |
| SA 700 (Revised) paragraphs 20 to 48 | Written report; title showing it is by an independent auditor; addressee; "Opinion" first; "Basis for Opinion"; going concern where applicable; key audit matters for listed entities; signature, place and date. |
SA 701 (key audit matters) applies to audits of general purpose financial statements of listed entities, so an unlisted company's report normally has no such section.
A standalone report is on the company's own financial statements. The CARO 2020 applies to a consolidated report only through its clause (xxi) of paragraph 3, so this draft covers the standalone report.
Does the CARO 2020 apply to the company? Paragraph 1(2) of the Order applies it to every company including a foreign company, except a banking company, an insurance company, a company licensed under section 8, a One Person Company and a small company, and a private limited company that is not a subsidiary or holding company of a public company and that stays within three limits on the figures: paid-up capital and reserves and surplus not more than one crore rupees at the balance sheet date, no borrowings above one crore rupees from any bank or financial institution at any time in the year, and total revenue not above ten crore rupees. If the company is outside the Order, the report does not carry Annexure A; say so in the report only if the auditor chooses to.
The format
The draft below is a general structure. The words are ours; the auditor's firm will have its own text, and the standards require certain statements, so treat every sentence as a prompt for the auditor to confirm. Use "as far as we know and believe" where section 143(3)(a) speaks of knowledge and belief.
INDEPENDENT AUDITOR'S REPORT
To the Members of
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of (the Company), which comprise the Balance Sheet as at , the Statement of Profit and Loss , the Statement of Cash Flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies and other explanatory information.In our opinion, and as far as we know and believe and according to the explanations given to us, the standalone financial statements give the information required by the Companies Act, 2013 in the manner so required and give a true and fair view in conformity with the prescribed under section 133 of the Act, of the state of affairs of the Company as at , its , its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those Standards are described in the section "Auditor's Responsibilities for the Audit of the Standalone Financial Statements". We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India and the ethical requirements relevant to our audit under the Act, and we have met our other ethical responsibilities under them. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Information Other Than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information, which comprises . Our opinion does not cover the other information and we do not express any assurance conclusion on it. We have read it and considered whether it is materially inconsistent with the financial statements or our knowledge from the audit, or otherwise appears materially misstated.Responsibilities of Management and Those Charged With Governance for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, and cash flows of the Company in accordance with the accounting standards and other accounting principles generally accepted in India. This includes maintaining adequate accounting records under the Act for safeguarding the assets and for preventing and detecting frauds and other irregularities; selecting and applying appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and designing, implementing and maintaining adequate internal financial controls that operate effectively, so that the statements are clear of material misstatement, whether from fraud or error.
In preparing the statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing matters relating to going concern, and using the going concern basis unless management intends to liquidate the Company or has no realistic alternative. Those charged with governance oversee the financial reporting process.Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 (the Order) issued by the Central Government under section 143(11) of the Act, we give in Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act, we report that:
(a) we have sought and obtained all the information and explanations which, as far as we know and believe, were necessary for the purposes of our audit ;
(b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books ;
(c) ;
(d) the Balance Sheet, the Statement of Profit and Loss [, the Statement of Cash Flows and the Statement of Changes in Equity] dealt with by this report are in agreement with the books of account;
(e) in our opinion the financial statements comply with the Accounting Standards prescribed under section 133 of the Act;
(f) ;
(g) on the basis of the written representations received from the directors as on and taken on record by the Board, none of the directors is disqualified as on from being appointed as a director under section 164(2) of the Act;
(h) ;
(i) with respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B;
(j) .3. With respect to the remuneration paid to directors, we report under section 197(16) of the Act that the remuneration paid by the Company to its directors in accordance with section 197 in excess of the limit laid down in that section.
4. With respect to the other matters to be included in the report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, as far as we know and believe and according to the explanations given to us:
(a) the Company disclosed the impact of pending litigations on its financial position in its financial statements;
(b) the Company has made provision, as required under any law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts ;
(c) there been any delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company;
(d) ;
(e) ;
(f) .For
Chartered Accountants
Firm Registration Number:
Partner
Membership Number:Place:
Date:Annexure A: statement on the matters specified in paragraphs 3 and 4 of the Order
Annexure B: report on the internal financial controls under section 143(3)(i)
How to fill it
| Placeholder or paragraph | What goes in | Where it comes from |
|---|---|---|
| Statements named in the opinion | The titles as they appear in the signed financial statements, with the date or period | The financial statements themselves |
| Framework | Accounting Standards or Indian Accounting Standards, whichever the company follows | Notes to the accounts |
| Going concern and key audit matters | Only where SA 570 or SA 701 requires them | Auditor's own assessment; SA 700 paragraphs 29 and 30 |
| Other information | The documents that accompany the statements, such as the Board's report | The annual report |
| Section 143(3)(g) date | Date of the directors' written representations taken on record | Board minutes |
| Section 197(16) | A statement on remuneration against the limits of section 197 | Remuneration records and the managerial remuneration working |
| Rule 11 clauses | One answer for each clause, with exceptions stated | Notes to accounts, IEPF records, dividend working, software audit trail logs |
| Signature block | Firm name, firm registration number, partner's membership number | ICAI records; SA 700 paragraph 46 |
| Place and date | City of signing; not earlier than the date the auditor obtained sufficient appropriate evidence and the statements were approved | SA 700 paragraphs 47 and 48 |
If the company has made preparatory changes, for example a new accounting software from a mid-year date, the audit trail clause covers the year as printed in rule 11(g); the draft keeps the exception space for that reason.
Annexure A and Annexure B
Annexure A (CARO 2020). Paragraph 3 of the Order lists twenty-one clause heads, each answered where applicable: (i) property, plant and equipment and intangible assets; (ii) inventory and working capital limits above five crore rupees; (iii) investments, guarantees, security, loans and advances; (iv) sections 185 and 186; (v) deposits; (vi) cost records; (vii) statutory dues; (viii) income not recorded in the books; (ix) borrowings and their application; (x) public offers and preferential or private placements; (xi) fraud and whistle-blower complaints; (xii) Nidhi companies; (xiii) related party transactions under sections 177 and 188; (xiv) internal audit; (xv) non-cash transactions under section 192; (xvi) registration under the Reserve Bank of India Act, 1934; (xvii) cash losses; (xviii) resignation of statutory auditors; (xix) material uncertainty on meeting liabilities; (xx) unspent corporate social responsibility amounts; and (xxi) qualifications in CARO reports of consolidated entities. Paragraph 4 says an unfavourable or qualified answer must state its basis, and an opinion the auditor cannot give must be stated with the reason. The Order is law; the ICAI Guidance Note around it is guidance.
Annexure B (internal financial controls). Section 143(3)(i) asks whether the company has adequate internal financial controls with reference to financial statements and whether they operate effectively. The separate annexure is where the auditor answers it; it is outside the scope of this draft beyond naming it.
Common mistakes
- Dating the report before the accounts are approved. SA 700 paragraph 48 says the date is no earlier than the date the auditor has sufficient appropriate evidence, including evidence that the statements are prepared and those with recognised authority have taken responsibility for them.
- Leaving Annexure A on a company outside the Order, or leaving it out for a company inside it. Test paragraph 1(2) of the Order every year; the figures are year-end and year-long, not a one-time test.
- Skipping the section 197(16) statement because the company pays no remuneration. The report should still say whether remuneration complies, even if nil.
- Giving a rule 11 clause an answer of "not applicable" with no reasoning, instead of the clear statement the clause asks for.
- Listing key audit matters in an unlisted company's report out of habit.
- Using the draft's wording as the final text without the audit firm's own review against the current standards and any ICAI announcements.
Signing, filing and time limit
Who signs. The auditor signs in his personal name, and where a firm is appointed also in the name of the firm; SA 700 paragraph 46 also asks for the membership number and, where allotted, the firm registration number. The place is the city of signing and the date is as above. This article does not cover the unique document identification number, as it is outside the sources used.
Time limit. Section 143 prints no separate time limit for the report. It goes to the members with the financial statements, which the Board must approve and sign under section 134 before submitting them to the auditor, and the statements and the report are then laid before the annual general meeting. The time limits for the meeting are in section 96 and for filing the statements with the Registrar in section 137. No form is named in section 143 for the report itself. It travels as part of the financial statements filed with the Registrar.
Need help with the auditor's report and the books behind it?
A clean report depends on books that agree with the statements, schedules that support each CARO clause and a clear audit trail. If the accounts and records need to be put in order before the audit, our books of accounts compliance team can prepare the working papers the auditor will ask for.
Key takeaways
- The report has two parts: the audit of the statements and other legal and regulatory requirements.
- Section 143(3)(a) to (j), section 197(16) and rule 11 clauses are the statutory items to answer.
- Annexure A (CARO 2020) applies only where paragraph 1(2) of the Order does not exclude the company.
- Key audit matters are for listed entities; going concern only where SA 570 requires.
- Date the report no earlier than the evidence and the approved statements.
Read next
- Section 143 of the Companies Act, 2013: auditor's powers and duties
- CARO 2020 explained clause by clause
- What is CARO 2020 and its applicability
- Board's report format for a private company that is not a small company
- Annual report on CSR activities: ready Annexure II format
Disclaimer: Based on the Companies Act, 2013 in the Ministry of Corporate Affairs consolidated text (last updated 29 July 2022), the Rules as consolidated in the Ministry's e-book and the other official texts named in this article, as consulted on 3 October 2026. Later amendments, notifications, circulars, forms and fees should be checked. Formats are general drafts to be adapted to the company's articles and facts. This article is general information, not legal advice; check the official text before acting.