CARO clause 3(i)(c) requires the auditor to report, for all immovable property (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements, whether the title deeds are held in the name of the company, and if not, to disclose specified particulars in a prescribed format; this means physically reconciling every immovable property line item on the fixed asset register to an actual title deed or conveyance document, not just to a purchase invoice or stamp duty receipt, and the exact format and threshold wording should be confirmed against the current order.
What counts as immovable property here
The clause covers land and buildings disclosed in the financial statements, whether classified as property, plant and equipment, investment property, or capital work-in-progress. Properties held on lease are reported only to the extent the lease agreement is not duly executed in favour of the company as lessee; a validly executed lease does not need a title deed because the company never held title in the first place.
Testing approach
- 01Extract every immovable property line itemPull land and buildings from the fixed asset register, investment property schedule and capital work-in-progress schedule, with original cost, acquisition date and location.
- 02Call for the actual title document for each propertyA registered sale deed, conveyance deed or allotment letter from a development authority, not a property tax receipt or an internal valuation report, which prove occupation but not title.
- 03Match the name on the deed to the company's legal nameCheck for name mismatches from predecessor entities, mergers, or amalgamations where the deed was never transferred into the surviving company's name, and for properties still in the name of a promoter or a group company.
- 04Confirm lease agreements are duly executed where leasehold is claimedAn unregistered or unsigned lease, or one that expired and was never renewed, moves the property out of the lease exclusion and into the reportable category.
- 05Build the exceptions schedule in the prescribed formatFor every property where title is not in the company's name, record description, gross carrying value, held in the name of, whether a promoter or a director or their relative or employee, period held, and reason for the title not being in the company's name.
| Situation | Audit implication |
|---|---|
| Property acquired via merger, deed never re-registered | Reportable unless legal transfer completed before the balance sheet date |
| Property jointly held with a group company or promoter | Reportable with the co-holder identified; assess whether it is also a related-party matter |
| Agreement to sell executed but conveyance deed pending | Reportable; an agreement to sell is not a title deed |
| Leasehold land with an expired lease deed awaiting renewal | No longer within the lease exclusion once the term has lapsed; treat as reportable |
Do not accept a photocopy of a title deed obtained once, years ago, as sufficient evidence for the current year. Confirm the deed is still held by the company, has not been pledged or encumbered in a way that affects title, and has not been superseded by a court order or attachment during the year.
Regulatory requirement
The exact clause number, prescribed disclosure format and the lease exclusion wording are set out in the Companies (Auditor's Report) Order as currently in force. Confirm all of these against current source material before drafting the report.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- CARO & Companies ActCARO fixed asset and inventory clauses: what auditors testWhat the fixed asset and inventory points under CARO actually require in evidence: physical verification, title deeds, revaluation, and count discrepancies.
- CARO & Companies ActCARO 2020 reporting checklist for statutory auditorsThe topic areas CARO reporting covers, what evidence each one needs, and how the clauses fit together across the audit file.
- Fixed assets & capexFixed asset register audit: completeness and accuracy checksWhat a fixed asset register must contain, how to tie it to the general ledger, and the gaps that quietly survive year after year if nobody checks for them.
- Fixed assets & capexPhysical verification of fixed assets: how to plan itA rotational verification policy, reconciling the count to the register, handling assets at customer or third-party sites, and the link to CARO 3(i).
Free tools, no signup
Each one reads a file entirely in your browser — or, for two of them, just answers a few questions — and nothing is ever uploaded.
- Purchase register checkDuplicate payments, round-sum amounts, weekend-dated invoices, incomplete records.
- GSTR-2B reconcilerMatches your purchase register against GSTR-2B — missing invoices either side, amount mismatches.
- Bank reconciliation checkerMatches your cash book against a bank statement — what's outstanding on each side.
- Fixed asset register checkDuplicate asset codes, missing location or useful life, negative net book value.
- Payroll red-flag scannerBank accounts shared across employees, and records missing an ID, PAN or salary.
- MSME payment delay checkerMSME-flagged invoices paid — or still unpaid — beyond the 45-day Section 22 limit.
- Related-party transaction screenerTransactions above a threshold you set with no approval reference, grouped by counterparty.
- Depreciation useful life checkerCompares a useful life in use against the Schedule II, Part C indicative figure.
- Materiality calculatorOverall and performance materiality against PBT, revenue, assets or equity, with reasoning shown.
- Sample size calculatorStatistical sample size for a test of controls or a substantive test of detail.