Thanks for all replies they are all valid but that look and stare Micheal gave Carlo after the whisper reply will always make me believe He just found out about Carlo. Just a question to all. Why and what hard evidence does anyone know that makes you think that Micheal already knew Carlo set up Sonny ? I cannot think of anything I seen or heard that Micheal knew Carlo set up Sonny.
Welcome to the boards, Johnny.
If you're here looking for "hard evidence," you won't have much luck.

A lot of what we discuss is speculation, some clearly supported by evidence from the book and movies, some more fanciful. But that's the brilliance of the movies- that there is so much subtext that we can speculate as to what it means 40 years later.
As to your question, I believe that Rocco was just reporting on the result of the hits.
For one thing, Michael himself tells Carlo that he was never fooled by the charade of the fight with Connie. I see no reason to disbelieve him.
But, more compellingly, accepting the idea that Michael only just found out about Carlo at the funeral leads to some logical stretches:
1. That Rocco was not providing Michael with the vital information on the hit. How else would Michael know whether they were successful?
2. That, while overseeing a major string of assassinations, Rocco somehow came into possession of important information that had eluded the Family for months.
3. That Michael would immediately murder a family member based solely on a whispered conversation on a sidewalk with no further follow up or investigation.
4. That Michael would be able to plan Carlo's assassination, gather the people together, buy plane tickets, etc. in a matter of minutes or hours. Plus, if he didn't know about Carlo before that day, would he really have so many people on site for the killing? What if one of them was in cahoots with Carlo? He had no time to investigate that.