Statutory Audit

A Statutory Audit is a legally mandated examination of a company’s financial records to ensure accuracy and compliance with the applicable laws and regulations. In India, statutory audits are governed by the Companies Act, 2013, and are essential for maintaining transparency and trust among stakeholders.

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Benefits of Statutory Audit

Legal Compliance: Ensures adherence to the Companies Act, 2013, and other relevant regulations.
Transparency: Provides stakeholders with a clear view of the company’s financial health.
Fraud Detection: Helps in identifying and preventing fraudulent activities.
Improved Financial Management: Offers insights into financial operations, aiding better decision-making.
Investor Confidence: Builds trust among investors and potential stakeholders.

Applicability

Private Limited Companies: Mandatory, regardless of turnover or profit.
Public Limited Companies: Mandatory.
Limited Liability Partnerships (LLPs): Required if turnover exceeds ₹40 lakhs or capital contribution exceeds ₹25 lakhs.
Other Entities: Depending on specific regulatory requirements.

Registration Process

Appointment of Auditor: Companies must appoint a qualified Chartered Accountant within 30 days of incorporation.
Audit Planning: Developing an audit plan tailored to the company’s operations.
Fieldwork: Examination of financial records, transactions, and internal controls.
Reporting: Preparation and submission of the audit report, highlighting findings and recommendations.

Documents Required

Financial statements (Balance Sheet, Profit & Loss Account, Cash Flow Statement)
Books of accounts and ledgers
Bank statements and reconciliations
Invoices and vouchers
Details of fixed assets and inventories
Minutes of meetings (Board and General Meetings)
Statutory registers and compliance records

What You’ll Get

Detailed audit report as per statutory requirements
Management letter highlighting key observations
Recommendations for improving financial controls
Assurance of compliance with applicable laws

Frequently Asked Questions

Have a look at the answers to the most asked questions

Is statutory audit mandatory for all companies?

Yes, under the Companies Act, 2013, statutory audits are mandatory for all companies, irrespective of their turnover or profit status.

Who can conduct a statutory audit?

Only a practicing Chartered Accountant or a firm of Chartered Accountants registered in India can conduct statutory audits.

What is the penalty for non-compliance?

Non-compliance can lead to penalties ranging from ₹25,000 to ₹5,00,000 for the company and ₹10,000 to ₹1,00,000 for officers in default.

How often should a statutory audit be conducted?

Statutory audits are conducted annually, covering each financial year.

Can the same auditor be reappointed?

Yes, but as per the Companies Act, 2013, an individual auditor cannot be appointed for more than one term of five consecutive years, and an audit firm cannot be appointed for more than two terms of five consecutive years.