Statutory Audit

Statutory audit is required to assess whether the company complies with the applicable laws, rules and regulations and standards and whether the financial statements reflect a true and fair view of the financial position of the company. It applies to all the companies registered in India under the erstwhile Companies Act, 1956 and Companies Act, 2013 and Limited Liability Partnerships (LLPs) having turnover exceeding Rs. 40 Lakhs or contribution Rs. 25 Lakhs.

Section 139(1) of the Companies Act,2013 read with Rule 3 of Companies (Audit & Auditors) Rules, 2014, mentions that every company shall appoint an individual/firm as an auditor.

Section 139(6) of the Act states that the first auditor of the company shall be appointed within 30 days of its date of registration.

Steps generally followed in conducting Statutory Audit:
  1. Getting appointment letter & board resolution copy
  2. Getting NOC from the previous auditor
  3. Filing no disqualification status to the company
  4. Filing of Form ADT-1 to ROC
  5. Letter of engagement
  6. Assessment of internal control
  7. Formulation of internal audit program action plan and calendar
  8. Conduction audit as per IGAAP, Companies Act, ICAI Accounting Standards and Auditing Standards.
  9. Forming an opinion on the financial statement prepared by the company
  10. Reporting to shareholders
  11. AttendingAGM

Statutory Audit Requirement
  • Companies
All companies such as Private Limited Company, One Person Company, Limited Company, Section 8 Company, Nidhi Company, Producer Company, irrespective of nature of business and sales turnover must appoint a Statutory Auditor.
  • Certificate of Incorporation (In case of Private or Public Company)
All the companies irrespective of the turnover and Limited Liability Partnership (LLP) if the annual sales turnover exceeds Rs. 40 lakhs or the capital contribution exceeds Rs. 25 lakhs, irrespective of the nature of business, must have the accounts audited.
  • Registration Certificate (In case of society)
The proprietorship firm must complete a tax audit by a Chartered Accountant, if the annual sales turnover exceeds Rs. 1 crore in terms of business or the annual gross receipts exceed Rs. 25 lakhs in terms of a profession.

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