Statutory Audit is a type of audit which is mandated by a Statute or Law to ensure true and fair view of the book of accounts of a Business is presented to the Regulators and the Public. Unlike internal audit, Statutory Audits are not optional and must be performed if a business satisfies certain criterias. Statutory audits must be completed by qualified Chartered Accountants who are independent of the Business. Further, the report prepared by the Auditor on his/her findings must be presented in the format prescribed by the Regulator.
Statutory Audits can be mainly classified into two types, company audits and tax audits. As per Companies Act, 2013, every company, irrespective of its sales turnover or nature of business or capital must have its book of accounts audited each financial year.
Statutory Audit Requirement
All companies (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.
Limited Liability Partnership
All Limited Liability Partnership (LLP) must have its accounts audited if the annual sales turnover exceeds Rs.40 lakhs or if capital contribution exceeds Rs.25 lakhs, irrespective of the nature of business.
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 if annual gross receipts exceed Rs.25 lakhs in terms of a Profession.