Statutory audit holds significant importance in the realms of business, finance, and banking, as mandated by the Companies Act 1956 and Companies Act 2013. Its primary objective is to ensure that businesses provide an accurate and detailed account of their financial status. This audit is conducted annually for every private limited and public company in India.
Only audit firms in India or professional Chartered Accountants can carry out these audits, tailored to the specific needs of each business. Apart from the statutory audit, companies may also require tax audits, transfer pricing audits, and GST audits based on their size and transactions.
Audit firms in India conduct a thorough analysis of financial statements to deliver precise reports on the institution’s economic condition. Governed by the Companies Act 2013 and Companies Rules 2014, failure to comply with statutory audit regulations can result in legal penalties.
To initiate a statutory audit, a company must appoint a professional auditor within thirty days of its incorporation. Shareholders must engage and appoint auditors at each Annual General Meeting, with a limit of five terms for auditors in public companies. The auditor’s report encompasses details regarding fixed assets, internal audit standards, statutory dues, internal controls, and inventories, to be filed with the Ministry of Corporate Affairs and other governmental bodies
