Statutory Audit

A statutory audit is an audit required by law for companies in India, under the Companies Act, 2013, in which an independent Chartered Accountant examines the company’s financial statements, books of account and records and issues a formal report expressing an opinion on whether the accounts give a true and fair view of the company’s financial position and performance, in accordance with the Act and the applicable accounting standards. “Statutory” simply means it’s mandated by statute (law), as opposed to a voluntary or internal audit. Its purpose is to give shareholders, lenders, investors and regulators independent assurance that the accounts are reliable. Every company must have a statutory audit each year. We prepare the accounts and coordinate the audit through our associated CA across Vasai-Virar.

We take you from accounts to a filed, CA-certified audit: we assist with appointing the statutory auditor (our associated CA) and the ADT-1 filing, finalise the financial statements in the proper (Schedule III) format, reconcile bank/GST/TDS/ledgers and organise the records, compile the schedules and documents the auditor will examine, coordinate the audit (our associated CA conducts it), address audit queries, have the auditor’s report finalised (with CARO if applicable), support the board/AGM adoption of the accounts, file the audited financials with the ROC (AOC-4), file the company’s ITR consistent with the audited accounts and retain the records. Because the audit can only be signed by an independent CA, our role is everything around that.

Because it’s mandatory for every company and it’s a cornerstone of corporate governance: shareholders, lenders, investors and regulators rely on audited accounts precisely because an independent professional has examined and opined on them. Miss it or get it wrong and you face penalties and compliance trouble. But it’s more than a legal box: a well-run audit gives your accounts credibility, catches errors and issues, provides true-and-fair assurance, deters fraud and underpins your ROC filings and tax return. Getting it done properly and on time keeps you compliant while adding real value. That’s exactly what we deliver, year after year.

Because a statutory audit must be conducted and signed by an independent Chartered Accountant appointed as the statutory auditor, the company can’t audit itself and it needs finalised, Schedule III-format accounts, proper reconciliations, statutory records and CARO reporting where it applies, all completed in time for the AGM and ROC filings. Getting any of this wrong causes qualifications, penalties or compliance trouble. We prepare and finalise your accounts, get them fully audit-ready, coordinate the audit through our associated CA (acting as your independent auditor) and ensure the audited accounts flow correctly into your ROC filings and ITR, as one integrated service with a single point of contact.

Your audit is handled properly and on time, accounts made audit-ready in the right format, the audit conducted and certified by an independent Chartered Accountant, CARO and reporting managed and the audited figures flowing cleanly into your ROC filings and tax return. We keep a clear separation between preparing the accounts and the independent audit, start early to avoid a rush, keep fees transparent and act as your single point of contact throughout. Because we also handle your accounting, ROC compliance, income tax and GST, everything ties up in one place. Taking a mandatory, rigorous obligation and making it smooth and correct, year after year, is what we do.

An independent Chartered Accountant examines the company’s financial statements, books of account and supporting records, examining transactions and balances, verifying assets and liabilities, checking compliance with the accounting standards and the Companies Act and evaluating the company’s financial reporting and then issues a formal report expressing an opinion on whether the financial statements give a true and fair view of the company’s state of affairs and its profit or loss for the year. It’s a rigorous process, not a rubber stamp. We get your accounts clean and audit-ready so the auditor’s examination runs smoothly and the report is sound.

The Chartered Accountant examines your books of accounts and financial records to verify that they’re properly maintained and give a true and fair view of your income and that the heart of the statutory audit: the auditor’s opinion is on whether the financial statements give a true and fair view of the company’s financial position (its state of affairs) and its performance (profit or loss) for the year, prepared in accordance with the Companies Act and the applicable accounting standards. In plain terms, it’s independent assurance that the accounts can be relied upon, that they’re not materially misstated and fairly present the company’s finances. Because the auditor is independent and bound by professional standards, that opinion carries a credibility management’s own assertions can’t. We prepare well-supported accounts so they genuinely present a true and fair view. arious particulars the tax law requires, details of the business, its transactions, deductions, TDS/TCS compliance, loans, payments and dozens of other specifics are correctly reported. It’s a genuine examination of your accounts against the tax law’s requirements, not a rubber stamp. The auditor then issues the report in the prescribed forms. We get your accounts clean and audit-ready and prepare the detailed particulars, so the CA’s examination runs smoothly.

To give the company’s stakeholders: shareholders, lenders, investors, regulators and the public independent assurance that the accounts can be relied upon. Because the auditor is independent of management and bound by professional standards, their opinion carries credibility that management’s own figures cannot. That assurance is what makes audited accounts trusted for ROC filing, taxation, financing and governance. So the audit isn’t just compliance, it’s what turns your accounts into a document others can rely on. We make sure your audit delivers that reliable, credible output.

Yes, considerably. It’s a myth that the audit is a mere formality. A well-run statutory audit gives credible accounts (an independent opinion stakeholders trust), detects errors and issues, provides true-and-fair assurance, reassures investors and lenders (banks rely on audited financials for credit), supports your ROC filings and ITR, checks compliance with accounting standards, strengthens governance through independent oversight, deters fraud, handles CARO reporting, reduces disputes and improves your books and controls going forward. So while it’s mandatory, it’s also an opportunity to strengthen credibility, governance and financial reliability. We run it to deliver that value, flagging issues for management to address.

The auditor’s report is the formal output of the statutory audit, attached to the audited financial statements. In it, the auditor expresses an opinion on whether the financial statements give a true and fair view, in accordance with the Companies Act and the applicable accounting standards. It also covers the basis for the opinion (the standards and framework applied), the accounts covered (balance sheet, P&L and other statements), compliance matters, any observations or qualifications the auditor must highlight, CARO reporting (where applicable) and any other legal reporting the Act requires. It’s a considered professional judgement that everyone relying on the accounts trusts, which is why well-prepared accounts matter so much.

Every company incorporated in India, private limited companies, public companies and One Person Companies (OPCs) regardless of turnover, size or level of activity. Even a dormant or newly-incorporated company must have its accounts audited each financial year. This is a fundamental difference from a tax audit, which only applies above certain thresholds: a statutory audit applies simply by virtue of being a company. In addition, LLPs whose turnover or contribution crosses prescribed limits require audit and certain trusts, societies and other entities require statutory audit under their governing laws. We handle statutory audits for companies and applicable entities of all sizes.

No and this is the key point that catches many small-company owners out. Unlike a tax audit (which kicks in above a threshold under Section 44AB), a statutory audit is not triggered by crossing any turnover limit, it applies to every company, every year, simply because it’s a company. It’s a myth that audit isn’t needed if turnover is low; company audit doesn’t depend on turnover at all. So whether you’re a large operating business or a tiny company with minimal activity, the statutory audit requirement is identical. We make sure your company meets it, whatever its turnover.

Yes, it’s a myth that a small company is exempt. The statutory audit requirement flows from being a company, not from a level of turnover or size, so even the smallest private limited company or OPC must have its accounts audited by an independent CA each and every financial year. Assuming a small company is exempt (a listed mistake) is exactly how owners fall into non-compliance. There can be certain relaxations within the audit for small companies (for example, in some reporting aspects), but the audit itself is still required. We handle statutory audits for the smallest companies, applying any relaxations that fit.

Yes, this catches many owners out. A statutory audit is mandatory for every company each and every financial year, regardless of whether it did any business and regardless of how small it is. A dormant company with no transactions still has to have its accounts audited by an independent Chartered Accountant, because the requirement flows from being a company, not from activity. It’s a myth that a dormant company is exempt; skipping it (a listed mistake) is a non-compliance under the Companies Act, with consequences. We handle audits for dormant companies too and can advise whether to keep it compliant or close it.

You have two sensible options and we can do either. You can keep it compliant, with its annual statutory audit and ROC filings, so it stays in good standing, ready to use later or you can formally close it, ending the audit and filing obligations. What you shouldn’t do is let it lapse: the audit and filings keep falling due regardless of activity and skipping them is a non-compliance with consequences. A Virar owner assumed a no-business company didn’t need an audit and had let it lapse; we prepared the minimal accounts, arranged the audit and advised on the path forward. We’ll help you choose and handle whichever suits you.

Yes, audit applies from the first financial year. A newly-formed company must have its accounts audited from its very first year, even with modest activity and its first auditor is appointed shortly after incorporation. Many founders don’t realise this and assume audit only starts later. A Nalasopara startup didn’t realise it needed a statutory audit in its very first year; we assisted with appointing the auditor and filing ADT-1, prepared the accounts and had the first audit conducted and certified. We set up first-year audit correctly for new companies, so the obligation is met from the outset and compliance is established going forward.

Only an independent Chartered Accountant or a firm of CAs in practice and the auditor must be independent of the company, meaning not a director, officer or employee. It’s a myth that any accountant can sign it; only a Chartered Accountant can certify a statutory audit and appointing a non-independent auditor (a listed mistake) is not valid. The auditor is formally appointed under the Companies Act and reports to the shareholders. In our service, our associated Chartered Accountant acts as your independent statutory auditor, conducting and certifying the audit, while we prepare the accounts and handle coordination.

Because independence is central to the audit’s value. The whole point of a statutory audit is that an independent professional not the company’s own management or staff examines and opines on the accounts, which is what gives the opinion its credibility. If the auditor were a director, officer or employee, the “independent assurance” would be meaningless. So the auditor must be independent of the company and objective, applying professional standards, and reports to the shareholders, not to management. This independence is exactly why we keep a clear separation between our preparing the accounts and the independent audit conducted by our associated CA.

The shareholders, it’s a myth that the auditor reports to management. The statutory auditor is appointed by and reports to, the company’s shareholders (members), not to its directors or management. This reporting line is a key part of the auditor’s independence: they’re providing assurance to the owners (and other stakeholders) about the accounts management prepared, so they can’t be answerable to the very management whose figures they’re examining. Understanding this reporting line explains why the audit carries the weight it does. Our associated CA acts as that independent auditor reporting to your shareholders.

Under the Companies Act: the first auditor is appointed shortly after incorporation, typically by the board within a prescribed period; thereafter, the auditor is appointed by the shareholders at the AGM, for the term the Act allows. The appointment must then be intimated to the Registrar of Companies (in Form ADT-1). Not appointing an auditor properly or missing the ADT-1 filing, are both listed mistakes. We assist with the auditor appointment (our associated CA) and the ADT-1 filing as the first step of the process, so the auditor is validly in place and the appointment is properly recorded with the ROC.

ADT-1 is the form through which a company intimates the appointment of its statutory auditor to the Registrar of Companies. When the auditor is appointed (at incorporation for the first auditor or at the AGM thereafter), that appointment must be filed with the ROC in ADT-1 within the prescribed time. Missing the ADT-1 filing (a listed mistake) leaves the appointment unrecorded with the ROC. We handle the ADT-1 filing as part of setting up your audit, so the auditor’s appointment is properly intimated and your compliance is clean from the start.

The statutory auditor has statutory rights of access to the company’s records (books, accounts and documents) and specific reporting duties under the Companies Act, they can examine whatever they need to form their opinion and they must report on the specified matters. They must also remain independent and objective, applying professional standards throughout. These powers and duties are what make the audit a genuine, rigorous examination rather than a formality. We provide the auditor full access to the records and documents they require and address their queries, so they can discharge their duties and complete the audit properly.

A clean (unqualified) opinion means the auditor found the accounts to give a true and fair view without material reservations, the accounts are reliable. A qualified or modified opinion flags specific issues the auditor found in the accounts. So the opinion isn’t guaranteed to be clean, it’s a myth that a clean report is guaranteed; the opinion depends on the actual account. A qualification can arise from things like unsupported balances, depreciation or provision errors or undisclosed matters. We prepare clean, well-supported accounts precisely so the audit can result in an unqualified opinion, rather than a qualification that raises questions with lenders and stakeholders.

Qualifications typically arise from problems in the accounts, missing depreciation or provisions, unsupported assets or liabilities (balances without proper backing), undisclosed related-party transactions, non-compliance with accounting standards or similar issues (several of which are listed mistakes). A qualified opinion flags these publicly, which can concern lenders and investors. The way to avoid one is to get the accounts right before the audit; properly prepared, reconciled, standards-compliant and well-supported. Because we finalise and clean your accounts and address the auditor’s queries thoroughly, we work toward a clean opinion, catching and fixing issues before they become qualifications.

CARO, the Companies (Auditor’s Report) Order is an order requiring the statutory auditor of applicable companies to report on a list of specified additional matters, over and above the main opinion on the financial statements. These cover various aspects of the company’s affairs and compliance that the government wants specifically reported on. CARO applies to many companies (with certain categories excluded), so for those companies the auditor’s report includes this additional reporting. It’s a myth that CARO “doesn’t apply to me”, it applies to many companies and we check. Determining whether CARO applies and addressing its requirements is part of a proper statutory audit.