Statutory Audit

Statutory Audit

Statutory Audit

A statutory audit is a legal requirement for assessment of the accuracy of the financial statements and records of a company or government. A statutory audit aims to determine if an organisation produces an honest and accurate representation of its financial position by evaluating information, such as bank balances, financial transactions and accounts records.

In India, various laws and regulatory bodies like Reserve Bank of India, Income Tax, and Companies Act etc. establish the requirements and guidelines for statutory audit. Only a practicing and qualified Chartered Accountant is authorized to conduct the statutory audit.

BizFinTax.com: Leading Statutory Audit & Tax Audit Firm

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How Does A Statutory Audit Function?

The term statutory denotes that statutory auditing is a fundamental and a necessary requirement. A statute is a regulation or law enforced by the associated government of the organization's legislative branch. Legislations for various levels may be passed by the Centre or State Government. In a company, a regulation also applies to any rule set by the management team or board of directors of the organizations.

An audit is an assessment of records conducted by a firm, company, government department, or individual. This usually involves analysing different financial records and statements. During a financial audit, reports of a company with respect to revenue or benefits, returns on investment, expenditures, and other things are also included in the audit process. This is a very tedious process and requires professional assistance who is both recognized and qualified.

The objective of a financial audit is to assess the accuracy of financial representation of the company. The process of statutory audit is not an implicit indication of misconduct. It is rather a formality aiming to help discourage: crimes, such as misappropriating funds and fraud by ensuring proper verification and assessment of all the documents by a professional third party. BizFinTax.com takes on the job of statutory audit with confidence as it possesses both the experience and the experts.

Threshold of Statutory Audit

There is a specified threshold prescribed concerning Statutory Audit for various business types such as Proprietorships, Partnership Business, and Companies.

  • Company: All companies (Private Limited Company, One Person Company, Limited Company, Section Company Nidhi Company Producer Company) irrespective of the nature of business and sales turnover are bound to 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 is more than Rs. 25 lakhs, irrespective of the nature of business.
  • Proprietorship: Proprietorship firms must conduct a tax audit by a recognized Chartered Accountant if the annual sales turnover exceeds Rs 1 crore in terms of business or if annual gross receipts exceed Rs 25 lacs in terms of a Profession. There are different criteria for mandatorily conducting tax audit, please consult our team for detailed information.