Statutory Audit IN India
Statutory Audit
A Statutory Audit is a legally required audit of a company’s financial statements to ensure accuracy, transparency, and compliance with the Companies Act, 2013. It is conducted by a Chartered Accountant (CA) or an Audit Firm who is independent of the company.
This audit provides assurance to shareholders, investors, banks, and regulators that the company’s accounts show a true and fair view of its financial position.
Applicability of Statutory Audit
- Verify accuracy of financial statements (Balance Sheet, P&L, Cash Flow)
- Ensure compliance with Companies Act, Accounting Standards & other laws
- Detect and prevent fraud, errors, and misstatements
- Build credibility and trust with stakeholders
- Facilitate loans, investments, and tenders
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Benefits of Statutory Audit
Frequently Asked Questions
Who is eligible to conduct a statutory audit?
Only a Chartered Accountant (CA) or CA Firm, appointed as the company’s auditor.
Is statutory audit mandatory for all private companies?
Yes, even a small private limited company or OPC must get its accounts audited annually.
What is the penalty for not doing a statutory audit?
Directors/officers can be fined ₹25,000 to ₹5,00,000, and the auditor may face penalties too.
When should a statutory auditor be appointed?
Within 30 days of incorporation in the first AGM, and then every 5 years (subject to reappointment rules).
What is included in a statutory audit report?
Auditor’s opinion on whether accounts give a true & fair view of financial position as per law.
Can I convert my Proprietorship into a Pvt Ltd Company?
Yes, conversion is possible through MCA by following the prescribed process.