Statutory audit is an important concept in the business, financial and banking world. It is an audit that is required by the Companies Act 1956 and Companies Act 2013. The aim of conducting this audit is to observe and determine whether a business is presenting a detailed and accurate account of their financial situation. Facts and figures must be presented with the claims so that the financial statutes have a clear idea of its internal financial state. Every private limited company and every public company must go through an annual statutory audit in India.

Audits can be conducted only by an audit firm in India. A professional Chartered Accountant can perform multiple audits according to the needs of your business firm. For a typical business, a statutory audit is a minimum requirement. Depending on its size and transactions, it may also need a tax audit, transfer pricing audit and GST audit annually.

Audit firms India can carry out a thorough analysis of the financial statements of the business and then present an accurate report of the economic situation of the institution that they are working with. Statutory audit is guided and governed by Companies Act, 2013 as well as Companies Rules, 2014. Any company that does not follow the strict regulations associated with statutory audit is liable to be penalized by the law. For this reason, it is very important that business or banking institution takes the process of statutory audit very seriously.

In order to have a statutory audit conducted, a company must find and appoint a professional auditor within the first thirty days from that company’s date of incorporation. Shareholders of a business company need to consult and appoint a statutory auditor at each session of the Annual General Meeting. A specific auditor can only serve for a maximum number of 5 terms in a public company. The report presented by the auditor includes details about fixed assets, internal audit standards, statutory dues, internal controls and inventories and is to be filed with the Ministry of Corporate Affairs and other Government departments.

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