Statutory Audit
A Statutory Audit is a mandatory audit conducted to ensure that an organization’s financial statements accurately reflect its financial position and comply with the legal and regulatory framework. In India, statutory audits are governed by the Companies Act, 2013, and must be conducted by a qualified Chartered Accountant (CA). Businesses and organizations in Hyderabad, a major commercial and IT hub, are required to undergo a statutory audit to maintain transparency, legal compliance, and investor confidence.
Importance of Statutory Audit
A Statutory Audit enhances financial accountability and ensures that organizations adhere to legal regulations set by authorities like the Ministry of Corporate Affairs (MCA), SEBI, RBI, and the Income Tax Department. It helps businesses detect financial discrepancies, prevent fraud, and ensure tax compliance, contributing to a strong and transparent financial system.
Minimum Requirements for Statutory Audit
Companies, LLPs, and registered organizations must comply with statutory audit requirements.
A certified CA or audit firm must be appointed to conduct the statutory audit.
Businesses with a turnover exceeding ₹1 crore must undergo an audit (₹10 crore for digital transactions).
Balance Sheet, Profit & Loss Account, Bank Statements, and Financial Ledgers must be maintained.
The organization must ensure compliance with GST, Income Tax, and other regulatory requirements.
Benefits of Statutory Audit
- Ensures Legal & Regulatory Compliance : Helps businesses comply with corporate laws and tax regulations.
- Enhances Financial Credibility : Improves trust with investors, banks, and stakeholders.
- Detects Fraud & Financial Irregularities : Identifies errors, fraud, and misstatements.
- Improves Internal Control Systems : Helps businesses strengthen financial discipline and governance.
- Ensures Transparency in Financial Reporting : Provides accurate financial data for decision-making.
- Facilitates Smooth Tax Assessments : Helps in quick and hassle-free income tax filings and scrutiny.
Important Notes on Statutory Audit
- Mandatory for all companies registered under the Companies Act, 2013.
- Conducted as per the guidelines of Indian Accounting Standards (Ind AS) & Auditing Standards (SA).
- Required for businesses exceeding ₹1 crore turnover (for tax audit applicability).
- Listed companies, banks, NBFCs, and insurance companies have stricter audit requirements.
- Non-compliance can result in penalties, legal action, and disqualification of directors.
Advantages of Statutory Audit
Prevents Financial Misstatements
Boosts Investor & Lender Confidence
Enhances Business Reputation
Reduces Legal Risks & Penalties
Identifies Operational Inefficiencies
Simplifies Tax & GST Compliance
Process of Statutory Audit
Appointment of Auditor :
- A Chartered Accountant (CA) or audit firm is appointed as per Section 139 of the Companies Act, 2013.
Review of Financial Records :
- The auditor examines books of accounts, financial statements, and bank transactions.
Verification of Tax & Regulatory Compliance :
- The audit checks compliance with Income Tax, GST, and Corporate Laws.
Identification of Errors & Fraud Detection :
- The auditor detects financial misstatements, fraud, and discrepancies.
Preparation of Audit Report :
- The Statutory Audit Report is prepared, highlighting financial findings and compliance status.
Submission to Authorities :
- The audit report is submitted to regulatory bodies like MCA, SEBI, RBI, or Income Tax Department (as applicable).
Rectify Discrepancies & File Tax Returns :
- Businesses must correct any errors and file their ITR accordingly.
Documents Required
To facilitate a seamless registration process, please ensure that the necessary documents are readily available.
Company Incorporation Certificate & MOA/AOA
Books of Accounts
Bank Statements & Financial Transactions Records
GST Returns & Income Tax Returns (ITR)
Invoices for Sales, Purchases, and Expenses
TDS/TCS Records & Compliance Documents
Company Incorporation Certificate & MOA/AOA
Books of Accounts
Bank Statements & Financial Transactions Records
GST Returns & Income Tax Returns (ITR)
Invoices for Sales, Purchases, and Expenses
TDS/TCS Records & Compliance Documents
Company Incorporation Certificate & MOA/AOA
Books of Accounts
Bank Statements & Financial Transactions Records
GST Returns & Income Tax Returns (ITR)
Invoices for Sales, Purchases, and Expenses
TDS/TCS Records & Compliance Documents
Company Incorporation Certificate & MOA/AOA
Books of Accounts
Bank Statements & Financial Transactions Records
GST Returns & Income Tax Returns (ITR)
Invoices for Sales, Purchases, and Expenses
TDS/TCS Records & Compliance Documents
Conclusion
A Statutory Audit is a vital financial compliance requirement for businesses in Hyderabad to ensure transparency, accuracy, and legal compliance. It helps organizations maintain financial discipline, build investor confidence, and avoid regulatory penalties. Conducting regular statutory audits strengthens a company’s financial health and ensures long-term business success.
For professional statutory audit services in Hyderabad, consult our expert Chartered Accountants today!
+91 - 9542641607
Copright@2024
CA Naresh Gowlikar & Company.
All Rights Reserved.
Disclaimer | Privacy Policy