These are essential measures to assess the nerves of a company’s money. A statutory audit permits the government to ascertain if a company is providing the financial details in a genuine manner. Companies have for a long time indulged in malpractices, however with such an auditing system, a company’s credibility comes to the fore.
What do you mean by Statutory Audit?
This happens to be a mandatory auditing of the monetary matters of a business entity. Over here, the company’s financial body and deals are evaluated to ascertain if the company is giving genuine details regarding its finances to its shareholders and the government. It comprises detailed checking of all the statements, fiscal statements, bank balance and books of accounts. Consider this check as a means to ascertain if you are providing genuine monetary information to the customers.
How to perform a Statutory Audit?
Being a company director, you are not supposed to audit on your own. You need to appoint an auditor within 30 days of registering your company. The process of statutory audit in India is akin to the same in western countries. Only exception being, according to the Companies (Amendment) Act, 2017, an Annual General Meeting conducted to select an auditor for 5 fiscal years. That’s appropriate. You are not supposed to have the same auditor every year. He needs to be fair and independent.
Who can’t perform your company’s audit?
The Companies Act 2013 contains some clear cut rules that specify the suitability of who can and who cannot be the auditor. Following can’t do the auditing for you:
Any corporate body that ain’t the Limited Liability partnership
An officer and employee of the company.
An individual who happens to be the partner with a worker of the company or the employee of the company’s employee
The person who owes the company an amount bigger than 1000 rupees or a person who has assured the debt of that person.
A person who has held any securities in the company within 1 year after the start of business of that company.
Any individual convicted by the court for an offence and the gap has been less than 10 years since that conviction.
The above bodies/professionals cannot audit your company. Their financial and ethical bearing reflects that they are not infallible and for genuine assessment people with integrity are needed.
Who has to go through a Statutory Audit?
Inside the Statutory Audit Applicability Section, it’s clearly specified that any company whose yearly revenue happens to be over 40 Lakh rupees or the capital contribution is over 25 Lakh rupees must go through statutory audit.
Particulars regarding the Audit report
An audit report happens to be a potent document mentioning all the financial details of a company. They have to be correct and verifiable by the auditors. This kind of report is produced in the Company’s Auditor’s Report Order (CARO), and it has the following information:
Inventories: The items being accounted for?
Fixed Assets: What about the fixed assets of the company?
Internal audit Standards: Specify the standards under which the audit is undertaken.
Statutory dues: The compliances that the company has not filed yet.
Once prepared, the audit report is given to the Ministry of Corporate Affairs for assessment, along with the directors and shareholders of the company.
What if you don’t file the statutory audit?
A statutory audit is a legal requirement that displays your ethical practices. Non-compliance can lead to attracting the unwanted attention of law enforcement agencies. Having said that, in case you have not filed the statutory audit within the due date, you can be levied a fine of 20,000 rupees. Also, every officer guilty of such deference will be imprisoned for a year.
Concluding Thoughts
Statutory Audit happens to be a critical aspect of business. It portrays your responsibility, truthfulness and very ideal for the future of your company. In case you want statutory auditors following the government obligations to give you prompt services, you can get in touch with our business registration experts. We have a dedicated and talented bunch of CAs, CSs and other financial professionals, willing to look into your needs and deliver on time.
