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Audit & Assurance

Audit & Assurance

Independent audit and assurance to enhance the transparency and reliability of financial reporting.

Overview

An audit is an independent examination of an entity's financial statements to express an opinion on whether they present a true and fair view in accordance with the applicable financial reporting framework. It gives shareholders, lenders, investors and regulators confidence in the numbers they rely on.

Beyond meeting a legal requirement, a well-planned audit highlights weaknesses in internal controls, compliance gaps and accounting issues early, when they are easier to correct. Engagements are carried out in accordance with the Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of India.

Who needs this service

Private and public limited companies (statutory audit is mandatory for every company)
LLPs with turnover above ₹40 lakh or contribution above ₹25 lakh
Partnership firms and proprietorships where required by lenders or tax law
Trusts, societies and Section 8 companies
Investment entities such as AIFs, PMS and investment companies
Entities seeking independent assurance for investors, banks or internal governance

Legal and regulatory framework

  • Companies Act, 2013: Sections 139 to 148 (appointment, powers and reporting of auditors)
  • Companies (Auditor's Report) Order, 2020 (CARO) for applicable companies
  • Standards on Auditing, Standards on Review Engagements and Standards on Assurance Engagements issued by the ICAI
  • Limited Liability Partnership Act, 2008 and LLP Rules, 2009
  • Accounting Standards (AS) and Indian Accounting Standards (Ind AS), as applicable

Scope of services

Statutory audit

  • Audit of financial statements under the Companies Act, 2013 and the LLP Act, 2008
  • Reporting under Section 143, including on internal financial controls where applicable
  • CARO 2020 reporting on fixed assets, inventory, loans, statutory dues and related matters

Limited review and assurance

  • Limited review of interim financial information
  • Agreed-upon procedures and special-purpose engagements
  • Certification of specific financial information for regulators and lenders

Financial statement and compliance review

  • Review of accounting policies and their consistent application
  • Verification of disclosures required by Schedule III and accounting standards
  • Compliance audits against regulatory, statutory and contractual requirements

• Audit Support and Coordination

  • Year-end closing checklists and audit readiness reviews
  • Coordination with management, internal auditors and regulators
  • Communication with those charged with governance

How the engagement works

  1. Engagement and understandingAcceptance procedures, engagement letter, and understanding of the entity, its industry and the applicable framework (SA 210, SA 315).
  2. Risk assessment and planningIdentification of significant risks, materiality and an audit plan focused on the areas most likely to contain misstatement (SA 300, SA 320).
  3. FieldworkTesting of controls and substantive procedures: vouching, confirmations, physical verification and analytical review.
  4. Evaluation and reportingEvaluation of findings, management representations, and issue of the audit report and CARO report (SA 700 series).
  5. CommunicationManagement letter setting out control observations and practical recommendations.

Documents typically required

Trial balance, ledgers and books of account for the yearBank statements and bank confirmationsFixed asset register and inventory recordsSales, purchase and expense invoices; agreements and contractsStatutory returns filed (GST, TDS, PF/ESI) and tax challansMinutes of board and general meetings; registers under the Companies ActLoan agreements and sanction letters

Key forms and due dates

ItemTimeline
Appointment of first auditorWithin 30 days of incorporation (by the Board)
Appointment at AGMFor a term of 5 years; ADT-1 to be filed within 15 days of the AGM
Board approval of financial statementsBefore the AGM, which is due by 30 September for most companies
Filing of financial statementsForm AOC-4 within 30 days of the AGM

Indicative; subject to amendments and extensions notified by the authorities.

Deliverables

  • Independent auditor's report
  • CARO 2020 report, where applicable
  • Report on internal financial controls, where applicable
  • Management letter with observations and recommendations

The scope of each engagement is agreed in writing and depends on the nature, size and regulatory requirements of the entity.

Frequently asked questions

Is audit mandatory for every business?

Every company must have its financial statements audited, irrespective of size. LLPs need an audit above the turnover or contribution thresholds. Other businesses may require a tax audit or an audit for lenders.

What is the difference between statutory audit and internal audit?

A statutory audit is required by law and gives an independent opinion on the financial statements to shareholders. An internal audit reviews processes and controls for management and the board, and its scope is set by the entity.

What is CARO 2020?

The Companies (Auditor's Report) Order, 2020 requires the auditor of applicable companies to report on specific matters such as fixed assets, inventory, loans, statutory dues and utilisation of funds. It does not apply to small companies, OPCs and certain other companies.

How long does a statutory audit take?

It depends on size and readiness. A small company with closed books can usually be audited in 2 to 4 weeks; larger entities take longer.

Can the audit help identify financial risks?

Yes. Audit procedures often bring out control weaknesses, compliance gaps and accounting issues, which are reported to management in the management letter.

This page is for general information only and does not constitute professional advice or solicitation.