Statutory Audit is a type of audit which is mandated by a Statute or Law to ensure true and fair view of the book of accounts of a Business is presented to the Regulators and the Public. Unlike internal audit, Statutory Audits are not optional and must be performed if a business satisfies certain criterias. Statutory audits must be completed by qualified Chartered Accountants who are independent of the Business.Further, the report prepared by the Auditor on his/her findings must be presented in the format prescribed by the Regulator.

Statutory Audits can be mainly classified into two types, company audits and tax audits. As per Companies Act, 2013, every company, irrespective of its sales turnover or nature of business or capital must have its book of accounts audited each financial year. Thus, the Board of Directors of a Company are required by law to appoint an Auditor within 30 days of incorporation and thereafter conduct an audit of its financial statements each financial year. The accounts of a Limited Liability Partnership (LLP) must be audited if it has an annual turnover of Rs.40 lakhs or more or Rs.25 lakhs or more capital contribution.Tax audit on the other hand is required for Proprietorships and Partnership Firms that have cross a certain threshold of sales.

At this stage, the audit team focuses on the review of the client’s internal audit system and its efficiency. Our evaluation is based on scrutiny of a selected data sample from the most areas of accounting books including observation of the company’s internal rules and regulations. At the same time, the auditor performs an adequate inspection of the stocktaking process based on the organisation’s internal asset and liability stocktaking rules. At this point, the auditor evaluates important factors that might have had an influence on the company’s results in the past period. The auditor also looks into the client’s final accounts strategy. This stage is where we develop interim reports notifying the client of any discrepancies or problems that need to be corrected.

At this stage, the overall audit plan is approved including specifications of the areas that are to be studied by our auditors. At the same time, we talk to the client and together we define the schedule of all necessary activities and a detailed timetable.

The objective of the final audit stage is to review the final accounts and develop the audit report. Before this is done, however, the auditor checks the main ledger balance as of the final accounts day and the continuity of related reports.

We always make sure that accounting books show a true and accurate picture of the organisation’s assets, liabilities, net assets and financial results. At the same time, we make sure that books are kept in accordance with legal regulations applicable to final accounts presentation. The final audit stage also includes verification that the data stated in the annual report and the relations report correspond to the data stated in the audited final accounts.

Prior to starting the statutory audit, the auditor obtains an understanding of the business, book of
accounts and financial statements prepared by the Business.

The Statutory Auditor executes the audit plan. He or she would verify the information presented on the financial statements, obtain samples and verify data used to prepare the Books.

Based on the data and information gathered in the audit, the Statutory Auditor would prepare an Audit Report and express an opinion of it the financial statements portray a true and fair view.