Statutory Audit & Assurance

Common questions

Frequently asked

Which entities are required to get a statutory audit under the Companies Act?

Every company registered under the Companies Act 2013 — public or private, profit-making or loss-making, regardless of turnover — must have its financial statements audited by a practising Chartered Accountant each financial year. There is no turnover exemption for statutory audit under the Companies Act; threshold-based exemptions apply only to tax audit under Section 44AB. LLPs with capital contribution or turnover above prescribed limits also require audit under the LLP Act.

What is CARO 2020 and does it apply to our company?

CARO 2020 (Companies Auditor's Report Order) requires the statutory auditor to report on 21 specific matters — loans, fixed assets, inventory, related-party transactions, internal audit systems, and more — in a separate section of the audit report. It applies to all companies except small private companies that simultaneously meet three thresholds: paid-up capital ≤ ₹1 crore, borrowings ≤ ₹1 crore, and turnover ≤ ₹10 crore. The scoping call will confirm applicability in the first session.

What is the difference between a statutory audit and a tax audit under Section 44AB?

A statutory audit is mandated by the Companies Act 2013 and examines whether the financial statements give a true and fair view under Ind AS or Schedule III. A tax audit under Section 44AB is mandated by the Income Tax Act when business turnover crosses ₹1 crore — or ₹10 crore if 95% of transactions are digital — and results in Form 3CB-3CD. The two audits overlap significantly; the same general ledger underpins both. We routinely conduct them as a combined engagement to eliminate duplication and compress your team's disruption window.

What penalties apply for missing the statutory audit or tax audit deadline?

Under the Companies Act, filing financial statements without an audit triggers MCA inquiry and can lead to director disqualification proceedings. Under Section 271B of the Income Tax Act, failing to complete a tax audit carries a penalty of 0.5% of total turnover, capped at ₹1,50,000. The UDIN-linked filing infrastructure means defaults are flagged automatically — there is no administrative grace window. We recommend engaging at least six weeks before the September 30 deadline to allow for books-closure, data access, and a revision cycle.

How long does the audit take, and how disruptive is it for our finance team?

For a mid-market company with turnover up to ₹50 crore, fieldwork typically runs four to eight working days once books are closed and data access is confirmed. Because we use API-based extraction and algorithmic testing rather than manual vouching, the load on your team is concentrated in the first two days — data access setup and representation letter. After that, most queries are resolved asynchronously via a shared task tracker rather than repeated team interruptions.

Can you conduct the audit if we use Tally, Zoho Books, or a cloud ERP?

Yes. Our stack covers Tally Prime and ERP9 (via TDL bridge), Zoho Books, QuickBooks, SAP Business One, and NetSuite. For less common ERPs we fall back to exported trial balance and ledger CSVs, which still support full-population testing in Python. One hard constraint: we need read-only access to the books at least two weeks before the planned report date. Late data access is the single most common source of deadline pressure — everything else is controllable.