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Statutory Audit Service

Statutory audit is a cornerstone for any Indian business in regard to financial accountability and legal compliance. It is a mandated legal obligation which involves independent, systematic examination of a company’s books of accounts, internal controls and other statutory, routine operational records to ascertain that the numbers being reported are truly reflective of reality and satisfy the criteria outlined in national regulations. Whether the company is publically traded, privately held or an LLP, statutory audit will foster confidence amongst various stakeholders, provide regulatory oversight, and assist organizations in making informed decisions about the company’s financial affairs.

As the regulatory environment in India continues to evolve-with increasing scrutiny from various authorities: MCA, SEBI, RBI, and the Income Tax Department—the value of professional statutory audit cannot be overstated. Businesses, large and small, should view their audit not just as a legal requirement but essential for protecting assets, demonstrating probity, and maintaining long-term marketplace trust.

What is Statutory Audit?

A Statutory Audit is an obligatory and independent verification of a company's financial statements which is done by a qualified Chartered Accountant as mandated by Section 139 of the Companies Act 2013 and is applicable to all Indian companies, irrespective of their size. The main purpose of the audit is to provide assurance that the financial records are not only accurate but also fair by verifying the revenue recognition, asset valuations, expense accruals, and the company’s compliance with tax laws like GST, TDS, and PF/ESI. The auditor is appointed by the shareholders at the Annual General Meeting (AGM) for a period of 5 years in the case of an individual CA or 10 years for a firm; however, for listed/large companies, there will be mandatory rotation after the term. 

The auditor’s scope includes the examination of the company’s internal controls, the testing of transactions with the help of documentation, the evaluation of related party transactions, and the analysis of the disclosures in CARO 2020 on loans, inventory, and fraud prevention. The output of the audit consists of the audit report, the management letter detailing the auditor’s findings, and the notes to accounts for the filing of MCA Form AOC-4 by 30 September. The fieldwork is usually carried out between April and July following the year-end of 31 March, and the penalties for non-compliance can go up to ₹5 lakh for companies and ₹50,000 for officers.

Trusted Process 100% Compliance

Scope and Applicability

The obligation of a statutory audit as per the Companies Act, 2013 applies to any registered company in India, which includes but is not limited to the following types:

  • Private Limited and Public Limited companies
  • Listed entities
  • LLPs (limited liability partnerships) having an annual turnover greater than INR 40 lakh or a contribution higher than INR 25 lakh
  • Banks, insurance companies, NBFCs (non-banking financial companies), and other financial institutions regulated by a financial sector regulator
  • Public sector undertakings, as well as, any other entity that may be subject to a sector-specific regulatory framework in its field (eg. electricity boards, cooperative societies, etc.).

Audit cycles are determined on an annual basis, based on the end of each financial year. Certain sectors may also be subject to quarterly audits, interim audits, and/or concurrent audits at the request of the sector specific regulator to improve oversight and consider real time risk.

Requirements

Key Objectives of Statutory Audit

The main purposes of a statutory audit are to confirm the truthfulness and fairness of an organization’s financial statements in an independent manner; determine an organization’s compliance with the relevant legislation and standards; and enhance transparency for all stakeholders.

Financial Statement Examination

To evaluate and level opinion that the annual financial statements give true and fair view of the entity’s financial position and performance based on the accounting standards (Ind AS/GAAP).

Compliance Verification

To evaluate and give opinion on compliance with Companies Act, Income Tax Act, Goods and Service Tax Act, and any other applicable acts and manner that protects the entity from regulatory fines and penalties​ and litigation.

Detecting & Preventing Fraud

To evaluate and detect material misstatements, omissions and fraudulent transactions through detailed testing of records and systems.

Management Review

To provide actionable recommendations for enhancing governance, operational processes, and risk management.

Stakeholder Assurance

To offer credible information to help inform and decision-making for investors, directors, lenders, business partners and regulators.

Please Note: Statutory audits therefore support ethical business practices and financial discipline across India's corporate landscape.

Our Process

Statutory Audit Process – Detailed Steps

Statutory audits are performed in multiple phases, all compliant with ICAI guidance, international standards and statutory duties:

Documents Required for Statutory Audit

Required Documents

  • Financial statements (balance sheet, profit & loss, cash flow, equity changes)
  • Trial balance
  • General ledger
  • Bank statements (including business accounts and loan accounts)
  • Invoices and receipts
  • Bank reconciliation statements
  • Tax filings (GST, VAT)
  • Income tax returns
  • TDS copies
  • Fixed assets register
  • Loan agreements
  • Payroll records
  • Internal audit reports
  • Debtor and creditor lists
  • Previous audit reports

Reporting Framework and Deliverables

The statutory audit concludes in a comprehensive audit report, prepared in accordance with the Companies Act, ICAI standards and applicable sector regulations. The report mainly embodies:

  • Auditor's Opinion (True and Fair View)
  • Observations/Qualifications, CARO/ICAI points
  • Remedial action/process improvements/compliance uptick recommendations
  • Annexes: A schedule of asset, liability, contingencies, related party transactions
  • A board/management letter of risks, summarizing the high-level issues.

The audit reports are essential input for statutory filings, board presentation and annual general meetings. For listed companies, the SEBI regulations require the prompt announcing of audit findings to promote transparency.

Important Benefits of Statutory Audit

Statutory audits provide a variety of important advantages to organizations, far beyond compliance. These audits promote accuracy, transparency, and stronger internal controls which help build stakeholder trust and give organizations a basis for long-term growth and confidence in regulation.
Clarity and Credibility

Clarity and Credibility

Having audited financials offers the investors confidence, attracts more capital, and places the business in a better situation in a tender and other external partnerships.
Process Excellence

Process Excellence

Auditors recommend improvements to the accounting system and data integrity of the internal processes resulting in operational efficiency.
Legal Protection

Legal Protection

Statutory audit certificates provide companies with protection from government action, from lawsuits, and from disputes from inaccuracies in financials.
Proactive Alerts & Risk Reduction

Proactive Alerts & Risk Reduction

Regular audits uncover gaps in cash flow, unauthorized transactions, and deficient internal controls, allowing management to address issues quickly or proactively before they escalate into a problem.
Benchmarking

Benchmarking

Audit reports examine businesses to benchmark them against industry best practices and regulatory expectations that help the strategic planning process.

Statutory Audit – Sector Specific Focus

Statutory audits handle particular operational risks and compliance requirements in various business sectors. Organizations gain targeted assurance, improved transparency, and industry-relevant risk mitigation strategies by customizing audit procedures to industry standards and legal requirements.

Banking/NBFC

Asset quality, regulatory capital adherence, money flows, fraud analysis.

Insurance

Audits over premiums and claims, reinsurance settlement, reporting to IRDAI.

Manufacturing

Inventory valuation, costing methods, monitoring environmental liabilities.

Service Sector

Revenue recognition, contract accounting, valuation of intellectual property.

Each sector has its own nuances related to the audit, and the auditor must have different thinking and ways of approaching each sector.

Common challenge in Statutory AuditPatron Accounting solution
Auditor appointment and rotation complianceGuide Companies Act Section 139 compliance for first/subsequent auditor appointments at AGM, 5/10-year term planning, and mandatory rotation for listed/large entities. 
CARO 2020 disclosures and reporting standardsPrepare complete CARO reporting on loans, inventory, fixed assets, related parties, fraud, and internal financial controls with clean/unqualified audit opinions.
Financial statement verification under Ind ASVouch transactions across revenue, receivables, expenses, assets, and liabilities; test internal controls; ensure true and fair view per Accounting Standards.​
Tight audit timeline (April-July fieldwork)Fixed-price engagement with planning, fieldwork, and reporting completed by AGM deadline (30 Sep), including management representation and AOC-4 readiness. 
Coordination with tax/legal teamsIntegrated audit approach covering GST/TDS/PF compliances, related party disclosures, and post-audit MCA filings with management letter recommendations.

Why Choose Us - Integrity You Can Rely On

An audit is more than a checklist - it’s a reflection of your business integrity.

With Sundram’s experience in financial analysis and Poonam’s focus on accuracy and process, we deliver audits and certificates that inspire confidence - both internally and externally.

Every report is personally reviewed by our founders, ensuring it’s clear, compliant, and credible. When our name goes on your report, it carries the weight of experience and honesty.

Frequently Asked Questions

Have a look at the answers to the most asked questions.

FAQ Illustration

A statutory audit ensures the accuracy of a company’s financial statements, as required by law. This independent verification strengthens trust in the company’s financial health.

Companies exceeding a certain turnover or profit threshold, and all public companies, are required to conduct a statutory audit. Specific details may vary by jurisdiction.

A statutory audit is legally mandated to verify financial accuracy for external stakeholders. An internal audit is voluntary, focusing on improving internal processes and controls for management.

Documents like financial statements, trial balances, contracts, and supporting documents related to the company’s finances are necessary for the audit process.

Statutory audits are typically conducted annually. However, the specific frequency may vary depending on regulations and company size.
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