A statutory audit is a legally mandated examination of a company's financial records to ensure compliance with applicable laws, rules, regulations, and accounting standards. It verifies whether the financial statements present a true and fair view of the company’s financial position.
 

Statutory audits apply to all companies registered in India under the Companies Act, 1956, and Companies Act, 2013, as well as Limited Liability Partnerships (LLPs) with:

✔ Turnover exceeding ₹40 lakhs, or

✔ Capital contribution exceeding ₹25 lakhs.
 

Legal Framework for Statutory Audit
 

• Section 139(1) of the Companies Act, 2013, read with Rule 3 of the Companies (Audit & Auditors) Rules, 2014, mandates that every company must appoint an auditor (individual or firm).
   
• Section 139(6) states that the first auditor must be appointed within 30 days of the company’s registration.
   

Key Steps in Conducting a Statutory Audit

1️⃣ Appointment Process
 

• Obtaining appointment letter and board resolution copy
   
• Getting No Objection Certificate (NOC) from the previous auditor
   
• Filing no disqualification status with the company
   
• Filing Form ADT-1 with the Registrar of Companies (ROC)
   

2️⃣ Pre-Audit Preparations
 

• Signing a Letter of Engagement
   
• Assessing internal controls within the company
   
• Formulating an internal audit plan and calendar
   

3️⃣ Execution of the Audit
 

• Conducting the audit per Indian GAAP, Companies Act, ICAI Accounting & Auditing Standards
   
• Reviewing financial records and forming an audit opinion
   

4️⃣ Post-Audit Reporting
 

• Preparing and submitting the audit report
   
• Reporting to shareholders
   
• Attending the Annual General Meeting (AGM)
   

Who Needs a Statutory Audit?

🔹 Companies

All companies, including Private Limited, One Person Company, Limited Company, Section 8 Company, Nidhi Company, and Producer Company, must appoint a statutory auditor, irrespective of business nature or turnover.
 

🔹 Limited Liability Partnerships (LLPs)

LLPs must conduct a statutory audit if:

✔ Annual turnover exceeds ₹40 lakhs, or

✔ Capital contribution exceeds ₹25 lakhs.
 

🔹 Societies & Proprietorship Firms
 

• Societies must undergo an audit if mandated by their registration certificate.
   
• Proprietorship firms must complete a tax audit if:
  
  ✔ Business turnover exceeds ₹1 crore, or
  
  ✔ Gross receipts from a profession exceed ₹25 lakhs.
   

Key Areas of Consideration in a Statutory Audit

1️⃣ Testing Internal Controls
 

• Evaluating the effectiveness of internal control mechanisms to detect and prevent fraud and errors.
  
   
• If internal controls are weak, auditors conduct substantive testing to ensure financial accuracy.
   

2️⃣ Verifying Balance Sheet Items
 

• Reviewing secured loans, including bank statements, reconciliations, and interest rates.
   
• Examining fixed assets, invoices, depreciation records, and unaccounted assets.
   

3️⃣ Verifying Profit & Loss Account Items
 

• Conducting year-over-year comparisons and trend analysis.
   
• Analyzing sales and purchase breakdowns.
   
• Ensuring preliminary expenses are capitalized within five years.
   
• Verifying stock valuation per AS-2.
   

4️⃣ Ensuring TDS Compliance
 

• Checking TDS voucher entries and source documents.
   
• Reconciling books with TDS challans and returns.
   

5️⃣ Additional Compliance Checks
 

• Verifying dividend payments are within statutory limits.
   
• Ensuring compliance with Provident Fund, ESIC, Gratuity, Bonus, and Leave Encashment regulations.
   
• Reviewing loans and advances for compliance with the Companies Act, 2013, and Income Tax Act, 1961.
   

Why Choose Naveen Pandey and Associates. for Statutory Audit?

At Naveen Pandey and Associates., we specialize in statutory audits with an expert team of qualified professionals. Our approach ensures compliance, accuracy, and efficiency, helping businesses avoid penalties and maintain financial integrity.

✔ Experienced Team – Handling statutory audits across diverse industries.

✔ Comprehensive Compliance – Adhering to ICAI and government regulations.

✔ Proactive Approach – Addressing potential audit risks upfront.

✔ Seamless Audit Execution – Minimum disruption to business operations.
 

Looking for the Best Statutory Auditor in Delhi?

We are one of the leading statutory audit firms in India, successfully completing multiple audit assignments in Dwarka and across Delhi.
 

📧 Reach out to us at [email protected] for expert statutory audit services!