Quick Summary
Statutory Audit is a legally required review of the accuracy of a company's financial statements by an external independent auditor appointed by shareholders.
Statutory Audit is governed by Section 139 to 147 of the Companies Act, 2013. Every company must get its annual accounts audited by a Chartered Accountant in Practice, irrespective of its turnover or nature of business.
Applicability
- All companies (Private, Public, One Person Company)
- LLP with turnover > ₹40 lakhs or contribution > ₹25 lakhs
- No exemption based on size or turnover for companies
Auditor Appointment
- First auditor: Within 30 days of incorporation (by Board), else by shareholders
- Subsequent auditors: Appointed by shareholders at AGM for 5 years
- Ratification at every AGM
- File ADT-1 within 15 days of appointment
Audit Report
- Auditor prepares Audit Report as per Standards on Auditing
- Opinion on true and fair view of financial statements
- Types: Unqualified (Clean), Qualified, Adverse, Disclaimer
- Report annexed to financial statements
Auditor Rotation
- Listed and certain public companies: Mandatory rotation
- Individual auditor: Maximum 5-year term, cooling off 5 years
- Audit firm: Maximum 2 terms of 5 years each, cooling off 5 years
Penalties
- Failure to appoint auditor: ₹25,000 for company
- Officer in default: ₹5,000
Key Points
- Mandatory for all companies
- Conducted by Chartered Accountant
- Appointed for 5 years
- Audit Report with financial statements
- Auditor rotation for listed companies