Introduction

A Statutory Audit is a legally mandatory audit required under Indian laws to verify whether a business’s financial statements present a true and fair view.

For companies, LLPs, and certain entities, statutory audit is not optional — it is a compliance requirement that also builds credibility with banks, investors, and regulators.

📋What is a Statutory Audit?

A statutory audit is an independent examination of:

• Balance Sheet
• Profit & Loss Account
• Cash Flow Statement
• Notes to Accounts

Conducted by a practicing Chartered Accountant, as mandated by law.

📋Who is Required to Conduct Statutory Audit?

✔ Companies (Mandatory under Companies Act, 2013)

• Private Limited Company
• Public Limited Company
• One Person Company (OPC)

👉 Applicable irrespective of turnover or profit.

✔ LLPs (Under LLP Act, 2008)

Audit required if:

• Turnover exceeds ₹40 lakh OR
• Capital contribution exceeds ₹25 lakh

✔ Other Entities

• Trusts & societies (as per respective laws)
• Entities receiving government grants
• Certain institutions as per governing statute

📋Key Laws Governing Statutory Audit

• Companies Act, 2013
• LLP Act, 2008
• Income Tax Act (in specific cases)

📋Statutory Audit Process (Simple Flow)

1️⃣ Appointment of Auditor
2️⃣ Understanding business & internal controls
3️⃣ Verification of books, vouchers & records
4️⃣ Compliance checks
5️⃣ Audit report with observations
6️⃣ Finalisation of audited financial statements

📋Why Statutory Audit is Important

✅ Legal compliance
✅ Improves credibility
✅ Mandatory for ROC filings
✅ Required for bank loans & tenders
✅ Detects errors and frauds
✅ Supports management decision-making

A well-conducted audit strengthens financial governance.

📋Common Mistakes Businesses Make

❌ Delaying audit till last date
❌ Incomplete documentation
❌ Ignoring auditor observations
❌ Treating audit as a formality

Audit should be viewed as a business strengthening exercise, not just compliance.