Audit Under the Companies Act

Q: What is CARO and when does it apply?

CARO requires statutory auditors to make specific additional disclosures covering areas such as fixed assets, inventory, loans, and statutory dues. It applies to most companies, with certain exemptions for small companies.

Q: How often must a statutory auditor be rotated?

Certain classes of companies must rotate their statutory auditor periodically after a maximum tenure, with specific requirements depending on the class and size of the company.

Q: What happens if a company fails to get its accounts audited?

Failure to comply can result in penalties for the company and its officers, and may cause difficulties filing annual returns and financial statements with the Registrar of Companies.

Q: Can a company change its statutory auditor mid-year?

A statutory auditor can be removed or replaced before term expiry, but this requires a specific procedure under the Companies Act, including special resolution and, in certain cases, Central Government approval.

Statutory Audit Compliance for Indian Companies

Every company incorporated under the Companies Act is required to have its financial statements audited annually by an independent statutory auditor. This audit verifies that the company's books of account give a true and fair view of its financial position and comply with applicable accounting standards.

Our team conducts statutory audits in full compliance with the Companies Act, covering the appointment process, audit execution, and reporting requirements. This service connects with our broader audit and assurance offering and supports clients also requiring tax audit or LLP compliance audit services.

Our Companies Act Audit Services

Statutory Audit Execution

Conducting the annual statutory audit in accordance with applicable accounting and auditing standards under the Companies Act.

Auditor Appointment Support

Guidance on the appointment, reappointment, and rotation of statutory auditors as required under the Act.

Internal Financial Controls

Reporting on the adequacy and operating effectiveness of internal financial controls over financial reporting.

Related Party Transaction Review

Reviewing related party transactions for compliance with Companies Act disclosure and approval requirements.

CARO Reporting

Preparing the Companies (Auditor's Report) Order disclosures required as part of the statutory audit report.

Board & AGM Support

Supporting the presentation of audited financials at board meetings and the Annual General Meeting.

Our Approach

Reviewing the company's financial statements and supporting documentation
Assessing internal controls and identifying audit risk areas
Performing substantive audit procedures in line with auditing standards
Preparing the statutory audit report including CARO disclosures
Supporting filing of audited financials with the Registrar of Companies

Benefits of a Properly Conducted Companies Act Audit

Ensures compliance with mandatory statutory audit requirements
Provides shareholders and lenders confidence in financial reporting
Identifies internal control gaps before they become significant issues
Supports timely filing of annual returns and financial statements
Reduces the risk of regulatory penalties for non-compliance
Builds a credible financial track record for future fundraising or transactions

Why Choose Us?

Deep familiarity with Companies Act audit and reporting requirements
Experience across private limited, public limited, and Section 8 companies
Practical guidance on internal financial controls and related party matters
Coordinated support with overall audit services
Clear, timely reporting that supports board and shareholder decision-making

Frequently Asked Questions

Is statutory audit mandatory for all companies regardless of size?

Yes. Under the Companies Act, every company is required to have its accounts audited annually by a statutory auditor, regardless of turnover or size. There is no exemption based on company size for the audit requirement itself, although certain compliance thresholds like CARO applicability may vary.

What is CARO and when does it apply?

CARO, the Companies (Auditor's Report) Order, requires statutory auditors to make specific additional disclosures in their audit report covering areas such as fixed assets, inventory, loans, and statutory dues. It applies to most companies, with certain exemptions for small companies and specified categories.

How often must a statutory auditor be rotated?

Certain classes of companies are required to rotate their statutory auditor periodically under the Companies Act, typically after a maximum tenure for an individual auditor or audit firm. The specific rotation requirements depend on the class and size of the company.

What happens if a company fails to get its accounts audited?

Failure to comply with statutory audit requirements can result in penalties for the company and its officers, and may also lead to difficulties in filing annual returns and financial statements with the Registrar of Companies, potentially triggering further compliance action.

Can a company change its statutory auditor mid-year?

A statutory auditor can be removed or replaced before the expiry of their term, but this requires following a specific procedure under the Companies Act, including special resolution and, in certain cases, prior approval from the Central Government.

Stay Compliant with Companies Act Audit Requirements

Professional statutory audit services tailored to your company's structure and size.