Audit Under the LLP Act
Statutory Audit, Annual Filing & Full Compliance for Limited Liability Partnerships
The Limited Liability Partnership Act 2008 created a hybrid structure combining limited liability with partnership flexibility. Since becoming operational in March 2009, LLPs have grown from a few hundred to hundreds of thousands of registrations — and compliance requirements, including the statutory audit, have strengthened progressively.
N D Savla & Associates provides fully integrated LLP audit services — LLP Act audit, income tax audit, Form ITR-5, Form 8, and Form 11 — as a single coordinated engagement from one experienced team.
What Is the Audit Requirement Under the LLP Act?
Every LLP must maintain proper books of account, prepare financial statements, and file a Statement of Account and Solvency (Form 8) with the Registrar of LLPs annually. Mandatory audit is triggered when either financial threshold is crossed.
Audit Applicability Thresholds
| Threshold | Amount | What It Covers | Key Note |
|---|---|---|---|
| Turnover Threshold | Rs. 40 Lakh | Total receipts from all business activities | Even Rs. 1 above triggers mandatory audit — no exceptions |
| Contribution Threshold | Rs. 25 Lakh | Total partner contributions in cash, kind, or other forms | Assessed independently — either threshold alone is sufficient |
| IT Audit (Sec 44AB) | Rs. 1 Cr / Rs. 10 Cr | Business turnover (Rs. 10 Cr for <5% cash transactions) | Separate requirement from LLP Act audit — both often apply |
| Voluntary Audit | Below Both Thresholds | Not legally required but strongly recommended | Banks, investors and clients routinely require audited accounts regardless |
Step-by-Step LLP Audit Process
Engagement Confirmation & Planning
Confirm audit scope, review LLP agreement (profit-sharing ratios, capital provisions, partner rights), examine prior year filings, and set detailed timeline working backwards from the Form 8 deadline.
Books of Account Collection
Collect cash book, bank statements, sales/income register, purchase/expense register, general ledger, all vouchers and supporting documentation. Verify Section 34 compliance and accounting method consistency.
Partner Capital Account Review
Examine each partner's opening balance, contributions, drawings, interest on capital, profit/loss allocation per the LLP agreement, working partner remuneration, and all financial transactions between partners and the LLP.
Revenue & Income Verification
Verify all income streams against supporting documentation. Reconcile with GST returns (GSTR-1 and GSTR-9) and Form 26AS for TDS deducted on receipts.
Expenditure & TDS Compliance
Examine all major expense accounts. Identify Section 40A(3) cash payment disallowances, verify Section 43B statutory payments, and conduct category-by-category TDS verification across all applicable sections.
Fixed Asset & Depreciation Review
Verify all asset additions against invoices, review depreciation schedules for correct rates and the 'put to use' condition, coordinate with lender requirements for pledged assets.
Audit Report, Form 8 & Management Letter
Prepare the formal audit report, discuss all findings with designated partners, issue a detailed management letter covering internal control weaknesses, TDS gaps, and compliance improvement areas.
Form 8, Form 11 & ITR-5 Filing
Prepare and verify Form 8 (Statement of Account & Solvency) and Form 11 (Annual Return), file both on MCA21, and coordinate ITR-5 filing ensuring consistency across all platforms.
Sector-Specific Considerations
CA & Professional Firms
Partner remuneration computation, goodwill on admission, ICAI Code of Ethics fee-sharing restrictions, and incoming/retiring partner capital settlements.
Technology Startups
SaaS revenue recognition, FEMA compliance for foreign partner contributions, GST zero-rating for export of services, and investment agreement consistency.
Real Estate LLPs
Percentage/project completion method, RERA compliance, GST on under-construction units, and investor profit-sharing or debenture instruments.
Trading & Manufacturing
Purchase-sales reconciliation, Section 145A stock valuation, GST ITC eligibility, and Section 43B(h) MSME payment compliance from FY 2023-24.
LLPs with Foreign Partners
FEMA Form (I) on foreign partner joining, FEMA Form (II) on contribution changes, prohibited activities check, and proper banking channel verification.
Multi-Partner LLPs
Complex profit-sharing arrangements, multiple classes of partners, dispute resolution provisions, and buy-out computation verification.
Why Choose N D Savla & Associates?
- Multi-law expertise — LLP Act, Income Tax, GST, FEMA, MCA21 — all integrated in one engagement
- Single point of contact — LLP audit, tax audit, ITR-5, Form 8 & 11 from one team
- Zero late Form 8 filings — engagements initiated by July, completed by September
- Proactive tax advisory — working partner remuneration optimisation and partner restructuring
- Transparent fee structure — scope, deliverables, timeline, and fee agreed upfront
- Detailed management letter — specific, actionable guidance on every identified compliance issue
- Pre-filing discussion — resolve Section 43B defaults before report is finalised to reduce tax
- Long-term relationship — continuity of team, knowledge, and context across years
Consequences of Non-Compliance
| Risk | Consequence | Who Is Liable |
|---|---|---|
| Form 8 Late Filing | Rs. 100 per day from due date — no upper ceiling. 6 months late = ~Rs. 18,300; 3 years late = ~Rs. 1.1 lakh | Designated Partners personally |
| Bank Credit Facilities | Account irregularity, frozen drawdowns, reduced drawing power, potential facility recall | LLP |
| IT Audit Default (Sec 271B) | Penalty of 0.5% of turnover, maximum Rs. 1,50,000 + potential scrutiny assessment | LLP |
| False Declaration in Form 8 | Criminal offence — fines and imprisonment for designated partners | Designated Partners personally |
Frequently Asked Questions
What is the mandatory audit threshold for LLPs in India?
Is Form 8 filing directly linked to the audit?
Can the same CA conduct both the LLP Act audit and income tax audit?
What is the Statement of Account and Solvency?
What happens if partner capital accounts show discrepancies after audit?
Can an LLP be converted to a private limited company?
Start Your LLP Audit Engagement Today
Avoid the Rs. 100/day penalty — our team initiates engagements well ahead of the 30 October deadline. One integrated engagement: LLP audit, income tax audit, Form 8, Form 11, and ITR-5.
Contact Us- 📞 +91 9821 832 683 | +91 9765 000 966
- 💬 WhatsApp: +91 9819 000 511
- ✉ nainitsavla@savlagroup.in
- 🏢 Baner Business Bay, Pune | Mon–Sat 10AM–7PM