facebook
Skip to main content

Audit means an examination of the financial transaction in a company be it a private limited companies or public limited companies in India. As we all know almost every financial law prescribes audit of the business such as VAT audit, Service Tax Audit etc likewise statutory audit is a mandatory requirement prescribed under the Companies Act, 2013.

Though statutory audit is a mandatory requirement, still it is beneficial for the company as well because it helps to keep a check on the financial health of the company, liquidity flows, analyze operational efficiency and much more. Therefore, it is important form government as well as company’s point of view.

Statutory audit is conducted by a qualified practising Chartered Accountant. Every company irrespective of the fact of its nature of business or turnover must have its books of account audited each financial year.

At the outset, the company shall appoint auditor being Chartered Accountant. As per new Companies Act, 2013, the auditor shall be appointed for a term of 5 years. There are some other qualifications as prescribed under Companies Act, 2013 such as only an independent chartered accountant or a firm of the chartered accountant can be appointed as auditor of the company.

Process of appointment of auditor:

Advantages of Statutory Audit:

  • Statutory audit increases the reliability of the financial information.
  • It shows that how strong the internal control system is of the company.

The Importance of statutory audit can be realised from the current business scenario. Of late, we all are the witness of few big corporate scams; the root cause of all those scams and fraud were related to financial ill-health of the entity e.g. Satyam scam in 2008 which trembled the stock market and erode the investor confidence.

 Therefore, the statutory audit is an important tool to unearth the grey area in financial books of the company and presents a true and fair view of company’s financial status.

Recents Post

Decoding the Benefits of Registering a Business

Decoding the Benefits of Registering a Business

It is a dream that becomes a reality when you start a business. You can already ....

Companies 2nd Amendment Rules 2019 for Appointment and Qualification of Directors

Companies 2nd Amendment Rules 2019 for Appointment and Qualification of Directors

Have you heard of INC-22A? INC-22A is an ACTIVE form introduced by the MCA as co ....

MCA Announced: Companies (Incorporation) Fifth Amendment Rules 2019

MCA Announced: Companies (Incorporation) Fifth Amendment Rules 2019

In its latest update to the Companies Act, MCA has come up with a new list of am ....

sociallike