Variants of Audit under Companies Act, 2013

  • July 26, 2016
  • Dushyant Sharma
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The new Companies Act, 2013 claims to bring more transparency in the companies working through introducing more strict provisions. Various types of audits are prescribed such as statutory audit, Internal Audit, Secretarial Audit, and cost audit which try to cover each and every aspect of a corporate transaction. The audit is like a regular check up which keeps a watch over the health of the companies.

Various audits are prescribed under the companies Act, which are as follows:

  1. Statutory Audit
  2. Internal Audit
  3. Secretarial Audit
  4. Cost Audit

Let�s understand these different types of audit one by one:

  1. Statutory Audit:

Companies Act, 2013 is the source of this audit requirement. Statutory audit is done by the statutory auditor who must be chartered accountant holding a valid certificate of practice. The auditor is appointed at the annual general meeting for the period of 5 years. There are certain qualifications and disqualification which must be kept in mind before appointing an auditor. The company can either appoint Individual or firm as its auditor.

  1. Internal Audit:

Before understanding the concept of internal audit, you must understand its applicability because internal audit is applicable to certain types of the company as follows:

  1. Every listed company;
  2. Unlisted public limited companies:-
  3. whose paid up shares capital is INR 50 Crore or more during the preceding financial year;
  4. whose turnover are of INR 200 Crore;
  5. Whose outstanding loans and borrowing from banks or public financial institution are more than INR 100 Crore or more; and
  1. Turnover of INR 200 Crore or more; or
  2. Outstanding loans or borrowings from banks or public financial institutions exceeding 100 Crore.

Internal audit can be done by CA, Cost accountant or any other professional because there are not as such eligibility criteria to appoint an internal auditor.

  1. Secretarial Audit:

The Secretarial audit is first time prescribed under the companies act, 2013. Again this is not applicable to every type of company. Only certain types of the companies are required to conduct Secretarial Audit, which are as follows:

  1. Every listed company;
  2. every public company having a paid-up share capital of INR 50 Crore rupees or more; or�
  • Every public company having a turnover of 250 Crore rupees or more.

Only Company Secretary in practice can do a secretarial audit and submit a secretarial audit report which must be annexed to the Board�s report.

The Secretarial audit is very comprehensive audit which includes almost every law which applicable on the particular company. Therefore, Secretarial Audit is like a comprehensive report on the compliance status of an entity.

  1. Cost Audit:

Cost audit is normally applicable to the companies which are into production process or manufacturing. The Central government can also order to conduct the cost audit for certain types of the company. Applicability of the cost audit is prescribed under the section 148 of the companies act, 2013 which is very detailed one. So, it would be advisable to check the criteria whether cost audit is applicable to your company or not.� Cost Audit is done by the cost accountant in practice.

These are summary of the different audits under the companies act only, which are core area of the law to regulate the corporate sector.


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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