In business environs, statutory audit is an important term which means inspection of the company accounts by an independent body of auditors to comply with the rules and regulations of the state law.
It is beneficial for companies in building confidence among the shareholder community as it signified the overall health and performance of the company accurately. In this blog you will know how to conduct statutory audit of companies to check their financial status.
Checklist for Statutory Audit of Companies
While performing the statutory audit of the company, the auditors are required to check some important documents to reach final conclusion of the company performance. Here are some important documents that are inspected during the statutory audit of company.
- Evidence of appointment of the auditors
- Last year’s audited balance sheet
- Internal control system of companies
- Purchase Bill/ Sales Bill File
- Salary and wages file report
- Bills of the purchased assets of company
- Utility Bill proofs of company
- Rental bills of company
- Tax registration documents
- Tax Filing proofs
All important aspects of company are inspected with the documented proof of the sales and purchases.
Thus, statutory audit showcases fair and accurate representation of the company financial records.
Type of Statutory Audit for Companies
Statutory audits are classified in two classes.
- Company Audit
- Tax Audit
Statutory Audit Requirements as Specified by MCA
All registered companies are required to appoint a statutory auditor irrespective of the sales and turnover. It is required for OPC, Pvt Ltd company, Public ltd company, Section 8 company, nidhi company, producer company.
In case of Limited liability partnership (LLP), this is required if annual turnover of company exceeds 40 Lakh INR.
Procedure for Statutory Audit of Company
Review of the Company
Before starting the statutory audit, the appointed auditor understands the principle and functioning of the business and requests the balance sheets and financial statements of the business/ company.
Statutory Audit of Company
After the review process; the appointed auditor starts the audit process in which he/ she verifies the financial balance sheet and the documented proofs/ evidence of the entries to generate the final books of the financial assets of company.
Report Preparation of the Audit result
After successful execution of the audit plan; the auditor generates the final report for accurate representation of the financial records of the company.
This the the complete guide on how to conduct statutory audit of companies in an accurate way to meet the statutory compliance laid down by the state law.