Understanding Statutory Audit in India

Published on 28 September 2026 · Category: Audit & Assurance

A statutory audit is a legally mandated examination of a company's financial records and statements. In India, the requirement to undergo a statutory audit arises primarily from the Companies Act, 2013, and, in certain cases, the Income-tax Act, 1961.

Who Needs a Statutory Audit?

Under the Companies Act, 2013, all companies are required to have their financial statements audited annually, regardless of their size or turnover. This differs from a tax audit under the Income-tax Act, which applies when turnover, gross receipts, or professional receipts cross specified thresholds.

• Companies: Mandatory statutory audit every financial year.
• LLPs: Required only if turnover exceeds ₹40 lakh or capital contribution exceeds ₹25 lakh.
• Proprietorships & partnerships: Subject to tax audit if prescribed limits are exceeded.

What Does a Statutory Audit Cover?

The auditor examines the books of account, internal controls, and financial statements to express an opinion on whether they present a true and fair view. The scope typically includes verification of transactions, compliance with accounting standards, and statutory reporting requirements.

How to Prepare

1. Maintain complete and accurate books of account throughout the year.
2. Reconcile bank statements, ledgers, and statutory dues periodically.
3. Keep supporting documents organized and readily available.
4. Close books promptly and schedule the audit well before deadlines.

This article is for general informational purposes only and does not constitute professional or legal advice. For specific guidance, please consult a qualified Chartered Accountant.

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