Accountancy in India

>> Audit Requirements in India

Audits are generally classified into two categories:

  • Statutory Audits – mandated by Statues and to be conducted compulsorily
  • Internal Audit – driven by Management

Statutory audit

Statutory audits are conducted to report the state of a company’s finances and accounts to the Indian government. Such audits are performed by qualified auditors who are working as external and independent parties.

The two common types of Statutory  Audits are:

  • Tax Audit – Every person whose business turnover exceeds INR 10 million and every person working in a profession with gross receipts exceeding INR 5 million must have their accounts audited by an independent chartered accountant.
  • Company Audit – Every company, must have its annual accounts audited each financial year. Only an independent chartered accountant or firm of chartered accountants can be appointed as the auditor of a company.

Internal Audit

To maintain thorough control on the activities of the company, and for the purpose of corporate governance, the Companies’ Act requires that every public company having paid-up capital of not less than INR 50 million shall constitute an Audit Committee Board, who oversee company’s financial and risk management policies along with all other audit  related functions.
In India, every company whose shares are registered on the stock exchange must have an internal auditing system in place. For a company whose shares are not listed on the stock exchange, but whose average turnover during the previous three years exceeds INR 50 million, or whose share capital and reserves at the beginning of the financial year exceeds INR 5 million, must have an internal auditing system  in place.

Latest version updated 13th October 2017

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