Audits are generally classified into two categories:
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:
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.