Who must have a statutory audit
Every company on the register, with no size test. Other entities are tested against a threshold.
Companies
A company incorporated under the Companies Act, 2013 must get its accounts audited by an auditor appointed under section 139. Nothing turns on turnover, profit, paid-up capital or activity. A private limited company with no bank account and no invoices still needs an audit, still needs an auditor on record, and still files the audited accounts in AOC-4. That includes:
- private limited companies, including a company in its first year
- one person companies
- public limited companies
- section 8 companies
- dormant companies under section 455
- a company that has applied for strike-off but has not yet been struck off
The practical consequence is the one people miss. If the company has no books, the audit cannot happen, so the books have to be written up first. That is separate work: see accounting services.
LLPs and other entities
An LLP is different. Its accounts must be audited only if turnover exceeds ₹40 lakh, or contribution exceeds ₹25 lakh, in the financial year. Below both limits the designated partners can certify the accounts themselves. Contribution is cumulative, so an LLP that has taken in ₹30 lakh over several years needs an audit even on small turnover. See LLP annual compliance.
A partnership firm, a proprietorship, a trust or a society has no Companies Act audit at all. Any audit it has comes from another law: the Income-tax Act, its own deed or state statute, or a funder's condition. See tax audit and partnership firm compliance.
Who can be appointed as your statutory auditor
Only a chartered accountant in practice, or a firm whose majority of partners practising in India are chartered accountants. Under section 141(2), where a firm is appointed, only the partners who are chartered accountants may sign.
Section 141(3) then rules a long list of people out. The ones that catch small companies are these.
| Disqualification (section 141(3)) | What it means in practice |
|---|---|
| A body corporate, other than an LLP | A private limited consultancy cannot be your auditor |
| An officer or employee of the company | Your own finance manager cannot sign it |
| A partner or employee of an officer or employee of the company | Nor can their firm |
| A person, or a relative or partner, holding securities or an interest in the company, or indebted to it, or having given a guarantee for its borrowing, beyond the prescribed limits | Shareholder families need to check this before appointing a family CA |
| A person whose relative is a director or key managerial personnel of the company | A director's brother cannot audit the company |
| A business relationship with the company, its subsidiary or holding company, of the prescribed nature | Rules out an auditor who is also a vendor |
| A person in full-time employment elsewhere, or already the auditor of more than twenty companies | Some classes of company are excluded from that count |
| A person convicted of an offence involving fraud in the last ten years | |
| A person who, directly or indirectly, renders any service under section 144 to the company, its holding or subsidiary company | This is the one that separates audit from bookkeeping. See "What we cannot do for an audit client" below |
Appointment itself, the five-year term, casual vacancies and rotation are covered on auditor appointment and ADT-1. Removal, resignation and replacement are on change in auditor.
What the auditor is entitled to, and required to do
The auditor has a statutory right of access and a statutory duty to report, and neither depends on what the engagement letter says.
Under section 143 the auditor has a right of access at all times to the books, accounts and vouchers of the company, wherever kept, and may require information and explanations from officers of the company. Refusing access is not a negotiating position: it becomes a matter for the report.
The duty side has one item every director should know about. Under section 143(12), if the auditor has reason to believe that an offence of fraud involving the company is being or has been committed by its officers or employees, the auditor must report it, to the Central Government above the prescribed amount and to the audit committee or the board below it. There is no client-confidentiality exception to that.
In doing the work, the auditor follows the Standards on Auditing issued by the ICAI. In practice that means planning, understanding your business and its controls, testing balances and transactions, obtaining external confirmations for banks and larger balances, checking the presentation against Schedule III, and documenting all of it.
What the audit report actually says
The report is addressed to the members, not to you as management, and it answers a fixed set of questions.
Under section 143(3) the report states, among other things, whether the auditor has sought and obtained all the information and explanations needed, whether proper books of account have been kept, whether the financial statements are in agreement with the books, whether in the auditor's opinion the accounts give a true and fair view, whether any director is disqualified from being a director under section 164(2), and the effect of any qualification or adverse remark on the accounts. Observations or comments that have an adverse effect on the functioning of the company are set out in the report in thick type or italics.
The four kinds of opinion
The opinion paragraph is the part a bank, a buyer or an investor reads first. Under the Standards on Auditing there are four possibilities.
| Opinion | When the auditor gives it | What a reader takes from it |
|---|---|---|
| Unmodified, often called clean | The accounts give a true and fair view | Nothing to flag |
| Qualified | There is a misstatement, or evidence the auditor could not get, that is material but not pervasive | One identified problem, ring-fenced and described |
| Adverse | The misstatement is both material and pervasive | The accounts as a whole are not reliable |
| Disclaimer of opinion | The auditor could not obtain enough evidence, and the possible effect is material and pervasive | The auditor is not expressing an opinion at all |
A qualified opinion is not a failure of your company, and it cannot be negotiated away. It is a statement that one thing could not be verified or is wrongly stated. What you can do is fix the underlying item, and the usual candidates are unconfirmed balances, unreconciled inventory, related-party transactions with no documentation, and expenses with no supporting record.
Internal financial controls reporting
Section 143(3)(i) requires the auditor to report on whether the company has an adequate internal financial controls system and on the operating effectiveness of those controls. MCA notification G.S.R. 583(E) of 13 June 2017 takes some private companies out of that reporting: a one person company or a small company, or a private company with turnover below ₹50 crore per its latest audited financial statement, or with aggregate borrowings from banks, financial institutions or any body corporate below ₹25 crore at every point during the year.
Two points on it. The exemption is from the auditor's reporting, not from having controls. And it is available only to a private company that has not defaulted in filing its financial statements under section 137 or its annual return under section 92, so a company behind on annual ROC filing can lose it.
CARO 2020: the extra report, and who escapes it
CARO 2020 is the Companies (Auditor's Report) Order, 2020. Where it applies, the auditor attaches a second report answering twenty one separate clauses, covering property, plant and equipment, inventory, loans given, deposits, statutory dues, defaults to lenders, fraud, related parties, internal audit and more.
The Order does not apply to a banking company, an insurance company, a company licensed under section 8, a one person company, or a small company. It also does not apply to a private limited company that is not a holding or subsidiary of a public company and meets all three of these tests: paid-up capital and reserves and surplus not more than ₹1 crore, total borrowings from any bank or financial institution not exceeding ₹1 crore, and total revenue not exceeding ₹10 crore during the financial year.
The small company route is the one that changed. Since G.S.R. 880(E) of 1 December 2025, a small company is one with paid-up capital up to ₹10 crore and turnover up to ₹100 crore. A private company that is a small company on that definition is outside CARO 2020 whatever its reserves, borrowings or revenue look like, so the first thing to settle each year is whether the company is small, not whether it clears the ₹1 crore tests. A company that is a holding or subsidiary company, or a public company, is not a small company, so this route is not open to it.
We test CARO applicability in writing at the start of the engagement, because a wrongly attached or wrongly omitted CARO report is a defect in the audit report itself.
Statutory audit, tax audit, internal audit and secretarial audit
Four different audits, four different laws, four different readers. Businesses are often subject to two or three at once.
| Statutory audit | Tax audit | Internal audit | Secretarial audit | |
|---|---|---|---|---|
| Law | Companies Act, 2013, sections 139 to 147 | Income-tax Act: section 44AB for AY 2026-27, Form 26 from Tax Year 2026-27 | Companies Act, 2013, section 138 and Rule 13 | Companies Act, 2013, section 204 and Rule 9 |
| Who must have it | Every company, with no threshold | A business or profession above the turnover or receipts tests | Listed companies and companies above the Rule 13 limits | Listed companies and companies above the Rule 9 limits |
| Who signs it | A chartered accountant in practice, appointed by the members | A chartered accountant in practice | A chartered accountant or cost accountant, or another professional the board decides | A company secretary in practice |
| What comes out | The auditor's report on the financial statements | The tax audit report, filed on the e-filing portal | A report to the audit committee or the board | Form MR-3, annexed to the board's report |
| Who reads it | Members, lenders, the Registrar, anyone reading the accounts | The income-tax department | The board | Members and the Registrar |
Details of each sibling audit sit on its own page: tax audit, internal audit and secretarial audit.
From year-end to AOC-4
The audit is the middle of a sequence, and it is the step that usually sets the pace.
| Step | Time limit | For FY 2025-26, if the AGM is on 30 September 2026 |
|---|---|---|
| Books closed, trial balance and schedules ready | No statutory date, but nothing else can start | Aim for well before the AGM notice |
| Audit completed and the auditor's report signed | Before the board approves the accounts | |
| Board approves the financial statements and the board's report | Before the AGM notice goes out | |
| Annual general meeting | Within six months of the financial year end | 30 September 2026 |
| ADT-1, where an auditor is appointed at that AGM | Within 15 days of the AGM | 15 October 2026 |
| AOC-4, carrying the audited accounts and the auditor's report | Within 30 days of the AGM | 30 October 2026 |
| MGT-7 or MGT-7A | Within 60 days of the AGM | 29 November 2026 |
Late AOC-4 and MGT-7 filings carry an additional fee of ₹100 a day per form, with no cap. The dates, fees and forms are on annual ROC filing.
What a first-time client gives us
An audit runs on records, not on explanations. This is the list we send on day one.
- Last year's audited financial statements, auditor's report and, where one applied, tax audit report
- Certificate of incorporation, memorandum and articles, and any changes during the year
- Trial balance, ledgers and the accounting software backup for the year
- Bank statements for every account for the full year, with sanction letters and loan statements
- GST returns for the year and the reconciliation with the books. Where turnover crosses the limit, the GSTR-9C reconciliation is the same exercise
- TDS returns, challans and the reconciliation with expenses
- Fixed asset additions with invoices, and the fixed asset register
- Inventory count sheets as at 31 March, with valuation basis
- Debtor and creditor lists as at 31 March, and confirmations where we ask for them
- Board and shareholder minutes, and the statutory registers
- A list of related parties and every transaction with them
- Pending litigation, notices, demands and contingent liabilities
- The auditor's appointment papers: the board or members' resolution and the ADT-1 filed
Where the books are incomplete, we will say so before starting rather than after, because an audit on unfinished books produces a modified opinion and a second round of work.
What we cannot do for an audit client
Section 144 of the Companies Act bars an auditor, directly or indirectly, from rendering a list of services to the company it audits, and to that company's holding and subsidiary companies. The list includes accounting and book keeping, internal audit, design and implementation of a financial information system, actuarial services, investment advisory, investment banking, outsourced financial services and management services.
"Directly or indirectly" is defined widely. For a firm it reaches the firm, its partners, its parent, subsidiary or associate entity, and any entity in which the firm or its partners have significant influence or control, or that carries the firm's or partners' name or brand.
So the choice is yours to make, and we will make it explicit before any engagement letter is signed:
- If Regikart keeps your books or runs your accounting, payroll or internal audit, we cannot be your statutory auditor.
- If Regikart is your statutory auditor, that work goes to your team or another firm, and we will say so plainly rather than take both.
- Work outside section 144, such as your income tax return, tax audit or ROC filings, is permitted, and where the Act requires it we take the audit committee's or board's approval first.
Any firm that offers to keep your books and audit them is telling you something about how it reads section 144.
Fees
Fee on quote after a free review. There is no government fee for a statutory audit, and no fee to attach the report to your accounts.
| Item | Position |
|---|---|
| Regikart professional fee, statutory audit | Fee on quote after a free review |
| Government fee | No government fee |
| Writing up incomplete books before the audit | Separate service, see accounting services |
| Tax audit under the Income-tax Act, where it applies | From ₹7,499, see tax audit |
| ADT-1 for the auditor's appointment | ₹999, see auditor appointment |
| AOC-4 and MGT-7 filing of the audited accounts | From ₹4,999, see annual ROC filing |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 27 September 2026.
What moves the quote: turnover and transaction volume, the number of locations and bank accounts, whether the books are complete and reconciled, whether CARO 2020 and internal financial controls reporting apply, group and consolidation requirements, and whether this is a first-year audit or a continuing one. A first audit of a company with several unaudited years behind it is a different job from an annual audit, and we price it separately.
Why companies bring their audit to Regikart
Regikart is a CA and CS firm serving 250+ clients, with offices in Kolkata (head office), Delhi and Bengaluru. This page is reviewed by CA Deepak Jaiswal.
- Applicability settled in writing first. CARO 2020, internal financial controls reporting and the small company test are decided at the start of the engagement, not discovered while the report is being typed.
- The secretarial side is in the same building. Auditor appointment, ADT-1 and ROC filings and share transfers are handled by the CS team, so the audit file and the MCA record agree.
- We will tell you to fix the books first. If the trial balance will not support an audit, that is the first conversation, not a surprise in March.
- Independence taken seriously. Where we keep your books, we do not offer to audit them.