What is a Statutory Audit?
A Statutory Audit (Stat Audit) is a legally mandated audit conducted to assess the financial records of an organization, ensuring compliance with regulatory and statutory requirements. It is performed by a qualified Chartered Accountant (CA) or an audit firm, and its primary objective is to provide a true and fair view of the company’s financial position.
Statutory audits are required for various types of business entities as per different laws and regulations.
1. Companies (As per Companies Act, 2013)
- All Private Limited Companies, Public Limited Companies, and One Person Companies (OPC) must conduct an audit, regardless of turnover or profit.
- The auditor must be appointed within 30 days of incorporation.
- The audit ensures compliance with Indian Accounting Standards (Ind AS) and the Companies Act, 2013.
2. LLPs (Limited Liability Partnerships)
- LLPs with a turnover of ₹40 lakh or more OR a capital contribution of ₹25 lakh or more must undergo a statutory audit.
3. Banks and Financial Institutions
- Banks and Non-Banking Financial Companies (NBFCs) are subject to audits as per the Reserve Bank of India (RBI) Guidelines.
- Ensures compliance with prudential norms, risk assessment, and financial disclosures.
4. Trusts and Societies
- Trusts registered under Section 12A/12AB of the Income Tax Act require an audit if gross receipts exceed ₹5 crore.
- Societies and NGOs must comply with audit requirements under respective state acts.
- Form 10B: Required for trusts and institutions claiming exemption under Section 11 and 12 where total receipts exceed ₹5 crore.
- Form 10BB: Required for trusts with receipts less than ₹5 crore, ensuring compliance with regulatory norms and tax exemptions.
Statutory audits are required for various types of business entities as per different laws and regulations.
Comparison of Statutory Audit Requirements for Different Business Entities
Business Entity | Applicability of Statutory Audit |
Private/Public Companies | Mandatory, regardless of turnover |
LLPs | Required if turnover exceeds Rs. 40 lakh or capital exceeds Rs. 25 lakh |
Banks & NBFCs | Mandatory as per RBI guidelines |
Trusts & NGOs | Required if gross receipts exceed Rs. 5 crore (Form 10B), and less than Rs. 5 crore (Form 10BB) |
Listed Companies | Mandatory under SEBI & stock exchange regulations |
Government Entities (PSUs) | Required under CAG guidelines |
Conclusion
A Statutory Audit (Stat Audit) is a legal requirement that businesses must fulfill to remain compliant with financial regulations. It ensures transparency, accuracy, and credibility in financial reporting.
If your business requires a statutory audit, it is essential to appoint a qualified Chartered Accountant to conduct the audit efficiently and ensure compliance with regulatory norms.
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