Statutory Audit

Overview

A statutory audit is the independent examination of a company's financial statements by an authorised professional (or firm) appointed under the Companies Act, 2013. The auditor reports whether the statements give a true and fair view and follow the law. Every company, private or public, active or dormant, must appoint an auditor; there is no turnover threshold below which a company is exempt. LLPs have a separate audit rule that depends on turnover or contribution, and sole proprietors and partnership firms are audited for tax where the Income-tax Act requires it, which is a different engagement.

The audited financial statements and the auditor's report go to the shareholders at the AGM and are then filed with the Registrar of Companies.

Who needs it

• Every company registered under the Companies Act, including private limited companies, OPCs, Section 8 companies, public companies and subsidiaries, regardless of turnover or whether it has started trading.
• LLPs whose turnover or contribution crosses the limit in the LLP rules; Zenith confirms applicability from your figures.
• Businesses that want an audit for lenders, investors or tenders even where the law does not require one.
• Newly incorporated companies, which must appoint a first auditor soon after incorporation.

What Zenith does

Zenith listens first, confirms scope and a tailored quotation, and assigns a relationship manager. Audit is a regulated professional service. It is carried out only through appropriately authorised, independent authorised professionals, subject to eligibility and the applicable rules, and Zenith handles coordination and the secretarial steps around it.

• Checks whether an audit is required and which framework (Accounting Standards or Ind AS) applies.
• Coordinates the appointment: board or shareholder resolution, auditor's consent and eligibility certificate, and Form ADT-1.
• Plans the audit and issues a document request list, so your team knows what is needed and by when.
• The auditor tests balances and transactions, confirms balances with banks and parties, reviews internal controls over financial reporting and the statutory reporting matters, and raises queries.
• Issues the audit report, including the additional reporting required of companies, and signs the financial statements.
• Supports the AGM documentation and the filings that follow: AOC-4 and MGT-7.

Independence matters. Under Section 144 an auditor cannot also provide certain services to the same company, such as accounting and bookkeeping or internal audit. Where Zenith keeps your books, a different, independent professional performs the audit.

Eligibility and key rules

• Who can be auditor. An authorised professional, or a firm where the majority of partners practising in India are authorised professionals. Body corporates, employees or relatives of employees of the company and persons who have extended financial backing to the company above the limit in Section 141 are disqualified.
• First auditor. The board appoints the first auditor within 30 days of incorporation, who holds office until the first AGM. If the board does not, the company appoints one at a general meeting.
• Later appointments. The company appoints an auditor at the AGM for the term the Act allows. The auditor consents in writing and the company files ADT-1 within 15 days.
• Removal before term. Needs central government approval (Form ADT-2) and a hearing for the auditor, followed by a special resolution to appoint a replacement.
• Audit standards. The auditor follows the Standards on Auditing, and for the specified classes of companies, reports on internal financial controls.
• Government companies. The Central Government appoints the auditor on the advice of the Comptroller and Auditor General.

Documents required

• Draft financial statements and trial balance for the year, with ledgers.
• Previous year's audited statements and auditor's report.
• Bank statements, bank reconciliations and loan statements, and balance confirmations if you have them.
• Fixed asset register, stock records and valuation, and physical verification reports.
• GST, TDS, PF, ESI and income tax returns and reconciliations.
• Shareholding details, board and shareholder minutes, statutory registers and director details.
• Material contracts, related-party details and any legal notices.
• For appointment: board resolution, auditor's consent and eligibility certificate, certificate of incorporation and a DSC of the authorised director.

Process and timeline

1. Applicability and scoping. Confirm that an audit applies and agree scope.
2. Appointment. Resolution, consent and certificate, then ADT-1 within 15 days.
3. Planning. Risk assessment, materiality and document request list.
4. Fieldwork. Testing and confirmations; interim visits for larger companies.
5. Reporting. Draft report, management representation, signed financial statements.
6. AGM. The AGM must be held within six months of the year end, which is 30 September for a 31 March year end.
7. Filings. AOC-4 within 30 days of the AGM and MGT-7 within 60 days, with the audit report attached.

Timelines depend on the completeness of books, the size and complexity of the business and how quickly queries are answered.

Government fees, penalties and due dates

Item	Rule
ADT-1	Within 15 days of the board meeting or AGM at which the auditor is appointed. The fee depends on paid-up capital, and late filing adds a multiple of the normal fee that rises with delay (twice up to 30 days, up to twelve times after 180 days).
AOC-4	Within 30 days of the AGM; for an OPC within 180 days of the year end. Fee from Rs 200 to Rs 600 depending on nominal share capital.
MGT-7	Within 60 days of the AGM.
Late AOC-4	Additional fees rise with delay, and the company can be fined Rs 1,000 per day up to Rs 10 lakh; officers in default are separately liable.
Continued default	Can lead to strike-off proceedings and director disqualification.

Amounts and dates above reflect public sources read in October 2026 and change with notifications, so Zenith confirms the current figures in your quotation.

Common mistakes

• Treating a dormant or nil-turnover company as exempt from audit.
• Not appointing the first auditor within 30 days of incorporation.
• Missing the ADT-1 filing after the AGM.
• Asking the bookkeeper or the internal auditor to also act as statutory auditor.
• Handing over unreconciled books on the day the AGM is due.
• Printing machine-signed copies when hand-signed attachments are required on AOC-4.

FAQs