Helping organizations from various sectors on Company Audit, Internal Audit, Management Audit, Statutory Audits and other Voluntary Audits.
There is various audit some are mandatory some are voluntarily done by an individual or businesses. Audit services in India can be categorized in the below points:
Statutory Audits: Under this comes various audits as required by statutory that can be under the income tax, under company laws, under banking laws, under GST laws, so this category has a huge scope under audit services in India.
Internal Audits: This is mandatory for certain classes however mostly organization makes it a part of the business because of its significance in assessing the organization current affairs and preventing and detecting any error or frauds.
Management Audit: This category of the audit is to assess and recommend the resources, asset, strategies followed by the organization is in the right shape and going in a planned direction.
Similarly, there are other important audits such as stock audit, due diligence audit, forensic audit and so on.
CAONWEB with a wideAudit Services in India network of professionals provides audit services for various sectors.
In India, statutory audits are conducted for each fiscal year (For the period 1st April to 31st March) and not the calendar year. The most common important two statutory audits are:
Company Audits : Company Audits is governed by the Companies Act, 2013. Company audit has the objective of reporting the state of the company’s accounts & finance to the regulatory authority. Audit and assurance services like company audits are performed by qualified auditors who are working as an independent external party. The audit report form has its own set of rule that is set by the Government. Rules on the appointment, change, removal of auditors has specific rules.
Income Tax Audit : Section 44AB of the income tax act has the provisions related to the audit of accounts. Income tax audit under this section is mandatory for certain class of taxpayers that depends on turnover and receipts limit. To understand if you are liable under the tax audit, you can consult tax advisors that is Chartered Accountants near you. A tax audit can be performed only by a Chartered Accountant.
For banks, financial institution, for power companies, the law of banks, power Governs their statutory audit.
Internal Audit Procedure, Internal Audit Report: All listed companies have to mandatorily conduct an Internal Audit, for unlisted and for private limited companies, internal audit becomes mandatory that depends upon paid-up share capital, borrowing or deposits. In our FAQ below you can see in detail the limits for Internal audit in India.
Internal Audit Procedure starts where auditor see and analyses the current process, the system in an organization. The system and procedure like the management process, authorization process, how things flow for a different department. After analyzing these things assessment is done where auditor will compare the result that he analyzed at the first step with the internal control functions if it is in line with regulatory norms and internal policies of the organization. The internal audit report is prepared after as a final step of Internal Audit Procedure. The internal audit report shows the comparison and also recommendations are made by auditor wherever required.
Section 44AB of the income tax act has the provisions related to the audit of accounts. Income tax audit under this section is mandatory for certain class of taxpayers that depends on turnover and receipts limit.
It is mandatory if:
Total sales or gross receipts in business exceeds 100 lakh in any previous year or
For professional gross receipts exceeds 50 lakh in any previous year; or
The assessee is covered under section 44AE, (44BB or 44BBB) and claims that the profits from the business are lower than the profits computed on a presumptive basis.
The assessee is carrying on a notified profession under section 44AA, and claims that the profits from such profession are lower than the profits computed on a presumptive basis under section 44ADA and his income exceeds the basic exemption limit.
Where Income exceeds the basic exemption limit for any assessed who is covered u/s 44AD (4)
44AB is not applicable to a person who declares profits and gains on a presumptive basis u/s 44AD and his total sales, turnover or gross receipts does not exceed Rs. 2 crore.
Also, 44AB is not applicable to a person who derives income of nature referred to in sections 44B and 44BBA.
Company audit is mandatory for all companies registered in India. Company Audit is governed by the Companies Act, 2013. Company audit has the objective of reporting the state of the company’s accounts & finance to the regulatory authority. Audit and assurance services like company audits are performed by qualified auditors who are working as an independent external party.
The audit report form has its own set of rule that is set by the Government. Rules on the appointment, change, removal of auditors has specific rules.
Applicability of Internal Audit:
Below companies are required to appoint Internal Auditor
Paid up share capital of Rs. 50 Crore or more during the preceding financial year OR
Turnover of Rs.200 Crore or more during preceding financial year OR
Outstanding loans or borrowings from bank/ financial institutions(public) exceeding Rs.100 Crore or more at any point of time during the preceding financial year; OR
Outstanding deposits of Rs 25 crore or more at any point of time during the preceding financial year
Private Companies: if it satisfies the following conditions:
Turnover of Rs.200 Crore or more during the preceding financial year.
Outstanding loans or borrowings from banks or public financial institutions exceeding Rs.100 Crore or more at any point of time during the preceding financial year.
Compliance audit objective is to ensure that all compliances are being followed by the company or business applications to it. Compliance audit procedures ensure that the company will not have to bear the additional cost in the future for any compliances being incorrectly followed or any compliances being not followed.
Compliance in terms of labor laws, compliance in terms of companies Act, compliance in GST or compliance in income tax, it is very wide when we talk about compliance audit procedures.
The objective of the management audit is to assess the systems, methods, and policies implemented by an organization.
A management audit is not mandated by law however medium to big businesses use management audit as a tool to assess and improve their overall functions.