\n| \n Private Limited Company<\/span><\/a><\/p>\n<\/td>\n | \n Yes, always<\/span><\/p>\n<\/td>\n | \n Only if turnover crosses Rs 1 crore (business) or Rs 50 lakh (profession)<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n One Person Company<\/span><\/a><\/p>\n<\/td>\n | \n Yes, always<\/span><\/p>\n<\/td>\n | \n Same turnover threshold applies<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Dormant Company<\/span><\/p>\n<\/td>\n | \n Yes, always<\/span><\/p>\n<\/td>\n | \n Generally not applicable<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Newly incorporated company<\/span><\/a><\/p>\n<\/td>\n | \n Yes, from first year<\/span><\/p>\n<\/td>\n | \n Threshold-based<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Loss-making company<\/span><\/p>\n<\/td>\n | \n Yes, always<\/span><\/p>\n<\/td>\n | \n Not applicable if below threshold<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nThere is no minimum turnover below which a <\/span>Private Limited Company Audit<\/b> becomes optional. Even a company with zero revenue during the year must complete its audit before filing financial statements with the ROC.<\/span><\/p>\n<\/span>Legal Provisions Governing Private Limited Company Audit<\/b><\/span><\/h2>\nThe <\/span>Private Limited Company Audit<\/b> is governed by multiple provisions under the Companies Act, 2013. Understanding these provisions is essential before appointing an auditor or planning your audit timeline.<\/span><\/p>\n\n\n\n| \n Section<\/b><\/p>\n<\/td>\n | \n What It Covers<\/b><\/p>\n<\/td>\n<\/tr>\n\n| \n Section 139<\/span><\/p>\n<\/td>\n | \n Appointment and tenure of statutory auditor<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Section 141<\/span><\/p>\n<\/td>\n | \n Eligibility criteria for auditor appointment<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Section 143<\/span><\/p>\n<\/td>\n | \n Powers and duties of the auditor<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Section 144<\/span><\/p>\n<\/td>\n | \n Services that an auditor cannot provide<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Section 145<\/span><\/p>\n<\/td>\n | \n Signing of audit report<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n Section 147<\/span><\/p>\n<\/td>\n | \n Penalties for contraventions related to audit<\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n CARO 2020<\/span><\/p>\n<\/td>\n | \n Additional reporting requirements for certain companies<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nIn addition, the Income Tax Act, 1961 under Section 44AB governs the tax audit. Both are separate obligations. A company can need both a statutory audit and a tax audit in the same financial year.<\/span><\/p>\n<\/span>Auditor Appointment: Eligibility and Process for Private Limited Company Audit in India<\/b><\/span><\/h2>\nA <\/span>Private Limited Company Audit<\/b> must be conducted by a practising Chartered Accountant who meets the eligibility criteria under Section 141 of the Companies Act, 2013.<\/span><\/p>\nWho is eligible to be appointed:<\/b><\/p>\n\n- A practising CA or a firm of CAs registered with ICAI<\/span><\/li>\n
- Must hold a valid Certificate of Practice<\/span><\/li>\n
- Must not have any disqualification under Section 141(3)<\/span><\/li>\n<\/ul>\n
Who is NOT eligible:<\/b><\/p>\n\n- A CA who is a director, employee, or officer of the company<\/span><\/li>\n
- A CA who holds securities in the company or its subsidiaries<\/span><\/li>\n
- A CA who owes money to the company exceeding Rs 5 lakh<\/span><\/li>\n
- A CA providing bookkeeping, internal audit, or design and implementation of financial information systems to the same company<\/span><\/li>\n<\/ul>\n
<\/span>How to Appoint the First Auditor<\/b><\/span><\/h3>\nThe Board of Directors appoints the first auditor within 30 days of incorporation. If the Board fails to do so, the members are appointed within 90 days in a general meeting. The first auditor holds office until the conclusion of the first Annual General Meeting.<\/span><\/p>\n<\/span>Subsequent Auditor Appointments<\/b><\/span><\/h3>\nAt the first AGM, the company appoints an auditor for a five-year term. Form ADT-1 is filed with the ROC within 15 days of appointment. The auditor holds office from the conclusion of that AGM until the sixth AGM.<\/span><\/p>\n<\/span>Step-by-Step Process of a Private Limited Company Audit in India<\/b><\/span><\/h2>\nA <\/span>Private Limited Company Audit<\/b> follows a structured process from book preparation to final report submission.<\/span><\/p>\n<\/span>Step 1: Prepare and Close Books of Accounts<\/b><\/span><\/h3>\nThe company prepares its trial balance, profit and loss account, and balance sheet for the financial year ending 31 March. All ledgers must be finalised before handing over to the auditor.<\/span><\/p>\n<\/span>Step 2: Provide Records to the Auditor<\/b><\/span><\/h3>\nShare all financial records with the appointed CA. This includes bank statements, invoices, contracts, loan documents, board minutes, and the previous year’s audit report.<\/span><\/p>\n<\/span>Step 3: Auditor Conducts the Audit<\/b><\/span><\/h3>\nThe CA verifies transactions, checks internal controls, confirms balances with third parties, and tests compliance with accounting standards. For companies falling under CARO 2020, the CA prepares additional reports.<\/span><\/p>\n<\/span>Step 4: Audit Queries and Management Response<\/b><\/span><\/h3>\nThe auditor raises queries during the audit. Management responds with explanations and supporting documents. This back-and-forth is normal and important to resolve before the final report.<\/span><\/p>\n | | | | | | | | | | | | |
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