Audit
"An audit is an independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form, may be mandated by any laws or recommendatory in nature or for internal purpose and decision making. There are Various types of audits mandated in India, the main purpose of audit is to examine the accounting books and information as required by is conducted with a view to express an opinion thereon. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a important phenomenon in the corporate and the public sector that business entity perform there audits by the Auditors who perceive and recognize the propositions before them for examination, obtain evidence, evaluate the same and formulate an opinion on the basis of their judgement which is communicated through their auditing report."We at CompanyWale Consultancy are committed towards our client to provide auditing services in following fields.
1) Statutory Audits Under Companies Act 20132) Tax Audit Under Income tax 1961
3) GST Audits
4) Stock Audits
5) Internal Audits
6) Bank Audits
7) Transfer Pricing Audit
Statutory Audit under Companies Act 2013
What is Statutory Audit Under Companies Act 2013
Every company registered under Companies Act has to get its books of account compulsory audited as per
section 129 of the companies act 2013 by a Chartered accountant in Practice .
So Each and Every company is required to prepare financial statement for period ending 31st March every year,
irrespective of any criteria, Such financial statement must be give a true and fair view of the state of affairs of
the company and comply with the accounting standards notified by the central government under Section 133 of the Companies
Act. Such financial statement must be prepared in the form and format which may prescribed for a specific type of company for
a private limited company schedule III is the appropriate form.
Board of directors of the company are responsible for maintenance of books of account and preparation of Financial statements, Auditor responsibility is to give opinion on True and Fair view of financial statements whether they complay with Generally accepted accounting Principals and slandered in India.
Tax Audit Under Income Tax Act 1961
What is tax Audit
As the name it self suggest, TAX Audit is the audit under Income tax 1961,
for an examination or review of accounts of any business or profession carried out by taxpayers from an
income tax viewpoint, It is the Audit to make Assessee as Tax complaint under Income tax act which is carried
out by only practicing chartered accountants, It is mandated by the act and hence mandatory in nature.
It Records all the tax information and helps assessee to compute taxable income and determine tax liability
under Income tax act.
Applicability of tax Audit to taxpayers
A taxpayer is required to have a tax audit carried out if the sales, turnover or gross receipts of business exceed Rs 1 crore in the financial year. However, a taxpayer may be required to get their accounts audited in certain other circumstances.
| Category of person | Threshold |
|---|---|
| Business | |
| Carrying on business (not opting for presumptive taxation scheme*) | Total sales, turnover or gross receipts exceed Rs 1 crore in the FY |
| Carrying on business eligible for presumptive taxation under Section 44AE, 44BB or 44BBB | Claims profits or gains lower than the prescribed limit under presumptive taxation scheme |
| Carrying on business eligible for presumptive taxation under Section 44AD | Declares taxable income below the limits prescribed under the presumptive tax scheme and has income exceeding the basic threshold limit |
| Carrying on the business and is not eligible to claim presumptive taxation under Section 44AD due to opting out for presumptive taxation in any one financial year of the lock-in period i.e. 5 consecutive years from when the presumptive tax scheme was opted | If income exceeds the maximum amount not chargeable to tax in the subsequent 5 consecutive tax years from the financial year when the presumptive taxation was not opted for |
| Carrying on business which is declaring profits as per presumptive taxation scheme under Section 44AD | If the total sales, turnover or gross receipts does not exceed Rs 2 crore in the financial year, then tax audit will not apply to such businesses. |
| Profession | |
| Carrying on profession. | Total gross receipts exceed Rs 50 lakh in the FY |
| Carrying on the profession eligible for presumptive taxation under Section 44ADA | 1. Claims profits or gains lower than the prescribed limit under the presumptive taxation scheme 2. Income exceeds the maximum amount not chargeable to income tax |
Stock and Fixed Assets Audits
Stock audit or inventory audit or fixed assets audit is a term that refers to physical verification of a company or institution’s inventory or assets. There are types of stock audits depending on the purpose and every stock audit will require a different approach.
Every business institution at least needs to perform a stock audit once a year and Fixed Assets once every Two year depending upon the nature of entity to update and ensure that the physical stock or assets and the stock or fixed assets as per books of account is matched. A stock audit helps correct discrepancies between the physical stock and book stock can be corrected.
Why is a stock audit important?
There are several key reasons why an institution needs to perform a stock audit or Fixed Assets Audit, including:- Identify the slow-moving stock or Assets, deadstock, dead assets obsolete stock or assets, and scrap
- Find out discrepancies between book information and physical data
- Update the physical stock that matches book stock
- Make sure the proper preservation and handling of stocks and assets
- To reduce cost and bottom-line
- To prevent pilferage and fraud
- As information of the accurate inventory value
- to reduce gaps in the inventory management process
- As special arrangements for third party opinion, including for agent warehouses
- As a good control mechanism in running the business
Internal Audits
What is an Internal Audit? Internal audits evaluate a company’s internal controls, including its corporate governance & accounting processes. They ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection. Internal audits also provide management with the tools necessary to attain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit.
KEY TAKEAWAYS
- An internal audit offers risk management and evaluates the effectiveness of a company’s internal controls, corporate governance, and accounting processes.
- The Sarbanes-Oxley Act of 2002 introduced new internal control requirements and holds management legally responsible for their financial statements by requiring senior corporate officers to certify in writing that the financials are accurately presented.
- Internal audits provide management and board of directors with a value-added service where flaws in a process may be caught and corrected prior to external audits
- Make sure the proper preservation and handling of stocks and assets
Bank Audit
Statutory Audit is an audit which is prescribed by the different statute like Reserve Bank of India, Income Tax, Companies Act, etc. A Chartered Accountant need to conduct many audits as per the different statute requirement.
Statutory Audit of banks is mandatory. Statutory Auditors are appointed by RBI in association with the ICAI. Every year after the end of the previous financial year, in every branch of the banks, a very rigorous audit is conducted.
The Statutory Auditors should ensure that the audit report issued by them complies with the requirements of Revised SA 700 – Forming an Opinion and reporting on financial statements, SA 705 – Modifications to the opinion in the Independent Auditor’s Report & SA 706– Emphasis of matter paragraphs and other matter paragraphs in the Independent Auditor’s Report.
Nowadays, all statutory auditors are given a time frame in which they have to undertake the audit of the branches that are allotted to them. An auditor should immediately accept the appointment send a formal communication to the branch management and all other information that he would require in his audit.
The auditor will have to ensure that their report should include the quantification of advances, deposits, interest income and interest expenses.
The important elements to check in the statutory audit of banks are:
- Cash Verification Procedure
- Tax-Related Items
- Verification of Loan Accounts
F.A.Q
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What is Limited Liability Partnership (LLP)?
Limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. Limited Liability Partnership is managed as per the LLP Agreement.
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How many people are required to start a LLP?
To incorporate a Limited Liability Partnership, a minimum of two people are required. A Limited Liability Partnership must have a minimum of two Partners and can have a maximum of any number of Partners.
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What are the requirements to be a partner in a LLP?
The Designated Partners needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, the LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate a LLP in India provided at least one designated partner is resident of India.
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What is the capital required to start a LLP?
You can start a Limited Liability Partnership with any amount of capital. There is no requirement to show proof of capital invested during the incorporation process. Partner's contribution may consist of both tangible and/or intangible property and any other benefit to the LLP.
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Is an office required for starting Limited Liability Partnership?
An address in India where the registered office of the LLP will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.
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What are the annual compliances requirement for a LLP?
LLPs are required to file an annual filing with the Registrar each year. However, if the LLP has a turnover of less than Rs.40 lakhs and/or has a capital contribution of less than Rs.25 lakhs, the financial statements do not have to be audited.
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