An audit is a systematic and independent examination of books of accounts, records, documents, and financial statements of an entity in which auditor express an opinion on whether they present a true and fair view of its financial position and performance.
Auditing is an examination of accounting records and documents to check the correctness and completeness of the transactions.
Types of Audit Required by Private Limited Company
Statutory Audit
It is an audit which is mandatory for all private companies , where independent auditor examined the financial statements to express an opinion on whether they present a true and fair view of its financial position and performance.
As per Companies Act, 2013 every company must appoint CA in practice to carry out audit of its financial statements.
Internal Audit
Internal Audit is required for those companies which meet certain financial limits related to turnover, outstanding loans, or paid-up capital, as per Section 138 of the Companies Act. This audit assess the efficiency of internal controls, identifying risks, and recommending improvements to management processes.
Cost Audit
According to Section 148, certain classes of companies maintain cost records, and get such cost records audited by a Cost Accountant in practice as directed by Central Government.
Tax audit
It is a statutory audit conducted to verify the correctness of income, deductions, and compliance with the provisions of the Income-tax Act, 1961.
Under the Income Tax Act, 1961, it is mandatory for those companies whose turnover exceeds ₹1 crore or ₹10 crore (If cash receipts are less than or equal to 5% AND cash payments are less than or equal to 5%).
Due Date of Audit
Statutory Audit
The due date is connected with the Annual General Meeting (AGM). A private company shall hold its AGM within six months from the end of the financial year (i.e. by 30th September if the financial year ends on 31st March), and the audited financial statements must be approved and signed before the AGM.
The company must file Form AOC-4 within 30 days of the AGM and Form MGT-7 within 60 days of the AGM to avoid penalties.
Cost Audit
The cost audit report is submitted in form CRA-3 by 30 September.
Internal Audit
Internal audit report is submitted to the board by the internal auditor before AGM and it must be filed along with Form AOC-4.
Tax audit
The tax audit report must be filed electronically in Form 3CA/3CB and 3CD on or before 30th September of the relevant assessment year.
Appointment of an Auditor
Statutory Audit
Every private company shall appoint its first auditor within 30 days of incorporation. In case Board fails to appoint first auditor then Members within 90 days at an Extraordinary General Meeting (EGM) shall appoint.
Tenure of first auditor remains till conclusion of the 1st Annual General Meeting (AGM).
Subsequent Auditor is Appointedat the 1st AGM by Shareholders for maximum 5 years (from conclusion of that AGM till conclusion of the 6th AGM)
The auditor must be a qualified Chartered Accountant in practice .
Company must file Form ADT-1 with Registrar of Companies (ROC) within 15 days of appointment.
Cost Auditor
Board of Directors appoints the Cost Auditor within 180 days from the beginning of the financial year by passing a Board Resolution at board meeting. The auditor must be a Cost Accountant in practice.
Internal Auditor
Private Companies are required to appoint Internal auditor only when they meet prescribed limits (based on turnover or outstanding loans/borrowings) , the appointment is made by BOD by passing BR at BM .
The auditor may be Chartered Accountant, Cost Accountant, or any other professional as decided by the Board
Tax auditor
Private Companies are required to appoint Tax auditor only when they meet prescribed limits, Tax Auditor is generally, the Statutory Auditor of companybut it is not mandatory. Board of Directors appoints the Tax Auditor and The auditor must be a qualified Chartered Accountant in practice.
ROC Forms for Audit of Private Company
| Forms | Purpose |
| Form AOC-4 | Annual filing of company financial statements |
| Form ADT-1 | Appointment of statutory auditor |
| Form MGT-7 | Filing of company annual return |
| Form CRA-2 | Appointment of cost auditor |
| Form CRA-3 | Submission of cost audit records to the board |
| Form CRA-4 | Filing of cost audit report |
Conclusion
Audit play a crucial role in maintaining accountability and transparency. Regular audits help in avoiding penalties, compliance with audit provisions strengthens corporate governance and minimize risks. Therefore, understanding and adhering to audit requirements is essential for sustainable growth and regulatory compliance.
