Demystifying the Statutory Audit for Your Company

A conversational guide on what a Statutory Audit is, why it's legally required, and how it helps your business.

The Discussion

Sameer (New Pvt Ltd Director)

I just registered my Private Limited company last month. We haven't even made our first sale yet, but someone told me I still need to get an 'Audit' done. Is that true?

CA Expert (Aftab & Associates)

Yes, Sameer, that is entirely true. What you are referring to is a 'Statutory Audit'. Under the Companies Act, every registered company—whether it's a Private Limited or Public Limited—must have its accounts audited by an independent Chartered Accountant every financial year, regardless of turnover or profit.

Sameer (New Pvt Ltd Director)

Even with zero revenue? What is the auditor actually checking if there are no sales?

CA Expert (Aftab & Associates)

Even with zero revenue, there are capital introductions, pre-incorporation expenses, bank account openings, and compliance filings. The auditor's job is to review these transactions and ensure your financial statements present a 'true and fair view' to stakeholders like the ROC, investors, and banks.

Quick Knowledge Check

Is a statutory audit mandatory for a newly incorporated Private Limited company with zero revenue?

Glossary of Terms

Statutory Audit
A legally required review of the accuracy of a company's or government's financial statements and records by an independent auditor.
True and Fair View
An accounting principle ensuring that financial statements are free from material misstatements and faithfully represent the financial performance and position of an entity.
Independent Auditor
A certified external public accountant who examines the financial records and business transactions of a company with which they are not affiliated.

Related Tags

Statutory Audit Mandatory Audit Company Compliance Companies Act

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