STATUTORY AUDIT

STATUTORY AUDIT OF FINANCIAL STATEMENTS OF COMPANY

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The audit is an independent examination of the financial statements of an organization by an auditor. It is conducted to ensure that the financial statements represent a true and fair view of the financial position of the organization. Auditor presents the independent auditor’s report to the stakeholders of the company. There are various types of audit which are conducted in India. However, some audits are mandatory and some audits are voluntary.     

Statutory Audit is a type of audit which is mandated by a Statute or Law to ensure a true and fair view of the financial statements of an organization is presented to the regulators and the public. Statutory audit is to be conducted by qualified Chartered Accountants who are independent of the Business. Further, the independent auditor’s report prepared by the Statutory Auditor on his/her findings must be presented in the format prescribed by the regulator.

  • Statutory Audits can be mainly classified into two types of audits i.e. company audits and tax audits.
  • Company Audit is governed by the Companies Act, 2013 and every company, irrespective of its turnover or nature of business or capital must have its book of accounts audited each financial year.
  • And, the books of accounts of a Limited Liability Partnership (LLP) must be audited if it has an annual turnover of Rs.40 lakhs or more or capital contribution of Rs.25 lakhs or more.
  • Tax audit, on the other hand, is required for a certain class of taxpayers who exceeded a certain threshold of turnover or receipts. Tax audit is governed by the Income Tax Act, 1961.
Company Registration

Statutory Auditor Appointment:

  • Statutory auditor appointment will be made for five years and form ADT-1 will be filed for a 5-year appointment. The company auditor appointment can also be made for a period of 1 year, renewable at each annual general meeting.
  • Although the appointment of statutory auditor is made for a term of five years, the company will have to place the matter for ratification at every AGM. Members will have to ratify the appointment of such Auditor in Every AGM by passing an Ordinary Resolution.
  • The first statutory auditor appointment is to be made within one month from the date of incorporation of the company in the first board meeting.

Related Blog – All you need to know about Company Registration as a startup

For audit services you can contact professionals through CAONWEB.

FAQS

What does a Chartered Accountant do?

A Chartered Accountant provides consultancy about accounting, taxation, auditing, and, other matters. He/she also conducts the audit of financial statements of your organization as per the applicable law and provides an independent auditor’s report. 

What is Auditing and why it is necessary?

Auditing is an independent examination of the financial statements of an organization by an auditor. It is conducted to ensure that the financial statements represent a true and fair view of the financial position of the organization and accurate financial information can be provided to the management, shareholders, and investors. He prepares the independent auditor’s report which contains the summary of the examination of financial statements carried by the auditor.

GST Registration

What is the maximum period for which an individual CA or a CA firm can serve a company as an auditor?

An individual CA can serve for a term of five years and a CA firm can serve for two terms of five years as an auditor to a Company.

What if at any AGM appointment of an auditor is not ratified by the members?

If the company auditor appointment is not ratified by the members of the company, The Board of Directors shall appoint another Individual or Firm as its auditor. It will be considered as casual vacancy.

Know-About-your-Income-Tax-Return-Slabs

Know About your Income Tax Return and Income Tax Slabs & Income Tax Rates for FY 2018-19

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Income Tax Slabs & Income Tax Rates for FY 2018-19 for online income tax return filing:

Income Tax Slabs for FY 2018-19 for Individual, Hindu undivided family (HUF), Association of persons (AOP), Body of individuals (BOI), Artificial juridical person*:

  • Income Up to ₹250000- NIL
  • Income from ₹250000-₹500000- 5%
  • Income from ₹500000-₹1000000- 20%
  • Income more than ₹1000000- 30%
Company Registration

Income Tax Slabs for FY 2018-19 for Senior Citizens (60 Years Old Or More but Less than 80 Years Old)*:

  • Income Up to ₹300000- NIL
  • Income from ₹300000-₹500000- 5%
  • Income from ₹500000-₹1000000- 20%
  • Income more than ₹1000000- 30%

Income Tax Slab for FY 2018-19 for Super Senior Citizens (80 Years Old or more)*:

  • Income Up to ₹500000- NIL
  • Income from ₹500000-₹1000000- 20%
  • Income more than ₹1000000- 30%

*Note: In addition, cess and surcharge are levied as follows:

  • Health & Education Cess- 4% of income tax amount
  • Surcharge- 10% of income tax amount, where total income exceeds ₹50 lakh up to ₹1crore.
  • Surcharge- 15% of income tax amount, where total income exceeds ₹1crore.

Income Tax Slabs for FY 2018-19 for Domestic Companies:

  • Gross turnover up to 250 Cr. in the previous year- 25%
  • Gross turnover exceeding 250 Cr. in the previous year- 30%

Note: In addition, cess and surcharge are levied as follows:

  • Health & Education Cess- 4% of Corporate Tax
  • Surcharge- 7%, where taxable income is more than 1Cr. but less than 10Cr.
  • Surcharge- 12%, where taxable income is more than 10Cr.
Accounting & Auditing Services

Income Tax Slabs for FY 2018-19 for Co-operatives Societies:

  • Income Up to ₹10000- 10%
  • Income from ₹10000-₹20000- 20%
  • Income more than ₹20000- 30%

Note: In addition, cess and surcharge are levied as follows:

  • Health & Education Cess- 4% of Corporate Tax
  • Surcharge- 12%

Income Tax Slabs for FY 2018-19 for Firms/ LLP and Local Authority:

  • Firms/LLP- 30%
  • Local Authority- 30%

Note: In addition, cess and surcharge are levied as follows:

  • Health & Education Cess- 4% of Corporate Tax
  • Surcharge- 12%

Income Tax Slabs for FY 2018-19 for Foreign Companies:

  • Foreign Companies- 40%

Note: In addition, cess and surcharge are levied as follows:

  • Health & Education Cess- 4% of Corporate Tax
  • Surcharge- 2%, where taxable income is more than 1Cr. but less than 10Cr.
  • Surcharge- 5%, where taxable income is more than 10Cr.
GST Registration

Due date for online income tax return filing (FY 2018-19):

  • ITR due date is 30th September 2019 for Company, a person other than a company whose accounts are required to be audited and a working partner of a firm whose accounts are required to be audited.
  • ITR due date is 31st July 2019 for any other person.
  • Where a person furnishes the return of income after the ITR due date or does not furnish the return of income than the simple interest of 1% per month or part of the month is payable. However, if he has paid taxes in full on or before the ITR due date interest is not levied.
  • Where a person fails to furnish a return of income within the ITR due date he shall pay, by way of fee, a sum of ₹ 5000, if the return is furnished on or before the 31st December of the A.Y. and ₹ 10000 in any other case.
  • However, if the total income of the person does not exceed ₹ 5 lakhs, the fees payable shall not exceed ₹ 1000.

Online income tax return filing Services:

CAONWEB is an online platform of accounting and tax experts. You can visit our website for online income tax return filing.

audit service

Internal Audit Requirement Under Companies Law in India

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If we talk about audit compliance in India, You must be aware that every company shall appoint the auditor and get the audit of financial statement done every year. This shall apply irrespective of whether a company is newly established or whether an existing company is under loss. Today we will discuss the internal audit requirement under companies Law in India. what are an internal audit and its objective? Internal audit is the review of records and day to day operation of the business, It’s objective is to evaluate and improve the organizational activities from data entry to huge compliance. It covers everything basically. It helps reduce waste and utilize the potential of the organization.

To whom the law mandates this Audit compliance in India?

  1. Every listed company shall comply with internal audit requirement,
  2. For public unlisted companies

(i)    paid up share capital of fifty crore rupees or more during the preceding financial year; or

(ii) turnover(income) of two hundred crore rupees or more during the preceding financial year; or

(iii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point in time during the preceding financial year; or

(iv) outstanding deposits of twenty-five crore rupees or more at any point in time during the preceding financial year; and

  1. For private companies

(i) turnover of two hundred crore rupees or more during the preceding financial year; or

(ii)   outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point in time during the preceding financial year:

Provided that an existing company covered under any of the above criteria shall comply with the requirements of section 138 and this rule within six months of commencement of such section.

Audit service provider in India for internal audit as per law may be chartered Accountant, cost accountant or any other professional as may be decided by the Board. Therefore Chartered Accountants, Cost Accountants, Company Secretaries, Advocates and the like can be appointed as Internal Auditors.

Audit

What comes after incorporating a foreign subsidiary in India?

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Among several ways to bring foreign investment in India setting up a foreign subsidiary is the most popular and one of the best alternatives.  When we as consultants help our foreign client establish their business in India by incorporating a company in India, We always make sure that they have proper guidance on the compliance part such as audit of a foreign subsidiary in India. As a foreign subsidiary needs to comply with Indian laws it becomes very important for the legal entity in India to understand and comply with all the relevant compliances.

All types of company shall appoint auditor within one month of incorporation. The Board of directors is required to appoint the first auditor within 30 days of registration of company and in case of failure to do so, first auditors has to be appointed by members within 90 days at the EGM, however, such auditors have to vacate the position on conclusion of first AGM. Auditor’s consent and certificate has to be obtained by company explaining that such appointment is in compliance with the provisions of the Act and satisfies the criteria provided by law. Intimation of appointment has to be filed by the company with the Registrar within fifteen days of appointment by filing form ADT 1.

Accounting & Auditing Services

Regarding the audit service providers in India, One can reach out to consultants who are chartered Accountants. Audit service provider in India, audit of financial statements can only be done by qualified chartered accountant or a firm of chartered accountant. Every year the financial statement is prepared by the management of the company, which is then audited by the Accountants. Auditor express opinion on the financial statement of the company which is turns becomes very helpful. The feedback given could provide a good analysis of the business. It could help business in the operational strategy and many more.

Audit of a foreign subsidiary in India has to be done diligently as there could be several compliance that should be considered in business. It is very important for consultants to guide the clients in the best way. Because the miscommunication could cost the business. Any miscommunication means less clarity and the less clarity could result into breach in compliance, omission in compliance. And any omission or breach directly creates a negative impact for the business. The best way to smoothly operate is to have a basic understanding of laws and have open quality communication with your professional.

Summary: Audit of  any company including foreign subsidiary in India is mandatory under company laws. Additionally there are several audit to comply with buy corporates as specified by the law.

Company Audit

Cost of audit service in India

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Any company in India needs to get their accounts audited (statutory) on a mandatory basis. There are other audits such as tax audit and internal audit which has certain criteria on the basis of which it is decided whether these audits are needed. Individual practicing Chartered Accountants qualified to do the audit or a firm of chartered Accountants qualified to do audit shall be the company audit service provider in India. The cost of audit service in India depends on the size and volume of the work. One should always check the eligibility to be appointed the auditor of the company.

There are several benefits of the audit of the company. Major benefits are listed below

Good for your business:

Effective internal control to facilitate supervision and monitoring helps Prevent and detect irregular transactions, feedback on ongoing performance,  maintain adequate business records and to promote operational productivity. Internal audit prevents the risk of irregularity and fraud.

Risk of Misstatement:

Auditors assess the risk of material misstatement in a company’s financial statement. Without a system of internal controls a companies financial statements cannot be relied upon by stakeholders.

Fraud Prevention:

Internal audit is crucial for any business in fraud prevention. Recurring analysis of a company’s operations and maintaining rigorous systems of internal controls can prevent and detect various forms of fraud and other accounting irregularities. Audit professionals assist in the design and modification of internal control systems the purpose of which includes, among other things, fraud prevention.

Cost of Capital:

The cost of capital is important for every company, regardless of its size. Cost of capital is largely comprised of the risk associated with an investment, and if an investment has more risk, an investor will require a higher rate of return to invest. Strong audit systems can reduce various forms of risk in an enterprise

audit-1

Difference in statutory audit and tax audit requirement in India

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An audit is the inspection of an individual or any legal entity’s books and accounts.  In any audit, accountants verify that a company’s business transactions were recorded accurately, and provide a true and fair reflection of that company’s financial situation. Two major audit comes to our mind which are ruled by company law and income tax laws. Businesses which need audit service in India reaches out to tax professionals such as Chartered Accountants.

Let’s understand these two audits and see what the difference between the statutory audit and tax audit:

A statutory is made mandatory by company law. All companies registered under companies Act shall get their accounts audited. Even the Audit of a new company is therefore mandatory irrespective of turnover. The main objective is to provide opinion on the truthfulness and fairness of accounting records. The appointment of auditors, his removal, rights and duties, remuneration, are set according to the provisions of the law, as applicable to the organization.

In the case of companies, the auditor is appointed by the shareholders at the annual general meeting (AGM), and the remuneration is also fixed by them. Companies registered under The Companies Act, 2013 needs to get their accounts audited by a qualified chartered accountant who is qualified to do the audit.

Tax Audit is defined as an audit of the accounts of the taxpayer, by a Chartered Accountant, for the requirement of Section 44AB, in which the auditor needs to express his views and observation by way of the audit report. An audit which is held mandatory  (from financial year 16-17 onwards) for- Business (Not opting presumptive scheme) 1 Crore, Business (Those opting for the presumptive scheme) 2 Crore, Professionals (all types) 50 Lakhs. At CAONWEB, we provide services from company incorporation and all audit solutions.

Audit

Audit of a new company

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Audit of a new company is mandatory irrespective of its volume or turnover. If you are into a business then it is essential to know your compliance requirement. Apart from handling your daily operations, it is important to know what are the regulatory authorities to whom you need to submit certain information or file documents. In India, it is mandatory for any private limited company to get their Accounts audited by a Chartered Accountant. For any new company, the first thing it needs to do is appoint the Auditor of the company within one month of incorporation. Audit of a new company or an existing company is mandatory under taxation Laws in India.

Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year which is mandatory. The Auditor shall provide an Audit Report and the Audited Financial Statements for the purpose of filing it with the Registrar. Filing with the Registrar annually is another compliance that a company needs to follow. It is also mandatory for every Private Limited Company Company to hold an AGM in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year.

Any new company or an existing company need audit service in India looks for Chartered Accountant offering this service. There are several providing this service and one needs to carefully plan and first have a detailed discussion with auditors directly in order to make sure that they have chosen the right auditor. The initial homework by yourself such as having knowledge of basic compliance of income tax and company laws in India always helps. You could always reach out to consultants in the market. Read basic guidance on compliance then discuss your matter with Auditors. Anyone who needs audit service in India can directly discuss with the CA’s at CAONWEB, a Platform of tax professionals.

Audit of a private limited company in India is compulsory, Not complying means interest and penalty.

Audit and Assurance

Audit and Assurance Services

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We are providing a range of Audit and Assurance Services and business services to a diverse client base ranging from small businesses & start-ups to substantial international groups and development sector.

Tax Audit u/s 44AB of Income-tax Act, 1961: Audit of accounts of certain persons carrying on business or profession

Tax Audit is compulsory in the following cases:

  • In case a person carries business

Where a person carries business is required to get his accounts audited by a Chartered accountant if his total sales/turnover/gross receipt exceeds Rs.1Crore in the previous year, before 30th September of the relevant assessment year. However, this section shall not be applicable to the person who declares profit U/S 44AD and has total sales/turnover/gross receipts less than Rs.2Crore.

  • In case a person carries profession

Where a person carries a profession is required to get his accounts audited if the gross receipts in the previous year exceed Rs.50 lacks. Also, where a person carries profession, declares profit U/S 44ADA, and declares the profit less than the deemed profit and his total income exceeds the limit which is not chargeable to tax, then he requires to get his accounts audited.

However, this section shall not be applicable to the person who declares profit U/S 44AD and has total sales/turnover/gross receipts less than Rs.2Crore.

If failed to get accounts audited as required by sec 44AB –Penalty – Lower of

  • 1) 0.5% of total sales, turnover or gross receipts of business or profession
  • 2) Rs.150000

For more Details Visit Our Website: https://www.caonweb.com/