Audit & Assurance

An audit serves someone other than the person paying for it — a lender, a regulator, a shareholder, a prospective buyer. That is what makes it useful, and it is also what sets the limits on how it can be conducted.

The engagements below are undertaken in accordance with the Standards on Auditing issued by the ICAI, and subject to the independence requirements that apply to a member in practice.

What the work covers

Statutory audit. Audit of companies and LLPs where the governing statute requires it, including the reporting the Companies Act and the applicable rules call for.

Tax audit. Audit and reporting where turnover, receipts or the presumptive-scheme conditions bring the assessee within the requirement. Note that the presumptive thresholds have moved in recent years, and that a business under the turnover limit with predominantly non-cash receipts may fall outside the requirement entirely — worth confirming rather than assuming.

Internal audit. Review of internal controls, process testing and risk identification, undertaken either as a statutory requirement or by management's own decision. The output is a set of findings that can be acted upon, not a document filed and forgotten.

Stock and fixed asset verification. Physical verification and reconciliation to the books, commonly required by lenders as a condition of continuing facilities.

Certification. Net worth certificates, turnover certificates, utilisation certificates, certificates required under subsidy and incentive schemes, and certificates required by banks, tender authorities and foreign remittance procedures.

Who this is relevant to

• Private limited companies and LLPs meeting the statutory audit criteria
• Firms and proprietorships crossing the tax audit threshold
• Enterprises whose lenders require periodic stock, book-debt or asset verification
• Applicants under subsidy or incentive schemes requiring a CA certificate as part of the claim
• Businesses preparing for investment, sale or a due diligence process, where clean prior-year audit files materially shorten the exercise

How the engagement runs

Acceptance and independence check. Before anything else, whether the engagement can properly be accepted — including whether other services already provided to the same entity create a conflict.

Planning. Understanding of the business, identification of risk areas, and determination of materiality and the extent of testing.

Fieldwork. Testing of transactions and balances, verification, and confirmation procedures, with observations raised as they arise rather than saved for a final meeting.

Reporting. The audit report, along with a management letter setting out control observations and recommendations where the engagement includes it.

A note on what an audit is not

It is worth being direct about this, because expectations differ.

An audit provides reasonable assurance that financial statements are free from material misstatement. It is not a guarantee that every transaction has been examined, and it is not designed primarily to detect fraud — although fraud identified in the course of the work is reported as the standards require.

Where the actual concern is fraud, misappropriation or a specific suspected irregularity, a forensic or investigative engagement is the appropriate instrument, and is scoped differently.

Frequently asked questions

Do I need a tax audit?
It depends on turnover or gross receipts, the proportion of cash transactions, and whether a presumptive scheme has been opted into or out of. The thresholds differ for business and profession and have changed over recent years, so the current position should be confirmed for the relevant year.

Can the same firm do my accounting and my statutory audit?
No. Auditing one's own work compromises independence, and the position is governed by both the Companies Act and the ICAI's ethical requirements. Where accounting is handled here, statutory audit is undertaken by a different firm, and vice versa.

How long does an audit take?
Principally a function of the state of the records. Well-maintained books with reconciled bank, GST and TDS positions compress the timeline substantially; records assembled after year-end extend it.

Do you issue certificates for subsidy claims?
Yes, where the underlying record supports the certification. A certificate is a professional assertion, not a formality, and is issued on verification.

General information only, not professional advice.