A Private Limited Company (Pvt Ltd) in India must comply with various auditing requirements under the Companies Act, 2013 and other relevant financial regulations. These audits ensure financial transparency, legal compliance, and accuracy in reporting financial transactions.
This guide explains the types of audits, appointment of auditors, due dates, and penalties applicable to private limited companies.
1. What is an Audit in a Private Limited Company?
An audit is an independent examination of a company’s financial records to ensure compliance with legal and regulatory standards.
As per Section 139 to 147 of the Companies Act, 2013, every private limited company must appoint an auditor and undergo mandatory statutory audits, regardless of turnover or profit.
2. Types of Audits for Private Limited Companies
| Type of Audit | Purpose | Applicability |
|---|---|---|
| Statutory Audit | Ensures financial statements are accurate and comply with laws. | Mandatory for all Pvt Ltd companies. |
| Internal Audit | Identifies risks, fraud, and inefficiencies. | Required for companies with turnover ≥ ₹200 crore or borrowings ≥ ₹100 crore. |
| Cost Audit | Verifies cost records of manufacturing/service companies. | Required if turnover ≥ ₹50 crore (for specific industries). |
3. Statutory Audit for Private Limited Companies
🔹 What is a Statutory Audit?
A Statutory Audit is a compulsory audit conducted by an independent auditor to examine a company’s financial records and verify compliance with the Companies Act, 2013.
🔹 Applicability
✅ Every private limited company, regardless of turnover or profit.
✅ Even companies incurring losses must undergo a statutory audit.
🔹 Who Can Conduct a Statutory Audit?
Only a Chartered Accountant (CA) or a CA firm registered with ICAI (Institute of Chartered Accountants of India) can conduct a statutory audit.
🔹 Key Sections Governing Statutory Audit
| Section | Provision |
|---|---|
| Section 139 | Appointment of auditors |
| Section 141 | Eligibility and qualifications of auditors |
| Section 143 | Powers and duties of auditors |
| Section 144 | Restrictions on auditors |
| Section 145 | Signing of audit reports |
| Section 146 | Auditor’s right to attend meetings |
🔹 Audit Process
1️⃣ Appointment of Auditor – Appointed within 30 days of company registration.
2️⃣ Verification of Financial Records – Examine balance sheet, profit & loss statement, cash flow statement.
3️⃣ Testing & Evaluation – Verify internal controls, transactions, and documents.
4️⃣ Preparation of Audit Report – Auditor submits a report with observations and remarks.
5️⃣ Submission to ROC (Registrar of Companies) – The audit report is filed with MCA (Ministry of Corporate Affairs).
🔹 Due Dates for Statutory Audit
- Audit Report Submission – Before the Annual General Meeting (AGM).
- AGM Deadline – 30th September every year.
- Filing with ROC:
- Form AOC-4 (Financial Statement) – Within 30 days of AGM.
- Form MGT-7 (Annual Return) – Within 60 days of AGM.
4. Internal Audit for Private Limited Companies
🔹 What is an Internal Audit?
An internal audit helps the company’s management review financial health, operational efficiency, and risk assessment.
🔹 Applicability (As per Rule 13 of Companies Rules, 2014)
✅ Private companies with:
- Turnover ≥ ₹200 crore
- Outstanding loans/borrowings ≥ ₹100 crore
🔹 Objectives of Internal Audit
✔️ Identify financial risks and fraud
✔️ Improve efficiency of operations
✔️ Ensure regulatory compliance
🔹 Who Can Conduct an Internal Audit?
- A Chartered Accountant (CA)
- A Cost Accountant
- Any other professional as decided by the Board
🔹 Due Date for Internal Audit
- No fixed due date, but the report must be submitted before the AGM.
- The internal audit report must be filed with Form AOC-4.
5. Cost Audit for Private Limited Companies
🔹 What is a Cost Audit?
A cost audit ensures proper cost accounting and pricing of goods and services.
🔹 Applicability (As per Section 148 of Companies Act, 2013)
✅ Private companies engaged in manufacturing or services with:
- Turnover ≥ ₹50 crore (for specified industries – cement, steel, telecom, etc.).
- Turnover ≥ ₹100 crore (for other sectors).
🔹 Who Can Conduct a Cost Audit?
Only a Cost Accountant in Practice (CMA) registered under the Cost and Works Accountants Act, 1959.
🔹 Due Date for Cost Audit
- Submission to Board – Before 30th September.
- Filing with Central Government – Within 30 days of Board submission (Form CRA-4).
6. Appointment of Auditors in Private Limited Companies
| Type of Auditor | Appointment Deadline | Eligibility |
|---|---|---|
| Statutory Auditor | Within 30 days of company registration | Chartered Accountant (CA) or CA Firm |
| Internal Auditor | Decided by the Board | CA, Cost Accountant, or other professionals |
| Cost Auditor | Within 180 days of the financial year | Cost Accountant in Practice |
🔹 ROC Forms for Audit Requirements
| Forms | Purpose |
|---|---|
| Form ADT-1 | Appointment of company auditor |
| Form AOC-4 | Filing of financial statements |
| Form MGT-7 | Filing of annual return |
| Form CRA-2 | Appointment of cost auditor |
| Form CRA-3 | Submission of cost audit report to the Board |
| Form CRA-4 | Filing of cost audit report with Central Government |
7. Penalties for Non-Compliance
🚨 Failure to conduct audits attracts penalties under the Companies Act, 2013.
| Non-Compliance | Penalty |
|---|---|
| Not appointing an auditor | ₹25,000 – ₹5,00,000 |
| Failure to maintain books of accounts | ₹50,000 – ₹5,00,000 |
| Not submitting audit report to ROC | ₹1,00,000 – ₹5,00,000 |
| Auditor fraudulently signing financial statements | Fine + Imprisonment up to 10 years |
8. Conclusion: Importance of Audits for Private Limited Companies
Audits ensure financial transparency, regulatory compliance, and fraud prevention. Every private limited company must adhere to statutory, internal, and cost audits to avoid penalties and build stakeholder trust.
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