Expert verified TL;DR SummaryStatutory audit is mandatory for every registered company in India under the Companies Act 2013 — regardless of size or turnover — with additional audits required based on specific thresholds: tax audit under Section 44AB for turnover above ₹1 crore, internal audit for qualifying companies, and secretarial audit for listed and large public companies. Non-compliance carries serious consequences including monetary penalties, director disqualification, legal action, and difficulty securing loans or investments — while FY 2025-26 reforms have added mandatory audit trails, stricter fraud reporting, and data analytics-driven scrutiny. A statutory audit typically takes 3–8 weeks depending on company size and documentation readiness, and choosing the right CA firm with Indian regulatory expertise, modern tools, and clear communication makes the difference between compliance as a burden and compliance as a business advantage. |
Yes, audit is mandatory for all companies registered in India under the Companies Act 2013, regardless of size, turnover, or profit — every private limited, public limited, and one-person company must appoint a statutory auditor and undergo an annual audit. Beyond statutory audit, companies may also require a tax audit under Section 44AB of the Income Tax Act if turnover crosses prescribed limits, an internal audit based on company size thresholds, a GST reconciliation audit, and a secretarial audit for listed or large public companies. Non-compliance attracts fines, director disqualification, and legal consequences under Section 147 of the Companies Act. The audit process follows five structured steps — scope definition, planning, data gathering, reporting, and follow-up — typically completed within 3–8 weeks depending on company size and document readiness.
Running a company in India comes with several compliance requirements, and audit is one of the most important among them. Audits help businesses ensure that their financial records are correct, compliant, and reliable.
In simple terms, an audit gives confidence to owners, investors, banks, and regulators that the company’s financial statements are accurate.
What are the legal requirements for a company audit in India?
Audits in India are governed by multiple laws and regulations. Every company must understand these requirements to stay compliant and avoid penalties.
Companies Act, 2013 — mandatory for all registered companies
The Companies Act, 2013 is the primary law governing company audits in India.
- Audit is compulsory for all companies, whether private or public, regardless of size
- Every company must appoint a statutory auditor
Key Provisions:
- Section 139 – Appointment of auditor for 5 years
- Section 143 – Auditor’s powers and duties, including reporting fraud
- Section 147 – Penalties for non-compliance
- Section 148 – Cost audit applicability for specific industries
Other Important Laws Governing Company Audits
- Income Tax Act, 1961 – Tax audit under Section 44AB based on turnover
- GST Act, 2017 – Audit/reconciliation requirements (as applicable)
- SEBI Regulations – For listed companies (quarterly and annual reporting)
- Companies (Accounts) Rules, 2014 – Internal audit and audit trail requirements
- Chartered Accountants Act, 1949 – Governs auditor qualifications and conduct
What types of audits apply to companies in India?
Different audits apply based on company size, structure, and regulatory requirements:
1. Statutory Audit
- Mandatory for all companies
- Ensures financial statements show a true and fair view
2. Tax Audit (Section 44AB)
- Applicable if turnover crosses prescribed limits
- Ensures proper reporting of income and tax compliance
Apart from statutory audit, companies with turnover crossing prescribed limits must also undergo a tax audit under Section 44AB — a separate examination ensuring proper income reporting and full tax compliance
3. Internal Audit
- Required for certain companies based on size
- Focuses on internal controls and risk management
4. GST Audit / Reconciliation
- Ensures GST returns match financial records
- Helps avoid tax mismatches and notices
5. Secretarial Audit
- Ensures compliance with company law and SEBI rules
- Applicable for listed and large public companies
What are the penalties for non-compliance with audit requirements in India?
Failure to comply with audit requirements can lead to serious consequences:
- Monetary penalties on the company and its officers
- Penalties on auditors for misconduct or negligence
- Disqualification of directors in severe cases
- Legal action for fraud or misreporting
- Difficulty in obtaining loans or investments
Under the Companies Act, non-compliance can lead to fines and, in some cases, imprisonment for responsible officers.
How have company audit requirements changed with India’s 2025–26 regulatory reforms?
Recent updates have made audits more detailed and technology-driven:
- Mandatory audit trail for all accounting entries
- Increased focus on fraud detection and reporting
- Stricter disclosure requirements
- Use of data analytics in audits
- Greater accountability for auditors
These changes aim to improve transparency and reduce financial irregularities.
What should you look for in a company audit firm in India?
Choosing the right audit firm can make compliance much easier. Look for:
- Strong experience in handling company audits
- Understanding of Indian laws and regulations
- Clear communication and timely support
- Ability to provide practical recommendations
- Use of modern tools and audit techniques
A firm like PKC Management Consulting combines experience with a practical approach, helping businesses stay compliant without disrupting operations. To understand how our audit process works end-to-end, explore our statutory audit services for LLP and see how we tailor audit engagements for businesses of every size and structure.
How does a Company Audit Work? A Step-by-Step Overview
A company audit typically follows a structured process:
Step 1: Define audit objectives and scope
The auditor understands the business, identifies key areas, and sets the audit scope.
Step 2: Audit planning and resource preparation
An audit plan is created, and required documents are identified.
Step 3: Data gathering, interviews, and testing
Financial records are checked, and key personnel may be interviewed.
Step 4: Reporting findings and recommendations
The auditor prepares a report highlighting issues and suggestions.
Step 5: Implementation, monitoring, and follow-up audit
The company acts on recommendations, and follow-ups may be conducted.
Frequently asked questions about company audits in India
1. Is audit mandatory for all companies in India?
Yes, every registered company must undergo a statutory audit under the Companies Act, 2013.
2. How often should a company conduct an audit?
Statutory audits are mandatory annually for all registered companies under the Companies Act, 2013. Internal audits may be quarterly (high-risk or listed companies) or annual. Listed companies are also subject to quarterly financial reviews under SEBI regulations. Voluntary audits can be conducted more frequently based on business needs.
3. What qualifications should a company auditor have in India?
A statutory auditor must be a Chartered Accountant (CA) holding a valid Certificate of Practice (COP) from ICAI. For internal audits, a CA, CMA, or other qualified professional may be appointed. The auditor must be independent — a statutory auditor cannot simultaneously serve as the company’s internal auditor.
4. How long does a statutory audit take for a company in India?
A statutory audit typically takes 3–8 weeks, depending on the company’s size, complexity of financials, and completeness of documentation. Smaller private limited companies with clean records may complete the process in 2–3 weeks. Large listed companies or those with multi-entity structures may require 6–12 weeks. Timely submission of documents significantly reduces audit duration.
5. What factors affect the cost of a company audit in India?
Audit fees depend on the size and complexity of the company, volume of transactions, number of locations, type of audit (statutory, internal, tax), and timeline requirements. Most CA firms price audits based on estimated hours and team composition. PKC provides customized quotes after an initial assessment — contact us for a no-obligation estimate.
Conclusion
Audits are not just a legal requirement—they are a key tool for building trust and improving business performance.
For companies in India, staying compliant with audit requirements is essential for smooth operations, better decision-making, and long-term growth.
Working with the right audit firm ensures that your business remains compliant while also gaining valuable insights for improvement.
Frequently Asked Questions (FAQ)
Companies need an audit for several reasons, including complying with regulatory requirements, identifying areas for improvement, and gaining investor or stakeholder confidence.
The frequency of audits depends on the size and nature of the company’s operations. Our seasoned experts at PKC Management Consulting suggest performing audits at least once a year.
At PKC, we are committed to providing accurate and relevant audit services. Our expertise in the country’s laws and regulations, focus on delivering valuable insights and ongoing support, and reputation for excellence speak for itself.
The length of an audit depends on the size and complexity of the company’s operations. Our auditors can take several weeks to several months to complete an audit depending on the assignment.
The price for an audit is typically based on the size and complexity of the company’s operations, as well as the scope of the audit. We provide customized quotes for each client based on their specific needs and requirements.
