Audit of Limited Companies in India – Rules, Applicability & Due Dates

In India, the audit of limited companies is not just a regulatory formality-it is a legal mandate and an essential step toward financial transparency, good governance, and statutory compliance. Under the Companies Act, 2013, every private limited company must get its accounts audited each year, no matter how much money it makes or if it even trades at all.   

Whether you run a brand-new startup or sit in the finance team of a long-standing business, knowing what an audit involves helps you stay compliant, dodge costly fines, and show investors, banks, and regulators numbers they can trust.

Statutory Audit Applicability

Under the Companies Act, 2013, statutory audit applicability applies to every private limited firm. There is no turnover figure or minimum paid-up capital that lets you escape. Here are the essentials:  

• Mandatory Annual Audit:  Every private limited company must pick a statutory auditor and file audited financials with the Registrar each year.
  
• Dormant & Non‑Operating Firms: The moment your status changes to dormant or the revenue hits zero, many assume the audit vanishes. Wrong. Audited accounts are still on the table.
  
• Internal Audit Exemptions: Smaller businesses often skip internal audits if turnover stays below ₹200 crore and loans sit below ₹100 crore, but that relief never stretches to the statutory audit. 

Ignoring these rules, you may face fines under Section 147, plus directors could even lose their eligibility to serve on boards.

Types of Audits for Private Limited Companies

Depending on its size, structure, and industry, a private limited company may face one kind of audit or a mix of them. Here are the main audit types every business owner should know about:

Statutory Audit

• Every private limited company must have one.
  
• A Chartered Accountant (CA) looks it over as part of the Companies Act.
  
• It reviews the yearly financials, checks that accounting rules were followed, and notes all required disclosures.

Internal Audit

• You need this if: 
  
  • Your turnover is over ₹200 crore, or 
    
  • You owe more than ₹100 crore in loans.
    
• It scans internal controls, measures how well risks are managed, and sees how operations can improve. 
  
• Smaller firms can skip it, unless a regulator asks.

Tax Audit

• A Tax Audit kicks in when:
  
  • Your business turnover is above ₹1 crore, or
    
  • Your professional income crosses ₹50 lakh.
    
• This review comes from Section 44AB of the Income Tax Act.
  
• A practising CA runs the audit, and the findings go into Forms 3CA, 3CB, and 3CD.

Cost Audit

• You fall under Cost Audit if you work in a sector like pharma, telecom, or power. 
  
• Its rules apply when: 
  
  • Your total turnover is over ₹100 crore, and
    
  • The part linked to regulated goods or services hits ₹25 crore.
    
• The results go into e-Form CRA-4.
  
• Cost Audits fall under Section 148 of the Companies Act.

Every type of audit serves a clear goal-financial checks, tax truth, smooth operations, or cost control-so together they cover the whole compliance picture for the firm.

Eligibility Criteria for Conducting Audits

Only trained and licensed people may perform audits under audit in company law:

• Individual Chartered Accountants (CAs):
  
  • Must hold a current Certificate of Practice from the Institute of Chartered Accountants of India (ICAI).
    
  • Anyone serving as a company auditor can’t have any ownership stake or financial tie that could influence their work.
    
• CA Firms:
  
  • More than half the partners in the audit firm need to be Chartered Accountants holding current Certificates of Practice.
    
  • The lead engagement partner has to be switched after five years. The firm itself may keep the overall mandate for up to ten years, but then there’s a break of five years.
    
• Disqualification Conditions (Section 141):
  
  • The auditor should not owe money to the company, hold a paid job there, or be a close relative of senior management.
    
  • There can’t be personal links with any directors or major shareholders.

Appointment of an Auditor

Statutory auditors come on board in two steps:

• First Auditor
  
  • By the Board of Directors: They must act within 30 days after the company is registered.
    
  • Fallback: If the Board misses that deadline, shareholders can step in at an Extra-Ordinary Meeting within 90 days.
    
• Subsequent Auditors
  
  • By Shareholders: At the first Annual General Meeting, auditors are chosen for a five-year term and do not need yearly ratification since the 2017 rule change.
    
  • Form ADT‑1 Filing: The Registrar of Companies needs Form ADT-1 filed within 15 days of an appointment, along with:
    
    • The auditor’s written okay.
      
    • a certificate proving compliance under Section 141, and
      
    • A copy of the resolution passed at the AGM.
      

Making these filings on time protects the audit process and prevents penalties under Section 147.

Who Signs the Audit Report?

Only the auditor confirmed under the Companies Act is allowed to put their signature on a private limited company’s audit report. This job falls squarely on one person:

• An individual Chartered Accountant who does audits on their own, or
  
• A partner at a CA firm who actively worked on the audit.
  

Key signing rules include:

• If you file the report through the MCA portal, sign it digitally with a valid Digital Signature Certificate (DSC).
  
• Make sure the report shows your CA membership number, your firm’s registration number, and the UDIN Unique Document Identification Number given by ICAI.
  
• For audit firms, only the engagement partner who did the work can put their name on the report.
  
• Everything said in the report-and the opinion behind it-belongs to the auditor whose name is on the line.

Getting the signing right is critical. If something is off, the whole audit report could be asked to sit on the sidelines during ROC filings, tax returns, or when stakeholders start asking questions.

Documents Required for Private Limited Company Audit

Auditors conducting the audit of limited companies in India require a specific set of documents to verify the authenticity of transactions and balance items, as well as ensure compliance. Have these ready:

• Trial Balance as of the financial year‑end
• General Ledger with supporting schedules for major accounts
• Board Resolutions authorising loans, investments, or accounting policies
• ROC Filings: last year’s AOC-4, MGT-7, ADT-1, and so on.
• ITRs along with compulsory Tax Audit Reports (Form 3CA/3CB & 3CD) if applicable.
• Invoices for Sales & Purchases, credit/debit notes, and expense vouchers.
• Company account Bank Statements for the entire year.
• Fixed Asset Register and depreciation schedules.
• Statutory Registers: Members, Directors, Charges, Loans, and Related Party Transactions Registers.
• GST Returns (GSTR-1, GSTR-3B), TDS Statements, and EPF/ESIC Filings.
• Supporting counts for Inventory Valuation Reports.
• Payroll Records, together with logs of reimbursement for employees.
• Contracts & Agreements relating to loans, leases, services, and vendors.

By providing these documents promptly, the audit duration is minimised as well as the chances of qualifications in the audit report of Indian company.

Audit Process for Private Limited Companies

Like any Indian private limited firm, they must go through several types of audits, and each one is initiated by a specific factor or criteria:

• Statutory Audit
  
  • Applicability: All private limited companies every financial year.
    
  • Scope: Review of financial statements under the Companies Act and Indian Accounting Standards.
    
• Internal Audit
  
  • Applicability: Mandatory when turnover > ₹200 crore or borrowings > ₹100 crore.
    
  • Scope: Assessment of internal controls, operational efficiency, and risk management.
    
• Tax Audit
  
  • Applicability: Under Section 44AB of the Income Tax Act, when business turnover > ₹1 crore or professional receipts > ₹50 lakh.
    
  • Scope: Verification of tax compliance, deductions, and computation accuracy; filed in Forms 3CA/3CB & 3CD.
    
• Cost Audit
  
  • Applicability: Specified manufacturing/service companies (e.g., telecom, electricity, pharmaceuticals) with turnover > ₹100 crore and segment turnover > ₹25 crore under Section 148.
    
  • Scope: Examination of cost records, efficiency of cost controls, and CRA‑4 reporting.

Contents of an Auditor’s Report

Every auditor’s report has to meet ICAI rules and, when needed, add CARO details. The main parts are:

• Opinion: A simple sentence saying whether the financials show a true and fair view.
  
• Basis of Opinion: A quick summary of what the audit looked at, the standards used, and the proof collected.
  
• Key Audit Matters (KAM): For big firms, this section calls out higher-risk areas, like revenue rules or asset write-downs.
  
• Management’s Responsibility: This line makes clear that directors own the numbers and the strength of internal controls.
  
• Auditor’s Responsibility: Here, the report says what the law and audit guidelines ask the auditor to do.
  
• CARO 2020 Reporting: When paid-up capital and reserves add to at least 1 crore, turnover hits 10 crore, or loans reach 1 crore, the auditor must check and report on 21 points, such as loan defaults, stock count, and fraud alerts.
  
• Auditor’s Signature & Disclosures: The close of the report shows the auditor’s name, membership number, firm’s registration number, place and date, plus the UDIN – the Unique Document Identification Number.
  

A tidy, complete report boosts your company audit trust and gives investors and lenders extra peace of mind.

Filing Audit Reports and ROC Compliance Forms

Once the audit wraps up, you need to send several documents to the Registrar of Companies (ROC). Here’s a quick cheat sheet on what to file, why it matters, and when it’s due:

Form	Purpose	Due Date
AOC‑4	Audited financial statements and Auditor’s Report	30 days from AGM
MGT‑7	Annual return (shareholding, directorship)	60 days from AGM
ADT‑1	Notify auditor appointment/reappointment	15 days from AGM
CRA‑4	Cost audit report (if needed)	30 days from receipt of the cost auditor’s report

Remember, each form must be uploaded on the MCA portal, verified with the Digital Signature Certificate (DSC), and the right fee paid before it counts as filed.

Audit Due Dates and Compliance Calendar

To see how these deadlines look on a calendar, let’s walk through a typical year-end of March 31:

• By September 30: Wrap up the statutory audit and hold the AGM.
  
• Within 30 days of AGM: Submit Form AOC-4.
  
• Within 60 days of AGM: Submit Form MGT-7.
  
• Within 15 days of AGM: Submit Form ADT-1 for the new auditor.
  
• Within 30 days of the cost audit report: Submit Form CRA-4.
  

set calendar alerts 2 to 3 months early. That way, you dodge the last-minute scramble and any penalties.

Penalties for Non-Compliance

When companies miss audit deadlines or skip required filings, they trigger tough penalties spelt out in the Companies Act. Read on for the main rules you need to know.

• Section 147 –
  If a firm does not appoint an auditor or ignores related rules, it can be fined up to ₹5 lakh. The directors who let this happen face a separate fine of ₹1 lakh, plus ₹500 for every day the problem goes unresolved.
  
• Section 450 –
  Missing the AOC-4 or MGT-7 filings costs the company ₹10,000 right away, and then an extra ₹100 every day until the forms land at the registrar. In the end, the company cannot pay more than ₹2 lakh, while officers cap out at ₹50,000.
  
• Form CRA-4 delay –
  Here, the fine kicks in at ₹100 a day, and there is no upper limit. Ignoring this form quickly turns into a huge bill.
  

Example:
Let’s say a company sits on AOC-4 for three months. The basic penalty alone hits ₹9,000 (₹100 a day times 90 days). This figure grows if other late fees pile on or if board members face disqualification.

Benefits of Timely Audits

Finishing audits on schedule does more than keep watchdogs happy. It lifts business health and opens new paths to growth.

• Verified numbers raise trust among investors and lenders, making future cash easier to secure.
  
• A clean regulatory record cuts the odds of surprise probes and costly fines.
  
• Most venture capital and private-equity firms ask for audited books before writing a cheque.
  
• Strengthens your internal financial controls through structured reviews and actionable tips.
  
• Curtails the last-minute scramble that leads to mistakes and avoidable penalties.

Put simply, regular audits boost your firm’s reputation and set the stage for lasting growth.

Frequently Asked Questions

Q1. What is the difference between a statutory audit and an internal audit for a private limited company?
Statutory audits are compulsory reviews required by the Companies Act; internal audits are optional and focus on improving day-to-day controls. 

Q2. Are small private companies exempt from audit requirements in India?
No. Every private limited company, big or small, must have its accounts audited every year. 

Q3. How much does a statutory audit cost for a private limited company in India?
Fees usually start around ₹15,000 but can climb to ₹1,00,000 or more, based on turnover, business type, and record clarity.

Q4. Can the same Chartered Accountant be reappointed as auditor every year?
Yes, an individual auditor can serve for 5 years and an audit firm for 10 years; then, a 5-year break is needed before reappointment.

Q5. Is cost audit mandatory for all manufacturing private limited companies?
No, only firms in key industries like pharmaceuticals or telecom and above a certain sales level, face this additional review under Section 148.

Q6. What are the consequences of not filing the audit report with ROC on time?
It faces fines under Sections 137 and 450, risks losing its good standing, and could lose the chance to bid for government contracts or secure public funding.

Q7. How can a company change its statutory auditor before the completion of the audit term?
The board must pass a special resolution, file Form ADT-2 for Central Government nod, and make sure all documents go in on time.

Q8. Does a private limited company need an audit if it is inactive or not operational?
Yes, even dormant or non-operational firms must send in audited financials and their annual return.

Q9. What role does the audit committee play in a private limited company, if any?
While audit committees are required for listed firms, a private company can set one up on its own to improve oversight.

Q10. Can a foreign‑owned private limited company follow a different audit process in India?
No, every company registered in India, regardless of foreign control, must stick to Indian auditing rules and steps.