Audit for Private Limited
Meeting the compliance criteria comes after registering your company as a private limited company. By implementing One-day Incorporation with SPICe, the Ministry of Corporate Affairs (MCA) has simplified the company incorporation procedure.
Overview
Regardless of the company's nature and turnover, audits are now required under the 2013 Companies Act. Irrespective of the size, aim, or type of the company, all Private Limited Companies are required to keep accurate books of account. The company's directors are in charge of having the books of accounts audited. A practicing Chartered Accountant must be chosen by the company for Private Limited Audit.
The employment of an auditor is another step in the compliance procedure. The auditor reviews the financial statements and presents the audit report. The area's Registrar of Companies (ROC) receives the audited financial accounts for filing.
One might say that the Private Limited Auditing process is an annual practice that falls under the compliance standards of the companies.
What Kinds of Private Limited Audits Are There?
Private Limited Audits come in various forms. The list is as follows-
Internal Control
The internal private limited audits are carried out in accordance with the internal management's recommendations. It is done to examine the organization's operational effectiveness as well as the financial health of the enterprise. Own audits can be carried out by the company's internal staff or by a third party. The internal audit enables internal management to gain access to all financial information and to make the necessary adjustments to improve operational efficiency.
Internal private limited audits for private limited companies are applicable when-
- 200 crore rupees or more in revenue over the previous fiscal year, or
- More than Rs. 100 crores in outstanding loans or borrowings from banks or public financial institutions.
If a private limited company meets the aforementioned requirements at any point during the previous fiscal year, it is required to engage an internal auditor to perform an audit of the books of accounts for the private limited audit.
Statutory Audit
To comprehend the health of a company's finances and accounts to the Government, statutory audits are undertaken for private limited audits. These audits are typically carried out by certified auditors who work for external, independent parties. A government agency creates the audit report for a statutory private limited audit in the format specified. Therefore, the major purpose of a statutory audit is to determine the corporation in question's true economic situation. Statutory audits are conducted across a financial year, which runs from April 1 to March 31.
Regardless of the company's turnover and profit, a statutory private limited audit is required. Any business that is going under loss is required to perform a statutory audit.
Price Audit
According to the following criteria, the private limited firm will conduct a cost private limited audit-
- Firms falling under category A-
- 1) Businesses with a combined yearly turnover from all of their goods and services of at least Rs. 50 crores in the upcoming fiscal year.
2) Businesses with annual turnover of at least Rs. 25 crores for each individual good or service.
- Companies falling under category B-
- 1) Companies with a combined yearly turnover from all of their products and services of Rs. 100 crore or more in the most recent fiscal year.
2) Companies with annual turnover of at least Rs. 35 crores.
Company Audit pursuant to the Income Tax Act of 1961
In accordance with Section 44AB of the Income-tax Act of 1961, the following person must undergo a tax audit pertaining to a private limited audit-
- Total sales, turnover, or gross receipts for a person commencing business must exceed Rs. 1 crore.
- Gross sales must surpass Rs. 50 lakhs in turnover, for professionals.
- Companies are covered by Section 44D of the Presumptive Taxation Scheme if their annual sales or gross receipts are less than Rs. 2 crores.
Company Audit
The Companies Act of 2013 explains the requirements for a company audit in a private limited audit. At the end of each fiscal year, all companies, regardless of their line of business or yearly turnover, must have their annual accounts audited.
- The company and the company's directors must initially select an auditor for private limited audit purposes.
- An auditor must be chosen by the company's shareholders at each Annual General Meeting (AGM).
- The appointed auditor will serve in the capacity from the end of one Annual General Meeting (AGM) until the following AGM.
- As a result, the auditor needs to be replaced after the term is through.
Who qualifies to carry out a private limited audit?
- The private limited audit must be performed by the auditor whom the firm has hired.
- The auditor must be chosen within 30 days of the company's incorporation.
- At the board meeting, a board resolution appointing the auditor must be approved.
- Within 90 days of the extraordinary general meeting, if the board fails to designate the auditor, the members must do so.
- From the end of one AGM until the following AGM, the auditor will serve in that capacity.
- ADT-1 electronic form is used to appoint the auditor.
- The company's auditors will be chosen at the first AGM and will serve for a maximum of five years.
- Only those who meet the requirements of the Chartered Accountant Act, 1949 to be qualified as a Chartered Accountant (CA) may be appointed as auditors.
- An LLP of Chartered Accountants may also be chosen to serve as the company's auditor.
- According to Sections 139(9) and (10) of the Companies Act of 2013, the auditor may be reappointed for private companies.
- Rotation of the auditor will be applicable to private firms with a paid-up share capital of at least Rs. 20 crores, as required by Section 139.
- Section 139(8) states that the board of directors must appoint a replacement for the casually vacant position of auditor within 30 days.
- A statement in the form of an electronic form ADT-3 must be submitted to the company and the Registrar of Companies (ROC) within 30 days of the resignation, under Section 140 of the Companies Act.
- According to Section 140, the auditor may be dismissed before the end of his term by enacting a special resolution and obtaining the Central Government's prior consent. 30 days after the board resolution has been approved, an application must be submitted using the e-form ADT-2.
- The remuneration of the auditor is set under Section 142 of the Companies Act of 2013.
- The statutory auditor is prohibited from performing internal audits.
- The internal auditor may be a firm employee or appointive from outside the organization.
- An organization.
- An employee or an officer.
- Partner with a company employee or the employees' superior.
- Any person who has guaranteed to the company an amount greater than Rs 1,000 on behalf of another person or who owes a company money that is greater than Rs 1,000.
- Anyone who has ever owned the company's securities, regardless of type.
Additional rules for the appointment of an auditor for a private limited audit include the following-
The Companies Act of 2013 states that the following people are ineligible to be auditors-
Checklist for Private Limited Audit Compliance
To understand the default state of the company, the party must be aware of ROC Compliances, GST, and income tax requirements. Here are a few of the compliances-
The Private Limited Audit Report is signed by who?
- At least two of the directors must be signatories of the company’s financial statement.
- The managing director must be one of the board members; in the absence of a managing director, the financial statement must be signed by the director himself.
- Following the directors' signature on the financial statement, the company's appointed auditor signs the auditor's report.
- A properly attested copy of the audit report is required.
- Before the general meeting, the qualifiers, observations, or comments made on the financial statement that have a negative impact and are listed in the audit report must be read and made available for inspection.
- If the auditor suspects that a crime involving fraud has been committed while conducting the audit, he or she is required to report the fraud (if any) against the company perpetrated by workers or executives.
When is the Private Limited Audit Due?
A private limited audit has the following due dates-
Internal audit
Internal audits don't have a set due date. The board must receive a report from the internal auditor before the annual general meeting (AGM).
Statutory audit
-
1) The annual general meeting must be called before the statutory audit is completed (AGM)
2) It is necessary to present the audit report to the board.
3) Before the general meeting, the audit report must be presented.
4) Within 30 days of the annual general meeting, the company's financial statement must be submitted in e-form AOC-4 along with the audit report.
5) The Annual Return must be submitted in Form MGT-7 within 60 days of the AGM.
6) Annual General Meetings (AGMs) must be held on or before September 30th of the year after the financial year has ended.
Cost audit
The board must get the cost audit report. Within 30 days of obtaining the cost audit report, the corporation is required to give the Central Government all relevant information.
Tax audit
After executing the audit, the income tax return must be filed by September 30th.
Audit of GST
The GST Audit is due on December 31st of the next fiscal year.
What is the Repercussion for Private Limited Audit Non-Compliance?
Fine under Form AOC-4
- The late filing of Form AOC-4 will result in a fine of Rs. 100 per day.
- Additionally, the organization will be subject to a fine of Rs. 1000 per day of noncompliance, up to a maximum of Rs. 100,000.
Fine under MGT-7
- The companies would impose a fine of Rs. 100 per day.
- The fine of Rs. 50,000 as well as a late fee of Rs. 100 per day as long as the default persists must be paid by each member of the defaulter company.
- The maximum fine that may be assessed is Rs. 5, 000,000.
Fine for failing to file an ITR-6
- Non-submission of the income tax return is subject to late filing penalty up to Rs. 10,000.
- A fine of approximately Rs. 1,50,000 or 0.5% of the total sales, gross receipts, or turnover for the current fiscal year is imposed under section 273B.
Fine under Form AOC-4
Fine under MGT-7
Fine for failing to file an ITR-6
What papers are required for a Private Limited Audit Report?
The following papers must be included in a private limited audit report-
- Notice, the Director's report, and Form MGT-9 are the documents that are attached prior to the auditor's report.
- The auditor's report, when prepared—which includes all the details learned from completing the corporate audit—is attached below the form MGT-9.
- The report's annexure is submitted in Form 3CD.
- Attachment of the balance sheet, notes to the accounts, and the profit and loss account should be made.
- The findings made during a tax audit are also attached, if one is done.
- The Audit Report also includes financial statement notes that are provided at the end.
Contents in the Auditor's Report for the Private Limited Audit
The following is a list of the contents of the audit report for Private Limited:
- The audit's title.
- Opinion of the auditor.
- The foundation for the auditor's opinion.
- Important issues pertaining to the audit.
- Anything besides financial statements and audit reports is information.
- Financial statements are the management's responsibility.
- Accountability of the auditor with relation to the examination of the financial statements.
- Other reporting obligations.
- Authorization and signature of the auditor.
- Date when the audit report is made
- Place of signature
What steps are included in an audit of a private limited company?
Professionals with experience and qualifications to conduct a private limited audit are included in our team at Estabizz.
- Establishing the goals and scope, planning the resources, and creating the processes necessary to provide an efficient and effective private limited audit method.
- Obtain proof that the audit area is properly regulated. Because the right procedures are being used to accelerate the efficiency of the operations.
- By examining audit evidence, reporting audit areas' effectiveness, and assessing the audit areas' strengths and shortcomings.
- By giving a report of the results, recommendations, and conclusions to the management in order to inform them of the effectiveness of operations and the sufficiency of controls.
- Evaluating every move the management has performed in terms of reporting methods and follow-ups.
- Observing professional and ethical standards to assure the accuracy and reliability of audit work.
How can you contact Estabizz?
- Fill the form.
- Get a call back.
- Submit the required documents.
- Track the progress of your application.
- Get the expected results
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Company Audit pursuant to the Income Tax Act of 1961
Who qualifies to carry out a private limited audit?
Checklist for Private Limited Audit Compliance
The Private Limited Audit Report is signed by who?
When is the Private Limited Audit Due?
What is the Repercussion for Private Limited Audit Non-Compliance?
What papers are required for a Private Limited Audit Report?
Contents in the Auditor’s Report for the Private Limited Audit
What steps are included in an audit of a private limited company?
How you can contact Estabizz?
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