Is statutory Audit compulsory?

In term of section 139(1) of the Companies Act, 2013 read with rule 3 of Companies (Audit and Auditors) Rules, 2014 every company shall appoint an individual or a firm as an auditor.

Section 139(6) of the Act stipulated that the first Auditor of the Company shall be appointed within 30 days of its date of registration.

Is Audit under Income Tax Act mandatory?

As per Section 44AB of the Income Tax Act, 1961, certain persons carrying on business or profession have to get their books of accounts audited by a practicing Auditors and Tax Consultants.

In case of business, if the total sales, turnover or gross receipts, as the case may be, exceed or exceeds 1 Crore Rupees in any previous year and In case of profession, if the gross receipts in profession exceed Rs.50 lakh Rupees in any previous year are compulsorily required to get their books of accounts audited by a Auditors and Tax Consultants.

This apart, under certain circumstances, even if the turnover is less than the limits specified above, books of accounts have to be audited by a CA. The applicable entities have to get their accounts audited by a Auditors and Tax Consultants before the specified date and furnish the report of such audit.

An audit is a systematic review and assessment of information or documents.

There are a few different types of audit but, in the specific context of professional services, an audit is usually financial. It is intended to provide reasonable assurance, but not absolute assurance, that the financial statements give a true and fair view in accordance with the financial reporting framework.

Not all companies are required by law to have audits. Many companies who do not require audits by law opt to have their financial information assured independently, usually by accountancy firms.

Assurance is a professional service with the aim of improving the quality and transparency of information, to reduce the chance of problems occurring from incorrect information. An audit is a type of assurance service.

Assurance services can be regulatory or compliance-based. They work to ensure that a company or organisation is following guidelines, rules and policy, and provide both internal and external confidence for financial statements.