STATUTORY AUDIT

At Aakash Seth & Associates Chartered Accountants, we recognize the importance of statutory audits in ensuring compliance and transparency in a company’s financial accounts. Our team of seasoned Indian Chartered Accountants is well-equipped to handle statutory audits as required by the Companies Act, 2013.

Statutory audits are mandatory for all companies registered in India under the Companies Act, 1956 and Companies Act, 2013, as well as Limited Liability Partnerships (LLPs) with a turnover exceeding Rs. 40 Lakhs or a contribution of Rs. 25 Lakhs. As per Section 139(1) of the Companies Act, 2013 read with Rule 3 of Companies (Audit & Auditors) Rules, 2014, every company must appoint an individual or firm as an auditor.

Our team of expert professionals, including CAs, CS, and Lawyers, is highly skilled in Conducting Audits under any applicable statute while adhering to global accounting standards to ensure the usability of audited accounts for various stakeholders such as financial institutions, shareholders, directors, investors, government, banks, and the general public.

With offices in Delhi and Bulandshahr, we cater to diverse industries, including IT, manufacturing, services, and more, providing expert audit services to clients globally.

Our statutory audit team comprises highly skilled professionals who undergo continuous training and development to stay abreast of the latest auditing techniques and regulatory requirements. This ensures that our clients’ annual accounts are accurate and reliable.

The complexity of statutory audits has significantly increased in recent years due to globalization, changing business landscapes, and evolving accounting standards. To address these challenges, Aakash Seth & Associates Chartered Accountants leverages its extensive knowledge, expertise, and core competencies to deliver exceptional results, prioritizing customer satisfaction and excellence.

At Aakash Seth & Associates, we follow a thorough process while conducting statutory audits, which includes:

• Obtaining the appointment letter and board resolution copy
• Obtaining a no-objection certificate (NOC) from the previous auditor
• Filing a no-disqualification status to the company
• Filing Form ADT-1 to ROC
• Sending a letter of engagement to the company
• Assessing the internal control of the company
• Formulating an internal audit program action plan and calendar
• Conducting the audit as per IGAAP, Companies Act, ICAI Accounting Standards, and Auditing Standards
• Forming an opinion on the financial statement prepared by the company
• Reporting to shareholders
• Attending AGM

As per the statutory audit requirement, all companies, including Private Limited Company, One Person Company, Limited Company, Section 8 Company, Nidhi Company, and Producer Company, must appoint a Statutory Auditor, regardless of the nature of business and sales turnover. In addition, all companies and Limited Liability Partnerships (LLPs) with an annual sales turnover exceeding Rs. 40 lakhs or capital contribution exceeding Rs. 25 lakhs, regardless of the nature of business, must have their accounts audited.

When performing a Statutory Audit, our team concentrates on several key areas:

• Internal Control Evaluation: We assess the effectiveness of the client’s internal controls to prevent fraud and errors, conducting thorough testing to determine control strength.
• Balance Sheet Verification: Our auditors verify the accuracy of Balance Sheet information by examining supporting documents for secured loans, fixed assets, and other items.
• Profit & Loss Account Analysis: We analyze Profit & Loss A/C items through year-over-year comparisons, industry benchmarking, trend analysis, and verification of individual sales and purchase transactions.
• TDS Compliance Testing: Our team evaluates TDS compliance by checking voucher entries, verifying source documents, and reconciling books with challans and returns.
• GST Compliance Testing: Our team evaluates GST compliance by checking voucher entries, verifying source documents, and reconciling books with challans and returns.
• Risk Assessment: We identify and assess potential risks that could impact the client’s financial statements, such as fraud, errors, or non-compliance.
• Substantive Procedures: Our team performs substantive procedures, such as testing transactions, balances, and disclosures, to ensure the accuracy and completeness of financial information.
• Reporting and Documentation: We prepare comprehensive audit reports and documentation, highlighting findings, recommendations, and areas for improvement.
• Communication and Follow-up: Our team maintains open communication with clients throughout the audit process, addressing concerns, and providing guidance on implementing recommendations.
• Additional Checks: We also verify:
  • Dividend payments
  • Compliance with labour laws (PF, ESIC, Gratuity, Bonus, Leave encashment)
  • Loans and advances for compliance with the Companies Act, 2013, and Income Tax Act, 1961
  • Compliance with other statutory laws and regulations
  • Accuracy of financial statements and reporting

We ensure our clients’ financial statements comply with all applicable laws and regulations through a rigorous statutory audit process. This involves a thorough examination of financial statements, internal controls, and relevant documents to verify the accurate and complete representation of the company’s financial position.

Our statutory audit services cater to various entities, including private and public companies, Limited Liability Partnerships (LLPs) as well as other corporate bodies. Our team of professionals conducts statutory audits as per the Companies Act, 2013, and the rules and regulations set by the Institute of Chartered Accountants of India (ICAI).

We are committed to delivering high-quality services, ensuring timely and efficient completion of statutory audit requirements. Additionally, we provide guidance and recommendations to enhance financial reporting and internal controls, which can help companies strengthen their operations and financial management.

Frequently asked questions about statutory audits:

• Can a CA, being a relative of a company’s director or Key Managerial Personnel, be its statutory auditor?
  No, as per section 141(3)(f), a person whose relative is a director or is in the employment of a company as a director or Key Managerial Person shall not be eligible for appointment as an auditor of that company.
• Who can conduct a statutory audit?
  Only a Chartered Accountant, or a firm or a Limited Liability Partnership firm (LLP) having a majority of partners, practising in India, qualified for appointment as an auditor of the company can be appointed as an auditor of the company.
• What is the penalty for non-compliance with a statutory audit?
  For non-compliance with the statutory audit provisions, the fine may range from Rs. 25,000 to Rs. 5,00,000 for the company. For every officer in default, the fine may range from Rs. 10,000 to Rs. 1,00,000.
• What is the applicability of Statutory Audit?
  Private Company/ Public Company: Statutory Audit is mandatory for a company irrespective of its turnover, profits, etc. If the company is incurring loss even then, a statutory audit is required. LLP: Statutory Audit is applicable if the turnover of the LLP in any financial year exceeds Rs. 40 Lakhs or its contribution exceeds Rs. 25 Lakhs.
• What is the difference between an internal audit and a statutory audit?
  Internal Audit is carried out to provide unbiased and independent reviews of the system and processes of the business organizations. It is done to detect fraud or prevent errors. A statutory Audit is a type of audit mandated by the law or a statute to ensure that the books of accounts are true and fair as presented to the public and regulators.

Statutory audit is done by a practising chartered accountant, whereas internal audit can be done by the company’s employee. The company’s shareholders appoint a statutory auditor in the annual general meeting, while an internal auditor is appointed by the company’s management.

TAX AUDIT

As a taxpayer, it is your responsibility to ensure that your financial records are audited by an independent Chartered Accountant if your turnover surpasses the limits set by The Income Tax Act, 1961. At Aakash Seth & Associates Chartered Accountants, we offer trustworthy and efficient tax audit services that comply with Section 44AB of the Income Tax Act.

The tax audit must be carried out by a Chartered Accountant appointed by the taxpayer. The Chartered Accountant then provides the Tax Audit Report in Form 3CD, as prescribed by the Income Tax Act. When filing the income tax return, the relevant details from the Tax Audit Report must be included.

Our team of skilled Accountants are highly knowledgeable about current laws and regulations. We conduct tax audits in a methodical and timely manner, ensuring that all required disclosures are made in the proper formats.

Who is Mandatorily Subject to Tax Audit?

According to Section 44AB of the Income Tax Act, 1961, individuals engaged in business or profession must have their financial records audited by a practicing Chartered Accountant if their sales, turnover, or gross receipts exceed Rs. 1 crore in any financial year for businesses, or if the gross receipts in a profession exceed Rs. 50 lakhs in a given year. In such cases, a Chartered Accountant must audit the books of accounts.

Additionally, even if the turnover is below the specified thresholds, there are certain situations where a Chartered Accountant must still audit the books of accounts.

Benefits of Tax Audit Services

• Gain government recognition: We ensure precise and transparent financial reporting, facilitating recognition from government authorities and enhancing your business’s reputation.
• Enhance loan and licensing prospects: Our tax audit services provide a seal of approval, increasing your likelihood of securing loans and licenses to expand your business.
• Strengthen credibility and trust: By demonstrating transparency and accountability, we help strengthen your credibility and trust among stakeholders, including customers, suppliers, investors, employees, and tax authorities.
• Reduce risk of internal fraud: Our tax audit services include a thorough examination of your financial records, helping to identify and mitigate potential risks of internal fraud and mismanagement.
• Gain actionable advice for business improvement: Based on insights from your financial records, we provide valuable recommendations for improving your business operations, optimizing processes, and increasing profitability.

At Aakash Seth & Associates Chartered Accountants, we understand that tax audits can be complex, time-consuming, and daunting for business owners. That’s why we provide comprehensive tax audit services designed to:

• Simplify the audit process
• Minimize disruptions to your business operations
• Ensure accuracy and transparency in financial reporting
• Provide actionable insights for business improvement

By partnering with us, you can rest assured that your tax audit is in good hands, allowing you to focus on what matters most – driving business growth and success.

Our Tax Audit Services Cover:

• Compliance with the Income Tax Act, 1961: We ensure that your tax audit adheres to the Income Tax Act, 1961, as well as the relevant auditing standards and guidelines set by the Institute of Chartered Accountants of India (ICAI).
• Timely and Accurate Reporting: We recognize the importance of delivering reports on time and with precision. Using advanced technology and tools, we conduct audits efficiently with minimal disruption to your business. Our risk-based audit approach ensures that we concentrate on the most critical areas for your company.
• Expert Recommendations: Our team of skilled Accountants provides actionable recommendations to enhance your business based on their audit findings. We adopt a proactive and constructive audit approach, addressing potential issues early on to prevent any unexpected complications or challenges.
• Protection from Legal Consequences and Penalties: We are dedicated to safeguarding your business from legal repercussions or penalties related to non-compliance with tax regulations. Our experts stay informed about the latest tax laws and regulations to ensure your business remains fully compliant.

Why Choose Us for Tax Audit Services

For a trustworthy and seasoned tax audit firm in Delhi/NCR, consider Aakash Seth & Associates Chartered Accountants. Our team of seasoned Accountants boasts over years of experience in conducting tax audits that adhere to the Income Tax Act, 1961. We adopt a proactive approach to our audits, identifying and addressing potential issues upfront to prevent surprises.

We leverage cutting-edge technology and tools to ensure efficient and minimally disruptive audits. Our methodology aligns with auditing standards and guidance notes issued by the Institute of Chartered Accountants of India (ICAI), conforming to International Auditing Standards. Through close collaboration with clients, we gain in-depth insights into their business operations and financial systems. This enables us to pinpoint potential issues and offer actionable suggestions for improvement. Our ultimate goal is to facilitate tax compliance while minimizing liabilities. For expert tax audit services in Delhi/NCR, rely on Aakash Seth & Associates Chartered Accountants. Schedule a consultation with our tax audit specialists today.

FAQs on Tax Audit

What is the penalty for not getting the accounts audited as required by section 44AB?

If a person who is supposed to get the tax audit carried out fails to get their accounts audited under section 44AB, they will have to pay a penalty of an amount lower of the following two amounts:

• 0.5% of the sales, total turnover or gross receipts during the relevant previous year
• Rs. 1,50,000

Is tax audit always applicable once it is applicable for a year?

No, tax audit applicability is ascertained with reference to each previous year. It is not necessary that tax audit applicable for one year will be applicable for all the subsequent years.

What are Forms 3CA, 3CB & 3CD?

• Form 3CA: Furnished when a person carrying on business or profession is already liable to get their accounts audited under any other law.
• Form 3CB: Filed when a person carrying on business or profession is not liable to get their accounts audited under any other law.
• Form 3CD: A statement of particulars in which the auditor has to report on various matters contained therein.

Can professionals also avail the benefit of the enhanced turnover limit of Rs. 10 crores for the tax audit?

No, the persons engaged in a profession are not entitled to avail an extended turnover limit of Rs. 10 crores for tax audit in the case of digital transactions. This benefit is available only to the assessee carrying on a business.

What is the due date for filing the Tax Audit report?

The due date for filing the Tax Audit report is 30th September following the relevant financial year. For example, the Tax Audit report for the Financial Year 2022-23 should be filed on or before 30th September 2023.

INTERNAL AUDIT

Internal Audit Service is a vital function that provides independent assurance on the effectiveness of the internal controls and risk management processes of an organization to enhance governance and achieve organizational objectives. At Aakash Seth & Associates Chartered Accountants, we aim to be among the Top Internal Audit Firms in India. Our expert and experienced team of professionals bring a systematic, disciplined, land consistent approach to assess and strengthen the effectiveness of risk management, control and governance processes.

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Today Internal Audit is not just an audit of financial working of an organisation. It has evolved to become a tool in the hands of management to ensure proper working of any function of the organisation be it production or sales or finance or human resources. Over the time the role of Internal Auditor has widened from just ensuring the correctness of financial system of any organisation to include consultative processes like advising on better utilisation of organisations resources, better management of financial as well as non-financial functions etc.

Scope and Objectives of Internal Audit

The scope and objectives of Internal Audit are dependent upon the size and the structure of the entity and its management’s requirements. Our team operates typically in one or more of the following areas:

• Review of the accounting system and related internal controls.
• Examination of the management of financial and operating information.
• Examination of the effectiveness and efficiency of operations including the financial controls of an organization.
• Physical examination and verification.

The objectives of Internal Audit that we aim to achieve for our clients are:

• Verification of the accuracy, reliability, and authenticity of the financial, accounting, and statistical records.
• Ascertaining that accepted accounting policies, principles, and practices have been developed while preparing the financial accounts.
• Ensuring that the assets are purchased/disposed of under proper authorization and that access to the assets is restricted to authorized persons at permitted times.
• Ascertaining that the liabilities are incurred for the authorized activities of the organization.
• Ensuring that the internal checks system operating in the organization is sound and economical.
• Preventing and detecting fraud and errors.
• Reviewing the overall operations of the internal control system and if deviations or weakness are noted, communicating the same to the appropriate authorities on a timely basis.

Benefits of Internal Audit

Our Internal Audit services offer numerous benefits to organizations, including:

• Enhanced governance and achievement of organizational objectives.
• Detection and minimization of the chances of fraud & errors.
• Review of the effectiveness & efficiency of internal control operations of the organization so that the required corrective actions, if any, can be taken well in time.
• Compliance with the applicable laws, regulations, and internal policies.
• Improved risk management processes.
• Identification of opportunities for operational improvement and cost savings.

Internal Audit Framework

We follow a comprehensive internal audit framework that ensures our audit services comply with industry best practices and meet the highest standards. Our framework includes:

• Formal Charter: We establish a formal charter that outlines the scope, objectives, responsibilities, and authority of our internal audit function.
• Documentation of Reporting Structure: We document our reporting structure to ensure our internal audit function is independent and objective.
• Detailed Testing: We conduct detailed testing of key business processes, controls, and procedures to identify weaknesses and areas for improvement.
• Competency: We ensure our internal auditors have the necessary skills, knowledge, and experience to perform their duties effectively.
• Liaison with External Auditors: We liaise with external auditors to ensure coordination and avoid duplication of efforts.
• Audit Committee and the External Auditors: We work closely with the audit committee and external auditors to ensure our internal audit services align with their objectives and requirements.
• Reviewing Effectiveness of Internal Audit: We review the effectiveness of our internal audit function to ensure it adds value to our clients’ organizations.

Why Choose Aakash Seth & Associates for Internal Audit Services?

At Aakash Seth & Associates, we understand the challenges our clients face in managing risk and achieving their objectives. We offer internal audit services that are tailored to meet their specific needs and requirements. Here are some reasons why you should choose us:

• Risk-based Approach: Our proficient auditors adopt a risk-based approach that focuses on the objectives and constraints of our clients to accomplish those objectives.
• Consistent Executive Ordinances: Our services have been improved for consistent executive ordinances in all internal audit practices all over the world.
• Specialized Expertise: We offer expertise in implementing the audit work in specialized areas such as fraud investigations, monitoring of projects, implementation of systems, and revenue assurance.
• Industry Experience: Our experts’ team serves clients in various industries like Manufacturing, Telecom industries, Education, Textile, and Consumer Business.
• Practical and Realistic Solutions: Our services can aid both the sides – you and your counsel with a comprehensive and disciplined approach that gives practical and realistic solutions, not just reliable reports.
• Value Creation: Our specialists and services are centred on value creation and offer you the vision and foresight throughout the enterprise as a whole.

REVENUE AUDIT

A revenue audit is a thorough examination of an organization’s revenue generation and collection processes to ensure accuracy, compliance, and efficiency. The primary objective is to confirm that the company accurately records and reports its income, aligning with tax regulations and financial reporting standards.

Key Aspects of a Revenue Audit

• Revenue verification: Auditors verify the accuracy of revenue streams, comparing transaction details with supporting documents.
• Tax compliance: The audit ensures revenue reporting adheres to relevant tax laws and accounting standards, such as GAAP or IFRS.
• Revenue leakage detection: Auditors identify potential instances of underreported, missed, or improperly recorded revenue.
• Internal control evaluation: The audit assesses the organization’s internal controls to prevent fraud, theft, or misreporting of revenue.
• Billing practice evaluation: The audit examines billing procedures to ensure clarity, accuracy, and timeliness.
• Tax liability assessment: The audit verifies the organization’s tax liability calculation and ensures compliance with local tax laws.

Revenue audits are crucial for ensuring businesses maintain financial health, transparency, and compliance with legal obligations, while also identifying opportunities for improvement in financial practices.

SPECIAL AUDIT

A special audit is a targeted and in-depth examination of specific aspects of an organization’s financial or operational activities. Unlike comprehensive audits, special audits focus on addressing specific concerns, suspicions, or stakeholder requests, often related to irregularities or potential misconduct.

Key characteristics of a special audit include:

1. Narrow scope: The audit concentrates on a specific area or issue, such as fraud investigation, regulatory compliance, or transaction assessment.
2. Investigative intent: Special audits are often triggered by suspicions of fraud, errors, or financial mismanagement, and may involve investigating specific allegations or concerns.
3. Clear objectives: The audit aims to verify specific transactions, confirm compliance with regulations, or investigate financial discrepancies.
4. Flexible approach: Special audits can be tailored to focus on specific transactions, timeframes, or business aspects.
5. Independent oversight: Special audits are typically conducted by external auditors to ensure objectivity, particularly when investigating potential misconduct.
6. Detailed reporting: After the audit, a comprehensive report outlines findings, discrepancies, and recommendations for addressing identified issues.

Special audits are a vital tool for organizations, regulators, and government agencies to identify and address financial or legal risks, and are often conducted in response to specific concerns or allegations.

MANAGEMENT AUDIT

A management audit is a comprehensive assessment of an organization’s management processes and practices, focusing on their effectiveness, efficiency, and performance. It evaluates how well the management team achieves organizational objectives, manages resources, and ensures smooth business operations aligned with strategic goals.

Key aspects of a management audit include:

1. Leadership and governance review: Assessing leadership structures, decision-making processes, and management systems.
2. Organizational process analysis: Examining planning, control, coordination, and communication processes within the organization.
3. Performance evaluation: Assessing manager and executive performance in achieving goals and objectives.
4. Strategic alignment: Ensuring management activities and decisions align with the organization’s overall strategy.
5. Efficiency and effectiveness evaluation: Assessing resource utilization (financial, human, and technological) in achieving organizational goals.
6. Identifying improvement areas: Providing recommendations for enhancing management practices, policies, and processes to boost performance.

Management audits, conducted by external consultants or internal auditors, aim to help organizations optimize management structures, streamline operations, and ultimately enhance overall business performance.

COMPLIANCE AUDIT

A compliance audit is an examination conducted to determine whether an organization is adhering to external laws, regulations, industry standards, and internal policies. The goal of a compliance audit is to ensure that the company is following all the relevant legal and regulatory requirements, as well as internal procedures and practices that apply to its operations.

Key aspects of a compliance audit include:

1. Legal and Regulatory Compliance: The audit assesses if the organization is following applicable laws, such as tax laws, environmental regulations, labour laws, and industry-specific requirements (e.g., healthcare, finance).
2. Internal Policies and Procedures: It checks whether the company’s internal policies, processes, and controls are being properly implemented and followed.
3. Risk Management: The audit evaluates the effectiveness of risk management strategies in place to ensure the organization is minimizing legal and regulatory risks.
4. Prevention of Fraud and Mismanagement: A compliance audit helps identify any fraudulent activities or mismanagement practices by ensuring that all actions are carried out in accordance with rules and standards.
5. Report and Recommendations: The auditor prepares a report that details the findings of the audit, including any areas of non-compliance. The report may also include recommendations for addressing any issues and improving compliance.

Overall, compliance audits are important for businesses to maintain their reputation, avoid legal penalties, and ensure smooth operations by following relevant laws and regulations.