Why a Statutory Audit Mandatory for Certain Companies?

Statutory Audit Is Mandatory for Certain Companies because it ensures legal rules are followed & it keeps financial work clear & honest for all. It helps a business stay responsible in the present system. It helps growing companies check their financial work in a simple way so they can build trust with people, investors & officials.

Today, In this Article we will Look at Statutory Audit Is Mandatory for Certain Companies  on filesure.

Understanding Statutory Audit Requirements

A statutory audit is a needed check of a company's financial papers. It checks if the financial details written in the books are right, fair & follow the rules.Under the mandatory audit under Companies Act every company in India must face these checks by a trained auditor unless the law gives small exceptions.

Why Does the Law Mandate Statutory Audits ?

• The audit keeps financial papers true & fair.

• The audit keeps things clear for owners.

• The audit stops fraud & wrong use of money.

• The audit helps follow sections of corporate law.

• The audit helps good control & responsible work.

These points form the base of financial rules & they help companies work smoothly in a guided system.

Who Needs Statutory Audit Applicability Explained ?

The statutory audit applicability changes with company type, income level, money base & rule needs. All companies under the Companies Act must choose auditors & some groups must face annual statutory audits.

• All Private Limited Companies

• All Public Limited Companies

• Section 8 Companies

• One Person Companies OPC

• Companies with high paid up capital

• Companies with income over the set limit

These needs cover all sizes so even small companies must do yearly statutory audits.

What is Mandatory Audit Under Companies Act Key Legal Provisions?

The Companies Act 2013 gives clear audit rules for companies. It says a company must keep correct books of accounts & choose a trained auditor who checks the financial papers in a fair way.

Important Legal Requirements:

• The company must choose a statutory auditor in 30 days of start.

• The auditor must do audits every year.

• The financial papers must follow basic accounting rules.

• The leaders must give all needed details to the auditor.

• The auditor must give an audit report format with clean findings.

These rules protect owners, the government & the finance system.

What are the Statutory Auditor Appointment & Eligibility Rules?

The statutory auditor appointment process is important for fair work. A statutory auditor studies the financial papers & checks if they follow the rules.

Auditor Eligibility Rules:

• The person must be a Chartered Accountant CA in practice.

• The person cannot be an employee of the company.

• The person must follow independence needs.

• The person must not hold company shares.

• The person must follow rotation rules when needed.

These rules help in choosing the right auditor who gives correct checks.

Audit Threshold Limits for Companies

Audits are needed for companies but some audit threshold limits apply in cases like tax audits or income based checks. These limits change with time to match the economy.

These limits help know extra rule needs apart from statutory audits.

Importance of Statutory Audit for Businesses

The importance of statutory audit goes beyond rule needs. It shapes trust, helps financial health & builds long growth for companies.

• The audit keeps financial reporting true & fair.

• It finds money errors & possible fraud.

• It builds trust with lenders, investors & rule groups.

• It improves inside money control.

• It builds a strong name & good work culture.

The companies with clear financial work enjoy better credit & smoother workflow.

Role of Statutory Auditors in Corporate Governance

The role of statutory auditors is more than checking books. They act like independent watchers who keep the company fair & clear.

Key Responsibilities

• The auditor gives clear financial opinions.

• The auditor checks inside control systems.

• The auditor finds wrong details or mistakes.

• The auditor checks rule needs.

• The auditor protects owner interest.

These points help a company grow strong.

Conclusion

Statutory Audit Is Mandatory for Certain Companies because it keeps financial work clear, protects owners & ensures rule needs are met. It helps both small & big companies keep true financial papers & build long trust. It is a key part of the rule system & it will stay important as rule checks grow.It helps companies grow strong when they see statutory audit as a tool for trust, good control & long success.

Also Read : What is the Difference Between MOA and AOA in Meaning