Auditing is a branch of accounting that deals with examination of the financial accounts of the company according to the applicable laws and regulations. Every party related to the company including the management, investors, creditors etc are interested in knowing the exact financial position of the company. After the preparation of the books of accounts an audit is conducted by the eligible person to check the accuracy of the accounts prepared. Apart from the voluntary requirement there are also the mandatory requirements to undergo the mandatory audits under some laws. In this article we will be taking a look at the various provision related to auditing for the different business structure.
What are the different types of auditing?
Under the different types of laws and regulations there are different kinds of audit that must be conducted according to the turnover criteria and other conditions. Here are the different kinds of audits that are required to be done for different business structures –
- Cost Audit
- Secretarial Audit
- GST audit
- Tax audit
What are the Audit provisions applicable to different business structure?
The procedure of audit and the expenditure related to it can be one of the factors while selecting the company structure for an entrepreneur. Thus, it is important to know and evaluate the various provisions related to the audit with respect to different company structures. To make the task easier for you here we have listed out provisions of audit for different company structures.
- The proprietorship firm taxation provisions are largely similar to the provisions applicable on the individual. When the gross receipts of the firm exceeds the minimum prescribed limit of 1 crore there is requirement to undergo the tax audit.
- If in case the income earned is out of the professional work done then the gross receipts exceeding the limit of 50 lacks attracts the requirement of audit.
- GST audit is required to be done for proprietorship firm if their annual turnover exceeds the total limit of 2 crore in a financial year.
- Secretarial audit is not applicable for firms under this category.
A company is corporate structure that is incorporated under the Companies Act 2013 and the rules and regulations made there under. The company incorporated under this act is a separate legal entity and thus the audit provisions are very specific. Here are the audit provisions for the companies registered in India –
- According to the rules and regulation of Companies Act 2013 it is mandatory for every company to undergo a audit.
- A company having an annual turnover of more than 2 crores is required to get the GST audit done.
- A company is also required to undergo a distinct secretarial audit if its paid-up share capital is Rs. 50 Crore or more, Public Company if its turnover is of Rs. 250 Crore or more and every Private company which is a subsidiary of a public company as mentioned here.
It is of utmost importance for all the company structures to comply with the various audit procedures as failing to do so can attract stringent penalty provisions for them.