Financial Reporting & Audit Requirements

Statutory Requirements

The following key records are to be maintained by most entities:

  • 1. All sums of money received and expended, and the matters in respect of which the receipt and expenditure take place
  • 2. All sales and purchases of goods/services by the entity
  • 3. The assets and liabilities of the entit
  • 4. In case of an entity engaged in manufacturing, processing, mining, etc., such particulars relating to the utilization of material or labor or other items of cost.

In addition to the above, there may be requirements to maintain additional records under relevant statutes.

Types of the mandatory audits to be conducted by an independent practicing chartered accountant

Type of audit 8 Timeline Applicability
Audit under Section 139 of the Companies Act, 2013: Statutory audit## Within 60 days from the end of the financial year for listed companies and within six months from the end of the financial year for other companies For listed and other companies
Limited reviews Within 45 days from the end of the quarter (except the last quarter wherein the reporting is required within 60 days) Listed companies
Audit of financial statements for tax purpose 30 September in case transfer pricing regulations are not applicable, else 30 November Companies where the statutory year-end is different from the tax year-end and where tax audit is applicable 9
Tax audit certification 30 September in case transfer pricing regulations are not applicable, else 30 November (refer footnote 8 for tax audit applicability)

## Important changes in regulatory information:

  • 1. Rotation of Auditor
    The provisions of rotation have come into effect from 1 April 2014. The Companies Act, 2013 provides a transition period of three years in order to ensure compliance with the rotation-related provisions. As per the provisions, an individual cannot be appointed as a statutory auditor for more than one term of five consecutive years; and an audit firm cannot be appointed as statutory auditor for more than two terms of five consecutive years, in respect of the companies falling under any one of the following categories: (This rotation provisions apply to the following categories of the companies)
    • a. Listed companies
    • b. Unlisted public companies having paid-up share capital of INR 100 million or more
    • c. All private limited companies having paid-up share capital of INR 500 million or more
    • d. All companies having paid-up share capital of below the threshold limit mentioned in (b) and (c) but having public borrowings from financial institutions, banks or public deposits of INR 500 million or more
  • 2. The auditors of the company are required to disclose the operating effectiveness of the internal controls of the company in their audit report about, which is known as Internal Control over Financial Reporting (ICFR). Exemptions are provided to private limited companies from ICFR if they fulfill the following criteria:
    • i. A company which is a One Person Company or a small company; or
    • ii. A company which has a turnover less than INR 500 million as per the latest audited financial statement and which has aggregate borrowings from banks or financial institutions or any body corporate at any point of time during the financial year less than INR 250 million
  • 8. This does not include any other audits which are specifically needed under special statutes
  • 9.In India, companies are allowed to follow a different statutory year-end than the fiscal year-end (31 March), provided they satisfy the condition of Section 2(41) of the Companies Act, 2013
Get in Touch
Mayank Lakhani
Senior Managing Director Assurance Advisory,
Greenfield, Indirect Tax and GCC Region Corporate Services

Subscribe Newsletter

We are constantly working on sharing relevant alerts & publications to keep you informed on the latest developments.

Talk to Us for your India Entry