Statutory Requirements

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

• All sums of money received and expended, and the matters in respect of which the receipt and expenditure take place
• All sales and purchases of goods/services by the entity
• The assets and liabilities of the entity
• 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.
• The company shall keep such books of account or other relevant papers available in an electronic mode. Such books of account and other relevant books and papers are maintained in electronic mode shall be retained completely in the format in which they were originally generated, sent, or received, or in a format that shall present accurately the information generated, sent, or received, and the information contained in the electronic records shall remain complete and unaltered. As part of the recent amendment, companies maintaining books of account in electronic form are required to ensure daily backups on servers physically located in India.

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

The types of mandatory audits to be conducted by an independent practicing Chartered Accountant:

Recent Accounting, Audit, and Regulatory Developments

• Uniform Definition of Wages under Labor Laws
  The Code on Wages, 2019, introduced a uniform definition of “wages”, which may increase the wage base used to determine certain employee benefits by restricting permissible exclusions from wages. As a result, employers may experience increased liabilities in respect of gratuity and other wage-linked benefits. Entities should evaluate the impact of the revised wage definition on employee benefit obligations and ensure that actuarial valuations, provisions, and related financial statement disclosures appropriately reflect such impact.
• ICAI Guidance Note on Financial Statements of LLPs and Non-Corporate Entities
  ICAI issued Guidance Notes on Financial Statements of Limited Liability Partnerships and Non-Corporate Entities in August 2023 to standardize the presentation and disclosures of financial statements for LLPs, partnership firms, proprietorships, and other non-corporate businesses. These Guidance Notes apply in a phased manner from accounting periods beginning on or after 1 April 2025 for entities with turnover exceeding INR 50 million and from 1 April 2026 for all LLPs and non-corporate entities.
• Requirements related to Audit Trail
  Companies Act, 2013 requires the management of companies to only use an accounting software that has a feature of recording the Audit Trail and ensure that such logs have been operational throughout the year and cannot be disabled.
  Auditor's reporting responsibility in relation to Audit trail:
  The auditor must report on three aspects:
  
  • Whether the accounting software has the feature of Audit Trail and the same has been in operation throughout the year and for all transactions;
  • Whether the feature of the Audit Trail has been tampered with; and
  • Whether the Audit Trail has been retained as per legal requirements.

• 9. Tax audit requirements apply where business turnover exceeds the prescribed threshold of INR 10 million (or INR 100 million relaxed limit subject to digital/cash transaction conditions)
• 10.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