What Is a Statutory Audit? Checklist for Private Limited Companies in 2026
Last updated: 22 October 2026
Quick Answer: A statutory audit is the annual independent audit of a company's financial statements that the Companies Act, 2013 makes compulsory for every company. A chartered accountant or CA firm appointed under section 139 reports whether the accounts give a true and fair view. No turnover floor exempts a private limited company.
A statutory audit in India is a legal duty, not a management choice. It also sits apart from any tax audit under section 44AB of the Income-tax Act, 1961 (section 63 of the Income-tax Act, 2025 from tax year 2026-27). For a 31 March year end, the audit has to be complete before the AGM due by 30 September, and the audited statements reach the Registrar in Form AOC-4 within 30 days of that meeting.
Which statements and matters does the auditor's report cover?
A statutory audit of a private limited company covers the balance sheet, the statement of profit and loss, the cash flow statement and the notes. Under the proviso to section 2(40), as modified by G.S.R. 583(E), a one person, small or dormant company, or a private company recognised as a start-up, need not include the cash flow statement.
It ends in a report to the members under section 143(2) of the Companies Act, 2013, stating whether those statements give a true and fair view of the company's affairs at the year end.
That is the statutory audit meaning: an audit the statute orders, which management cannot waive. Section 143(1) gives the auditor access at all times to the books and vouchers. Under section 143(3), the report also covers proper books, director disqualification under section 164(2) and, unless an exemption applies, whether internal financial controls are adequate.
A private company is exempt from that opinion if it is a one person or small company (G.S.R. 583(E), 13 June 2017). It is also exempt if its latest audited turnover is below ₹50 crore and its borrowings from banks, financial institutions or bodies corporate stay below ₹25 crore all year (corrigendum S.O. 2218(E), 13 July 2017). The relief needs a clean record of financial statement and annual return filings.
The sections behind each part of the audit
| Item | What the law requires | Source |
|---|---|---|
| Who is audited | Every company, with no turnover floor | Section 139(1) |
| Who can be appointed | A chartered accountant, or a CA firm acting through partners who are chartered accountants | Section 141(1) and (2) |
| What the report says | Whether the statements give a true and fair view | Section 143(2) |
| CARO 2020 | Extra matters in the report unless the company is exempt (a small company, or a private company within the ₹1 crore capital and reserves, ₹1 crore borrowings and ₹10 crore revenue tests) | CARO 2020 para 1(2) |
| Audit trail | Auditor reports on the accounting software edit log, financial years from 1 April 2023 | Rule 11(g) |
| Filing | Form AOC-4 within 30 days of the AGM | Section 137(1), rule 12(1) |
Who can conduct a statutory audit of a private limited company?
Only a chartered accountant, or a firm whose majority of partners practising in India are chartered accountants, can be appointed under section 141(1); a limited liability partnership counts as a firm. No company can be the auditor, because section 141(3)(a) disqualifies every body corporate other than an LLP.
Inside a firm, only the partners who are chartered accountants may act and sign for it (section 141(2)). Section 141(3) also rules out an officer or employee of the company and a person whose relative is a director or key managerial personnel. It further excludes a person in full-time employment elsewhere, and anyone who provides the services barred by section 144.
In Mumbai, as anywhere in India, the board shortlists chartered accountants in practice or CA firms and obtains each candidate's written consent and eligibility certificate. Members then appoint one at the AGM, and that auditor holds office until the sixth AGM under section 139(1).
When does a statutory audit apply?
Every private limited company needs a statutory audit for every financial year, whatever its turnover, profit or level of activity. Section 139(1) applies to every company, and section 134(2) requires the auditor's report to be attached to every financial statement. Statutory audit applicability for private limited company accounts therefore never turns on size: even a company with little or no trading appoints an auditor.
Auditor rotation under section 139(2) applies only to listed companies and the classes in rule 5 of the Companies (Audit and Auditors) Rules, 2014. For a private company, that means paid-up capital of ₹50 crore or more, or ₹50 crore or more of public borrowings from banks, financial institutions or public deposits; one person and small companies are excluded. In those companies, an individual auditor serves at most one term of five consecutive years and a firm at most two.
CARO 2020 applicability: does it apply to your private limited company?
CARO 2020 adds to the auditor's report up to 21 matters listed in its paragraph 3, from fixed assets and inventory to statutory dues, and it applies to financial years beginning on or after 1 April 2021. CARO applicability turns first on size: a small company is outside it altogether.
Since 1 December 2025, a private company is small when its paid-up capital is ₹10 crore or less and its turnover ₹100 crore or less (section 2(85) read with G.S.R. 880(E)). Holding, subsidiary, section 8 and special Act companies never qualify. A private limited company above those limits escapes CARO only when it passes every test in paragraph 1(2)(v).
| Test (private company that is not a holding or subsidiary of a public company) | Exempt under paragraph 1(2)(v) if | Measured |
|---|---|---|
| Paid-up capital plus reserves and surplus | ₹1 crore or less | On the balance sheet date |
| Borrowings from any bank or financial institution | Never above ₹1 crore | At any point in the year |
| Total revenue, including discontinued operations | ₹10 crore or less | During the year |
One person companies, banking and insurance companies and section 8 companies are also outside the order, as the ICAI Guidance Note on CARO 2020 (Revised 2022 Edition) reproduces. The borrowing test counts borrowings from any bank or financial institution exceeding ₹1 crore "at any point of time during the financial year", so one day above the limit is enough.
What is the statutory audit due date?
No separate statutory audit due date for private limited company accounts exists in the Act. The audit must be complete before the AGM that adopts the accounts, and section 96(1) requires that AGM within six months of the year end, which is 30 September for a 31 March year end.
| Step | Time limit | Section or rule |
|---|---|---|
| Appoint the first auditor | Board within 30 days of registration; otherwise members at an EGM within 90 days | Section 139(6) |
| Notify the Registrar of an appointment | Within 15 days of the meeting, in Form ADT-1 | Section 139(1), rule 4(2) |
| Approve and sign the financial statements | Before they go to the auditor | Section 134(1) |
| Hold the AGM | Within six months of the year end (first AGM within nine months) | Section 96(1) |
| File the audited statements | Within 30 days of the AGM, in Form AOC-4 | Section 137(1), rule 12(1) |
| File the annual return | Within 60 days of the AGM | Section 92(4) |
Under section 96(1), the Registrar may extend any AGM other than the first by up to three months. Not more than fifteen months may pass between two AGMs. For FY 2025-26, an AGM on 30 September 2026 puts AOC-4 at 30 October 2026 and the annual return at 29 November 2026.
MCA General Circular No. 05/2026 waives additional fees on FY 2025-26 AOC-4 filed by 31 December 2026 and MGT-7 or MGT-7A by 31 January 2027; the AGM deadline does not move (annual compliance filings).
Statutory audit vs tax audit vs internal audit: what is the difference?
A statutory audit reports to shareholders under the Companies Act, 2013. A tax audit reports under section 44AB of the Income-tax Act, 1961 (section 63 of the Income-tax Act, 2025 from tax year 2026-27), and an internal audit reports to the board. A private limited company can need all three in one year. In statutory audit vs internal audit, the line is independence: section 144(b) bars the statutory auditor from also acting as internal auditor.
| Point | Statutory audit | Tax audit | Internal audit |
|---|---|---|---|
| Law | Companies Act, 2013, sections 139 to 147 | Section 44AB, Income-tax Act, 1961; section 63, Income-tax Act, 2025 from tax year 2026-27 | Section 138 for prescribed classes; otherwise a board decision |
| Trigger | Every company | Business turnover above ₹1 crore (₹10 crore where cash receipts and cash payments are each within 5%) | Size thresholds in rule 13, or choice |
| Who can do it | Chartered accountant or CA firm | Chartered accountant | Chartered accountant, cost accountant or other professional |
| Reports to | Members | Income Tax Department | Board or audit committee |
For the internal side, see building an internal audit strategy.
Statutory Audit Checklist
This statutory audit checklist for private limited company finance teams gives each row its section or rule and its owner.
Documents required for statutory audit
| Area | Ready before fieldwork | Basis | Owner |
|---|---|---|---|
| Books and minutes | Books of account and vouchers (earlier years kept for eight years), trial balance with ledger schedules, board and general meeting minutes | Sections 128(5), 143(1) | Finance head, company secretary |
| Financial statements | Draft statements and notes in the Schedule III format | Section 129(1) | Finance head |
| Fixed assets | Asset register and physical verification record | CARO 2020 para 3(i) | Finance head |
| Inventory | Stock records and count sheets; see the inventory audit readiness checklist | CARO 2020 para 3(ii) | Operations, finance head |
| Borrowings | Sanction letters and quarterly statements to banks (limits above ₹5 crore) | CARO 2020 para 3(ii)(b) | Finance head |
| Statutory dues | GST, TDS, PF and ESI returns and challans | CARO 2020 para 3(vii) | Finance head |
| Related parties | Related party list and approvals | CARO 2020 para 3(xiii) | Company secretary or director |
| Systems and controls | Audit trail settings and edit log export; internal financial controls documentation where section 143(3)(i) applies | Rule 3(1) proviso, rule 11(g); section 143(3)(i) | Finance head, IT |
Reconciliations and confirmations to close first
| Item | Match the books against, or obtain | Owner |
|---|---|---|
| Sales and output tax | GSTR-1 and GSTR-3B for the year | Finance head |
| Input tax credit | GSTR-2B, the auto-drafted ITC statement from suppliers' returns | Finance head |
| TDS and tax credits | Form 26AS (Form 168 from tax year 2026-27), the Annual Information Statement and TRACES | Finance head |
| Inter-company balances | Balances confirmed by each group company | Finance head |
| Banks, customers and suppliers | Bank reconciliations and balance confirmations | Finance head |
| Management representation letter | Written representations addressed to the auditor, under SA 580 | Board, finance head |
Common Mistakes in Statutory Audits
Four errors that hold up the signature:
- Appointing the bookkeeper as auditor. Section 144(a) bars the statutory auditor from accounting and book keeping services to the company.
- Skipping the ADT-1 notice. The Registrar must hear of every appointment made at a general meeting within 15 days.
- Switching off the edit log. The audit trail proviso to rule 3(1), as amended to apply from 1 April 2023, requires software "ensuring that the audit trail cannot be disabled". The auditor reports on it under rule 11(g).
- Sending unapproved statements. Section 134(1) requires board approval and signatures before the auditor reports.
What happens after the auditor signs the report?
After signing, the auditor's report is attached to the financial statements under section 134(2), and the members adopt them at the AGM.
A qualified report, which must give its reasons under section 143(4), is still filed with the Registrar.
How do companies get a statutory audit done?
A private limited company has no in-house option for the audit itself: section 141(3)(b) disqualifies its own officers and employees. It appoints an outside chartered accountant in practice or a CA firm, and keeps the preparation work in-house or with a separate adviser.
Mumbai-based HSAG Consulting lists statutory and tax audits among its assurance services; the audit report itself is signed by a chartered accountant in practice appointed as auditor, never by HSAG Consulting as a company. Director CA Bhairavi Shah focuses on assurance work covering statutory audits and internal financial controls.
Any company that outsources bookkeeping and monthly closing must appoint a different firm as its statutory auditor, while board and shareholder meeting compliances, including the AGM and the filings after it, can sit with a separate compliance adviser.
Need Help Preparing for Your Statutory Audit?
Share your year-end timetable and we will map it against the checklist above: speak to our assurance team.
