Overview
Audit and attestation are functions that Indian law reserves for Chartered Accountants in practice. Statutory audits of companies under the Companies Act, 2013 and tax audits under the income-tax law can be carried out only by Chartered Accountants.
Audit engagements are accepted only after the eligibility and independence checks required by the Companies Act, 2013 and the ICAI Code of Ethics. These rules also restrict certain other services that an auditor may provide to the same client.
When it is typically needed
- A company requires its annual statutory audit
- A business crosses the threshold for a tax audit
- A bank requires a stock audit or concurrent audit
- Management wants an independent internal audit or control review
- A certificate of net worth, turnover or fund utilisation is required
Scope of work
Statutory and tax audits
- Statutory audit
- Tax audit
- Regulatory audit support
Internal and concurrent audits
- Internal audit
- Concurrent audit
- Process audit
- Control review
Stock and management audits
- Stock audit
- Management audit
- Operational review
- Special-purpose audit
Certification and attestation
- Net worth certificates
- Turnover certificates
- Utilisation certificates
- Other certifications by a Chartered Accountant
Compliance and assurance
- Compliance audit
- Internal control assessment
- Financial reporting assurance
Terms explained
For readers less familiar with Indian tax and regulatory terminology.
- Statutory audit
- An audit required by law, such as the annual audit of a company's financial statements under the Companies Act, 2013.
- Tax audit
- An audit of accounts required under the income-tax law for businesses and professions above prescribed thresholds.
- Concurrent audit
- An audit carried out alongside transactions as they occur, commonly at bank branches.
- Stock audit
- A review, usually required by a lender, of the inventory and receivables against which credit has been extended.
- UDIN
- Unique Document Identification Number — generated through ICAI for certificates and reports signed by Chartered Accountants, allowing them to be verified.
Scope and limitations
- Acceptance of any audit or attestation engagement is subject to eligibility, independence and professional requirements, including communication with any previous auditor where required.