Understanding Audit in India
Standards, Types & Obligations
Types of Audit in India
Every audit type serves a distinct purpose, understanding which applies to your business is the first step to compliance.
Statutory Audit
Mandatory under Companies Act 2013 for all registered companies. An independent CA examines financial statements and expresses an opinion on whether they present a true and fair view. Governed by Standards on Auditing issued by ICAI.
Tax Audit (Section 44AB)
Mandatory for businesses with turnover exceeding ₹1 crore (₹10 crore if 95%+ digital) and professionals with gross receipts above ₹50 lakh. CA certifies Form 3CA/3CB and the detailed Form 3CD. Due by 30th September.
Internal Audit
Mandatory under Section 138 for listed companies, unlisted public companies above specified thresholds, and private companies with turnover above ₹200 crore or outstanding loans above ₹100 crore. Risk-based; focuses on operational controls and governance.
Compliance Audit
A multi-law review covering Companies Act, GST, Income Tax, Labour Laws, FEMA, and RERA obligations. Identifies compliance gaps before regulators do. Often paired with secretarial audit (Form MR-3) for listed and specified unlisted companies.
Stock Audit
Physical verification of inventories for banks, NBFCs, or management purposes. Certifies stock quantities, valuation, and quality. Mandatory for entities with working capital credit limits above bank-prescribed thresholds. Conducted periodically by empanelled CAs.
Bank / Concurrent Audit
Audit of banking operations, financial statements, and regulatory compliance. Concurrent audit runs alongside daily bank operations to ensure real-time transaction accuracy, limit compliance, and KYC adherence as per RBI guidelines.
Government / PSU Audit
Audit of government entities, public sector undertakings, NGOs receiving grants, and cooperative societies. Follows CAG-prescribed standards. Focuses on fund utilisation, tendering compliance, and efficiency of government expenditure.
Cost Audit
Mandatory for companies in specified industries (cement, pharma, telecom, etc.) with turnover above prescribed limits. CA (Cost) or CMA certifies cost records in Form CRA-3. Ensures cost accounting records are maintained correctly.
Information Systems Audit
Review of IT systems, cybersecurity controls, data integrity, and access management. Increasingly relevant as financial reporting becomes system-dependent. Important for banks, NBFCs, large corporates, and digital businesses.
The Standard Audit Engagement Process
A six-stage structured process followed in every well-conducted audit engagement.
Companies Auditor’s Report Order 2020
CARO 2020 replaced CARO 2016 and significantly expanded auditor reporting obligations. It applies to all companies except certain small private companies, banking companies, insurance companies, and Section 8 companies below threshold.
CARO requires auditors to report on 21 specific clauses covering fixed assets, inventories, loans, investments, statutory dues, borrowings, related-party transactions, fraud, and CSR, among others.
“CARO 2020 transformed the auditor’s role from a financial statement verifier to a governance watchdog, requiring detailed reporting on fraud, related-party transactions, whistle-blowers, and CSR compliance.”
V J Desai & Co. LLP, Audit AdvisoryAudit Thresholds & Deadlines FY 2025-26
Quick reference for audit applicability and filing deadlines, ensure your entity meets all obligations on time.
| Audit Type | Applicability Threshold | Due Date | Report / Form | Authority |
|---|---|---|---|---|
| Statutory Audit | All registered companies (no threshold) | Before AGM; within 6 months of FY end | Auditor’s Report | MCA / ROC |
| Tax Audit, Business | Turnover > ₹1 crore (₹10 crore if 95% digital) | 30th September | Form 3CA + 3CD | Income Tax Dept. |
| Tax Audit, Profession | Gross receipts > ₹50 lakh | 30th September | Form 3CB + 3CD | Income Tax Dept. |
| Internal Audit | Listed cos.; unlisted public cos. turnover > ₹200 cr; private cos. turnover > ₹200 cr or loans > ₹100 cr | Board-defined (quarterly recommended) | Internal Audit Report | Board / Audit Committee |
| Secretarial Audit | Listed + unlisted public cos. with paid-up capital ≥ ₹50 crore or turnover ≥ ₹250 crore | With Board Report (AGM) | Form MR-3 | MCA / ROC |
| Cost Audit | Specified regulated industries; turnover > ₹35 crore (products) | 30th September | Form CRA-3 | MCA / Cost Audit Branch |
| GST Audit (GSTR-9C) | Aggregate turnover > ₹5 crore | 31st December | GSTR-9C | GST Department |
| Bank Audit | All scheduled commercial and cooperative banks | Within 3 months of FY end | LFAR + Main Report | RBI / Registrar Co-op |
Key ICAI Standards on Auditing
Standards on Auditing (SAs) issued by ICAI govern how audits must be planned, executed, and reported in India.
SA 200, Overall Objectives
Defines the auditor’s overall objectives: obtaining reasonable assurance that financial statements are free from material misstatement. Establishes the foundation of professional scepticism and audit judgment.
SA 315, Risk Assessment
Requires the auditor to understand the entity, its environment, and internal controls to identify and assess risks of material misstatement at both the financial statement and assertion levels.
SA 240, Fraud Responsibilities
Addresses the auditor’s responsibilities relating to fraud. Requires professional scepticism, specific fraud risk inquiries, and defined procedures when fraud risk factors are identified.
SA 570, Going Concern
Requires the auditor to evaluate management’s going concern assessment. If material uncertainty exists, the auditor must report it, even if the financials are otherwise fairly presented.
SA 540, Accounting Estimates
Governs auditing of accounting estimates and fair value disclosures. Requires evaluation of management’s estimation process, inputs used, and reasonableness of assumptions applied.
SA 700, Forming an Opinion
Governs the form and content of the auditor’s report on complete general-purpose financial statements. Specifies the required elements of an unmodified (clean) audit opinion.
SA 705, Modified Opinions
Covers circumstances where the auditor issues a qualified opinion, adverse opinion, or disclaimer of opinion, including specific language and placement of modifications in the audit report.
SA 600, Using Work of Others
Governs group audit engagements involving component auditors. The group auditor retains full responsibility for the group audit opinion and must oversee component auditor work appropriately.
SA 505, External Confirmations
Governs the use of external confirmation procedures, including bank confirmations, debtor confirmations, and legal representations. Covers design, execution, and evaluation of responses.
Need professional audit support?
V J Desai & Co. LLP conducts statutory, tax, internal, compliance, bank, and stock audits across all sectors. Our CA-led team brings structured methodology, rigorous documentation, and practical management insights to every engagement.
We provide:
- Statutory audit under Companies Act, LLP Act, and Trust Act
- Tax audit certification (Form 3CA/3CB/3CD)
- Internal audit, risk-based, process-driven
- Compliance audit across GST, labour, FEMA, RERA
- Stock audit for banks and management
- CARO 2020 reporting and IFC assessment
Book an Audit Consultation
Tell us about your entity and audit requirements. Our team will assess your obligations and propose the right engagement model.