Audit and Assurance
Statutory and regulatory audits, tax audits, internal and management audits, controls testing, special audits and reviews, and certificates. Each type of work, and what it involves, is described on this page.
Last reviewed 8 October 2026
The audit and assurance work carried out by the firm is described on this page for information. An audit is accepted only after the firm has assessed its independence and the eligibility conditions that the law sets for the auditor.
An entity may need several kinds of assurance in the same year, each with its own users. Where they are not identified early, reports are prepared to different dates on different figures, and lenders, tax authorities and regulators may each receive numbers that do not agree. A statutory audit reports to the shareholders or partners on the financial statements, while a tax audit reports to the income tax department on matters relevant to the computation of income. Internal audit reports to management or the board on processes and controls. Certificates and agreed-upon procedures answer a narrower question for a bank, a regulator or a counterparty.
The sections below set out each type of work under its group, with the law or standard that applies to it. To discuss a particular requirement, contact the firm.
Statutory and regulatory audits
These audits are required by the law that governs the entity, or by a regulator or other authority. Each is performed under the Standards on Auditing and the other pronouncements of the Institute of Chartered Accountants of India, and under the law that requires it.
Statutory audit of companies
The financial statements of a company are audited under the Companies Act, 2013, and the auditor reports whether they give a true and fair view. Where the Companies (Auditor's Report) Order, 2020 applies, the report also covers the matters listed in that Order, among them fixed assets, inventory, loans, statutory dues and related-party transactions.
Audit of LLPs
The Limited Liability Partnership Act, 2008 requires the accounts of an LLP to be audited unless its turnover and contribution fall below the limits set by the rules.
Audit of partnership firms
The Partnership Act imposes no audit requirement. An audit of a firm arises instead from its deed, from a lender or from the Income-tax Act.
Audit of trusts, NGOs and societies
Charitable trusts and societies are audited under the Maharashtra Public Trusts Act, 1950, the Societies Registration Act, 1860 and the conditions of their income tax registration. Funds received under the Foreign Contribution (Regulation) Act, 2010 are reported on separately.
Audit of co-operative societies
Co-operative societies, including housing societies and credit societies, are audited under the Maharashtra Co-operative Societies Act, 1960 by an auditor on the panel kept by the Registrar. Multi-State societies are audited under the Multi-State Co-operative Societies Act, 2002.
Bank audits
Banks appoint auditors for statutory central audit, statutory branch audit and concurrent audit. Appointment follows the Reserve Bank of India's guidelines and the bank's own empanelment.
Audit of government bodies and PSUs
The Comptroller and Auditor General of India appoints the statutory auditors of government companies under section 139(5) of the Companies Act, 2013. Other public bodies appoint auditors under their own statutes.
RERA project account audit
Under section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016, a promoter's separate project account is audited each year. Withdrawals are certified against the stage of completion of the project, as MahaRERA requires.
Audit of SEBI-registered intermediaries
Stock brokers, depository participants and other intermediaries registered with the Securities and Exchange Board of India need internal and system audits and certificates on a periodicity set by SEBI, the exchanges and the depositories.
Tax audits
Tax audits report to the tax authorities on matters relevant to the computation of income or tax. The Income-tax Act, 2025 applies from tax year 2026-27. For the year that ended on 31 March 2026 and for earlier years, the Income-tax Act, 1961 and its forms apply.
Tax audit
Section 63 of the Income-tax Act, 2025 (section 44AB of the Income-tax Act, 1961) requires an audit of accounts where turnover or receipts exceed the limits in the law. Under the 1961 Act the report is given in Form 3CA or Form 3CB, with particulars in Form 3CD, on matters that include books of account, stock, depreciation, TDS compliance and payments to related parties.
GST audit and reconciliation
The annual return in GSTR-9 is reconciled with the audited financial statements, and the reconciliation statement in GSTR-9C is prepared where the turnover limit is crossed. Since 2021, GSTR-9C is self-certified by the taxpayer. Audits by the department under section 65 of the CGST Act, 2017 are also supported.
Transfer pricing audit
An entity with international transactions, or specified domestic transactions above the limit, obtains an accountant's report on them. Under the 1961 Act this is the report in Form 3CEB under section 92E.
Internal and management audits
These audits report to management, the board or the audit committee. Their scope is agreed with the entity, and no single law fixes it.
Internal audit
Processes and controls are reviewed during the year under a scope agreed with the board or audit committee. Section 138 of the Companies Act, 2013 obliges certain classes of company to appoint an internal auditor; other entities appoint one by choice.
Management audit
The way the entity is organised and managed is reviewed against its stated objectives. Reporting lines, delegation of authority and the information that reaches management are examined.
Operational audit
Operating processes such as purchase, stores, production and dispatch are examined for the controls in them and for the way resources are used.
Concurrent audit
Transactions are checked shortly after they take place, in most cases monthly, so that errors are found within the period.
Stock and inventory audit
Inventory is physically verified, by full count or by sample, and the results are compared with the books. The valuation of stock, slow-moving items and goods held by third parties are reviewed at the same time.
Fixed asset verification and tagging
Assets in the register are physically verified and given tags. Differences between the register and the assets found are reported for reconciliation.
Receivables and payables audit
Balances with customers and suppliers are confirmed and their ageing is reviewed. Old or disputed balances, and credit given beyond agreed limits, are reported.
Procurement, vendor and supply chain audit
The selection of vendors, purchase approvals, rate contracts and receipt of goods are tested. Payments are matched with orders and receipts.
Revenue, concession and franchise audit
Revenue reported by a franchisee, concessionaire or licensee is checked against the agreement and the underlying records, so that the royalty or share due can be verified.
Controls and systems
IFC and ICFR testing
Under section 143(3)(i) of the Companies Act, 2013, the auditor reports on the adequacy and operating effectiveness of internal financial controls over financial reporting. Controls are documented and tested for this report, or for management's own assessment.
SOP and internal controls design
Standard operating procedures are written for key processes, and the controls in each are identified. A statutory auditor does not provide this service to the company it audits.
IT systems and ERP audit
Controls over accounting and ERP systems are reviewed, including access rights, changes to master data, interfaces and backups.
Risk-based audit
Risks to the entity are assessed first, and audit work is then directed to the areas where they are highest.
Specialised audits and reviews
Forensic audit
Records are examined to establish whether a fraud, diversion of funds or other irregularity has taken place. The work follows the Forensic Accounting and Investigation Standards issued by ICAI.
Fraud and whistle-blower investigation
A complaint or suspected fraud is investigated under terms agreed with the board or audit committee. Findings are reported with the evidence that supports them.
Financial and tax due diligence
Before an acquisition, investment or loan, the financial statements and tax position of the target are reviewed. Exposures and adjustments that may affect the transaction are reported.
Grant, CSR and utilisation-certificate audit
The use of grants and CSR funds is checked against the terms on which they were given. Utilisation certificates are issued where the funding body asks for them, and the impact assessment rules for CSR are considered where they apply.
Cost audit support
Cost records maintained under section 148 of the Companies Act, 2013 are reviewed, and the information the cost auditor needs is prepared. The cost audit itself is conducted by a Cost Accountant.
Energy audit (cost side)
Energy costs are analysed by plant, process and product, and the consumption recorded in the books is compared with meter and supplier data. The technical energy audit is conducted by an accredited energy auditor.
Compliance audit
Compliance with specific laws, licences or contractual conditions is tested, and the gaps found are reported.
Agreed-upon procedures
Procedures agreed with the entity and the user of the report are performed under SRS 4400. The factual findings are reported, and no opinion is expressed.
Limited review
Interim financial information is reviewed under SRE 2410. The report gives a moderate level of assurance; listed companies obtain it each quarter under SEBI's listing regulations.
Certification
Certificates are issued under the Guidance Note on Reports or Certificates for Special Purposes issued by ICAI, on the basis of records examined.
Net worth certificate
Net worth is certified from the audited or provisional financial statements, for banks, tenders, visa applications and regulators.
Turnover certificate
Turnover for a period is certified from the books of account and the GST returns, mainly for tenders and lenders.
Form 15CB
Before a payment is made to a non-resident, the accountant certifies the rate of tax withheld under the Act and any tax treaty that applies.
Stock and book-debt statements for banks
The stock and receivables statements given to a bank for drawing power are certified against the books and the physical records.
FEMA and RBI certificates
Certificates required under the Foreign Exchange Management Act, 1999 and the Reserve Bank of India's directions are issued, such as those for foreign direct investment, overseas investment and the annual return on foreign liabilities and assets.
For manufacturers
In a manufacturing entity, the financial statements depend in several places on physical operations, and audit work is concentrated there.
Inventory
The auditor attends the physical count and tests the valuation of raw material, work in progress and finished goods. Book stock is compared with the stock statements given to banks. CARO 2020 requires the auditor to report whether the quarterly statements filed with banks agree with the books where working capital limits above ₹5 crore are sanctioned on the security of current assets.
Goods with job workers and at other units
Material held by job workers is confirmed. Transfers between units are tested so that stock is neither counted twice nor missed.
Fixed assets and capital work in progress
Additions, capitalisation dates and depreciation are verified, together with the ageing of capital work in progress.
Cost records and product costing
Where cost records are required under section 148, the audit considers whether they are maintained. The cost of inventory is traced to the cost sheets that support it.
What an audit requires from the entity
- Books of account, trial balance and draft financial statements
- Bank statements, loan sanction letters and stock statements given to banks
- Inventory records, count sheets and valuation working
- Fixed asset register and documents for additions and disposals
- Records of goods sent to and received from job workers
- List of related parties and agreements with them
- Statutory registers and minutes of board and general meetings
- Tax, GST, TDS and payroll returns filed for the year
- For a certificate, the records on which each figure is based
- Written representations from management at the end of the audit
Independence
A statutory auditor must be independent of the company it audits. Under section 144 of the Companies Act, 2013, the auditor may not provide certain services to that company or to its holding or subsidiary company. These include accounting and bookkeeping, internal audit, design and implementation of financial information systems, and management services. Section 141 sets out who may not be appointed as auditor. Before any audit is accepted, the firm assesses these requirements. Where it is the statutory auditor of a company, it does not provide the barred services to that company, and several of the services on this page are therefore offered only to entities the firm does not audit.
How an audit is carried out
Every audit, whatever its type, passes through the same stages. Its terms are first agreed in an engagement letter. That letter sets out the scope and the form of the report, and it records what management is responsible for and what the auditor is responsible for. Planning comes next. The auditor learns how the business, its units and its systems work, assesses where material misstatement is most likely, and sets materiality.
Fieldwork follows. Internal controls are tested where the auditor intends to rely on them. Balances and transactions are tested substantively, for example through confirmations from banks, customers, suppliers and job workers and through attendance at the inventory count. Matters found during the work are discussed with management as they arise.
Management gives written representations at the end. The auditor then evaluates the evidence obtained and issues the report. Some findings do not change the opinion although they need management's attention, and these are communicated separately in writing. In a company, the report on the financial statements is addressed to the members and considered at the annual general meeting. Reviews, agreed-upon procedures and certificates follow a shorter form of the same sequence.
Common questions
How is a statutory auditor appointed?
In most companies the shareholders appoint the auditor at an annual general meeting. The appointment runs until the conclusion of the sixth annual general meeting after it, and the company files a notice of it with the Registrar of Companies. Listed companies and certain other classes of company must also rotate their auditors. The board appoints the first auditor. An incoming auditor must give written consent, together with a certificate that the appointment meets the conditions of the Act.
Is a tax audit the same as a statutory audit?
No. The law governing the entity, such as the Companies Act, requires the statutory audit, which reports on the financial statements. A tax audit is required by the Income-tax Act where turnover or receipts exceed the specified limits, and its report covers matters relevant to the computation of income. Some companies need both. If the accounts are already audited under another law, the tax audit report is given on those audited accounts.
Can the same firm be a company's statutory auditor and its internal auditor?
No. Section 144 of the Companies Act, 2013 bars the statutory auditor from providing internal audit services to the company, and to its holding or subsidiary company.
When should the inventory count be scheduled?
The count is usually held on the balance sheet date or close to it. The auditor plans to attend. Alternatively, a count on another date may be observed and the movements in between tested. Before the year end, the date should be agreed with the auditor, along with the count instructions issued to stores and production.
Does a partnership firm or LLP need an audit?
Under the Limited Liability Partnership Act, 2008, an LLP must have its accounts audited unless its turnover and contribution fall within the limits below which the law exempts it. The Partnership Act imposes no audit requirement on a partnership firm. Such a firm may still need a tax audit under the Income-tax Act, and its partnership deed or its lender may require an audit of its accounts.
What is the difference between an audit, a review and agreed-upon procedures?
An audit gives reasonable assurance and an opinion on whether the statements are free of material misstatement. A review, such as a limited review of quarterly results, gives a moderate level of assurance and relies mainly on enquiry and analysis. Under agreed-upon procedures the accountant performs only the steps agreed with the user and reports what was found, without any assurance.
Is a forensic audit the same as a statutory audit?
No. A statutory audit reports on whether the financial statements give a true and fair view. A forensic audit is directed at specific transactions or allegations, and its purpose is to establish facts that may later be used in proceedings before a court, tribunal or regulator.
What does a stock statement certificate for a bank cover?
The bank's sanction letter usually sets out what is to be certified. The certificate is issued on the basis of the stock and debtor records examined, with the date of verification and the method used stated in it.
See also: Taxation, Accounting and Compliance
Contact the firm
About Audit and Assurance, or any related matter. A phone number or an email address is enough for us to reply.
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