No matter what the status of a company is, each private limited firm must get its accounts audited periodically and the process must be done annually before the end of the current financial year by chartered accountants also known as CA in the language of the common masses.
The auditor (chartered accountant) must evaluate the documents of the company and generate the audit report which the company must provide for the registration of the firm. The internal private limited audits are conducted with the management’s recommendations.
It is done to verify the economic conditions of the company and also to check the efficiency of firms. This internal audit boosts the management including finances, outputs and also helps to make alterations in the blueprints of upcoming projects and the project on which the company is currently working.
The Checklist Of Internal Audit Of Companies Is As follows:-
| S.no. | Form no. | Compliance |
| 1. | FORM ADT-1 | Selection of Auditor. |
| 1. | FORM ADT-2 | Eviction of Auditor. |
| 2. | FORM ADT-3 | Registration of Auditor. |
| 3. | FORM AOC-4 | Annual filing of financial statements |
| 4. | FORM MGT-7 | Filing of annual return with shareholder and debentures list. |
| 5. | FORM MGT-14 | Filing of resolution and agreement to ROC. |
| 6. | FORM CAR-1 | Maintenance cost and record. |
| 7. | FORM CAR-2 | Assignment of cost auditor. |
| 8. | FORM CAR-3 | Submission of the cost audit records to the board. |
| 9. | FORM CAR-4 | Filing cost audit report, wherever applicable. |
| 10. | FORM ITR-6 | Filing income tax return of the company. |
| 11. | GSTR-3B With GSTR-1. AND GSTR. 2A | Cross verification. |
| 12. | FORM GSTR-9C | Filing GST Audit Form. |
The Following Steps Are Performed To Get An Audit Done:-
● Scheduling The Audit
Before planning an audit, a company needs to make sure that every member of the team has a clear heads-up to the company’s ambitions. If you fail to do so, the results you would get while performing an audit randomly will not give you sufficient information. This can make the whole audit procedure almost useless.
● Planning Of Audit
To start first, make sure that everything is scheduled accordingly. This comprises notifying the auditors you are employing to deduce the most beneficial time to take the review.
● Reports
After the successful completion of the audit, the auditors will confront you, to talk about the results they came up with. The results of this discussion will be to show the fallacies that were found during the audit and what schemes can be used to enhance those weak areas.
Now you will need to reveal the outcomes of the audit and problems that were detected. Relate your standards from before to after the conduction of the Audit to discover if there are any significant differences in achievement based on the recommended changes.
Company Audit As Per Income Tax Act 1961
The following are the type of organizations on which the Income-tax act of 1961 is applied:-
- Organizations ( professional) with a turnover of more than Rs. 5million
- Businesses with more than Rs. 2 crores per annum also encircled in the 44D section of the Presumptive taxation scheme
- Personal business with a turnover of Rs. 1 Crores or more than that also comes under this act.
Criteria To Conduct A Private Limited Audit:-
- Within 30 working days of incorporation of the company, the auditor must be appointed.
- The private limited audit must be performed by the appointed auditor.
- To assign the auditor a resolution has to be approved in a board meeting.
- For a maximum period of 5 years, an auditor in the company is assigned as AGM first.
- For the appointment of the next AGM, the auditor must hold the position of one AGM.
- Minimum qualifications required for an auditor is that he/she must have qualified chartered accounts that are within the meaning of Chartered Accountant Act, 1949.
- If somehow the board fails to assign the auditor then the members of the company should designate the auditor in an extraordinary general meeting but within 90 days.
Who Can Sign The Audit Report of a Private Limited Company?
- Minimum two directors of the company are required to sign the financial statement of the corporation.
- And among the above two directors, one must be the managing director, and in the absence of the managing director, another director can sign the financial statement.
- Only a duly certified copy of the audit is acceptable.
- If needed the auditor must report the deception against the company( fraud done by an employee or officer). This can be done only if he ( the auditor) believes that this crime was executed when he/ she was working.
Is There Any Fine For Non-Obedience To A Private Limited Audit?
What Is The Fine For Form AOC-4?
- 100/day is penalized if delayed in filing the FORM AOC-4.
- Some companies will be charged one thousand rupees per day by default and this goes up to one lakh rupees per day.
What Is The Fine For FORM MGT-7?
- Companies are penalised hundred rupees Per day.
- Fifty thousand rupees are charged from every single employee of the penalised company which is being penalized and also an amount of one hundred rupees are charged as late fees till the default proceeds.
The Fine Of Not Filing Of ITR-6
- According to section 273B fine of approximately 1,50,000 or .5 % of sales( total sales) of the financial year (current financial year).
- A fine of 10,000rs will be charged as a late filing fee of non-filing of the income tax return.
Total No. Of Documents Required In The Private Limited Audit Report Are:-
Documents which will be attached in the audit report are
- Notice
- Director’s report
- FORM MGT-9
- Below the FORM MGT-9, Auditor’s report is attached which has the necessary information gathered after the Audit.
- FORM 3CD
- Balance sheet
- Profit and loss account, balance sheet, and notes to which the account is linked.
- A tax audit is also attached if a tax audit was conducted.
- At the end of the Audit report Notes of financial statements will also be attached.
What Does A Complete Audit Report Look Like?
The whole contents of the Audit report are as follows:-
- Title of the Audit.
- Ground of opinion
- Auditor’s viewpoint
- Information supplementary to economic statements and reports
- Auditor’s signature
- Position of signature and position of date of the Audit report.
- Responsibilities of auditors regarding financial statements.
- Other reporting responsibilities.
- Important information related to Audit.
Audit Program And Planning Review
Audit programs are primarily for those companies that have never been audited before and should have multiple degrees of review before being completed. The following individuals should approve the preliminary internal audit planning methods before the beginning of fieldwork:
- Internal Audit Manager or Senior Manager
- Chief Audit Executive
- Subject Matter Expert
- Management’s Main Point of Contact for the Audit (Audit Customer)
Conclusion
Auditors play an important role in the development of any business/company as they look after all the accounts of the firm
Internal auditors create audit strategies from scratch and are more eligible to perform a company’s audits. Internal auditors will be able to conduct audits over specialised areas which are routinely audited.
When internal auditors spend their maximum time and resources on their organization’s main objectives, it directly increases internal auditor job satisfaction. They will be taking on more fascinating projects. Perhaps more significantly, suggestions by internal audits will have a more stunning effect to ensure a positive change in an organization.
