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Audit and Assurance

Our audit and assurances service offerings are based on a complete understanding of the clients business specifics, industry peculiarities and the applicable laws. The audit approach is based on the compliance issues, the nature and requirement for audit, the clients requirement and key risk issues involved. Our audit and assurance solutions range from statutory audits, internal audits, tax audits, transfer pricing audits, management audits, concurrent audits etc.

We conduct statutory and regulatory compliance audits for filing of annual or periodic financial results. Statutory audits are aimed at achieving compliance with regulations, assessing the strength of controls, confirmation of accounting treatments of recorded transactions, independent review of reported in for nation and preparation of accountants' report. 

A. Statutory Audit for Corporate Assessees:

Corporate assesses include companies registered under the Companies Act, 2013, and its predecessors. The statutory audit for corporate assesses is primarily governed by the Companies Act, 2013. Here are the key points related to statutory audit for corporate assesses:

i.  Applicability:
Every company, irrespective of its size or nature of business, is required to conduct a statutory audit.

ii.  Auditor Appointment:
Companies appoint a Chartered Accountant (CA) or a firm of CAs as their statutory auditor. The appointment is done by the company's Board of Directors and confirmed by the shareholders in the Annual General Meeting (AGM).

iii. Audit Frequency:
A company must conduct a statutory audit every financial year. The auditor examines the company's financial records, transactions, and prepares an audited financial statement.

iv. Filing of Audit Report:
After completing the audit, the statutory auditor issues an audit report, which is submitted along with the company's annual financial statements to the Registrar of Companies (RoC).

v. Compliance Verification:

The auditor also verifies the company's compliance with various provisions of the Companies Act and other applicable laws. 

B. Statutory Audit for Non-Corporate Assessees:
Non-corporate assesses include entities like partnerships, proprietorships, trusts, societies, etc. The statutory audit for non-corporate assesses is governed by different statutes, depending on the type of entity:

i. Partnership Firms:

Partnership firms are required to conduct a statutory audit if their turnover exceeds the prescribed limit, as specified under the Income Tax Act, 1961. If the turnover exceeds the specified limit, a CA is appointed to conduct the audit, and the audit report is submitted along with the tax return.

ii. Proprietorships:
Proprietorship businesses are not required to undergo a statutory audit under the Income Tax Act. However, they may require an audit under other laws, such as the Goods and Services Tax (GST) Act if their turnover exceeds the GST audit threshold.

iii. Trusts and Societies:
Non-corporate entities like trusts and societies may be required to conduct a statutory audit based on the laws under which they are registered. For example, charitable trusts may need to get their accounts audited under the relevant Trust Act.

We annually serve our clients in area of tax audit under various provisions of the tax laws. Our clients are large, medium corporations and small businesses, partnership firms, non-profit organizations and high net worth individuals. The firm has dedicated audit teams which specialize in conducting the audits effectively and diligently.

Applicability of Tax Audit:

Tax audit is mandatory under Section 44AB of the Income Tax Act for the following categories of taxpayers for the financial year:

i. Business Entities:
If a person is carrying on a business and their total sales, turnover, or gross receipts from the business exceed INR 1 crore in the previous financial year (for FY 2022-23 and onwards, the threshold limit is INR 10 crores if the taxpayer's cash receipts and cash payments are less than 5% of the total receipts and payments).

ii.  Professional:
If a person is engaged in a profession (e.g., doctors, lawyers, architects, etc.) and their gross receipts from the profession exceed INR 75 lakhs in the previous financial year.

iii. Presumptive Taxation:

For taxpayers who have opted for the presumptive taxation scheme under Section 44AD, Section 44ADA, or Section 44AE, tax audit is mandatory if they claim their taxable income to be lower than the deemed profits and gains computed under these sections.

Amidst the intricate workings of businesses in India, where internal processes and financial integrity are pivotal, our firm stands as a dependable provider of Internal Audit services. With a profound comprehension of the dynamic regulatory landscape, we aid organizations in conducting comprehensive internal audits. From meticulous assessment of financial records to the evaluation of operational efficiencies, our proficient team ensures that all facets of our clients' businesses are examined for accuracy and adherence to established protocols. By diligently identifying areas for improvement and offering strategic recommendations, we empower businesses to enhance their operations, risk management, and overall governance. Our commitment to maintaining a vigilant eye on internal processes allows our clients to confidently steer their enterprises towards sustainable growth while upholding the highest standards of compliance and transparency.

Internal audit is an independent, objective, and systematic evaluation of an organization's operations, controls, processes, and risk management. In India, both corporate and non-corporate entities may conduct internal audits to enhance their governance, risk management, and operational efficiency. Let's understand the applicability and process of internal audit for corporate and non-corporate entities:

A. Internal Audit in Corporate Entities

i. Applicability:

In corporate entities such as companies registered under the Companies Act, 2013, internal audit is mandatory for certain categories of companies. As per Section 138 of the Companies Act, the following companies are required to conduct internal audits:

a. Companies with a Paid-up Share Capital of Rs. 50 crores or more in the preceding financial year.

b. Companies with an annual turnover of Rs. 200 crores or more in the preceding financial year.

c. Companies with outstanding loans or borrowings exceeding Rs. 100 crores or more at any point during the preceding financial year.

ii.  Process:

The internal audit process in corporate entities involves the following steps:

a. Planning:
The internal audit plan is prepared, taking into consideration the objectives, scope, and risk assessment of the company's operations.

b. Conducting Audits: 
The internal audit team examines various aspects of the organization, including financial controls, operational processes, compliance with laws and regulations, and risk management.

c. Identifying Weaknesses: 
The audit team identifies areas of improvement, internal control weaknesses, and areas of non-compliance. 

d. Reporting: 
The internal audit findings are documented in the form of audit reports, which are presented to the management and the audit committee of the company.

e. Recommendations: 
The audit reports include recommendations for improvement and remedial actions to address the identified weaknesses.

B.  Internal Audit in Non-Corporate Entities:

i. Applicability:

For non-corporate entities such as partnerships, proprietorships, trusts, societies, etc., there is no specific legal mandate for conducting internal audits under the Companies Act. However, certain non-corporate entities may choose to conduct internal audits voluntarily to improve their internal controls and operational efficiency.

ii. Process:

The internal audit process in non-corporate entities may vary based on their size, nature of business, and specific requirements. In general, the process involves the following steps:

a. Planning: 
The entity defines the scope and objectives of the internal audit and identifies the areas to be audited

b. Conducting Audits: 
Internal auditors review the entity's operations, financial records, and processes to assess compliance and identify areas for improvement.

c. Reporting: 
The internal audit findings are documented in audit reports, which are shared with the management for necessary actions.

d. Implementation:

 Based on the audit recommendations, the management takes corrective actions to address the identified issues and improve internal controls.

It's important to note that while internal audit is not legally mandated for all non-corporate entities, it can be a valuable tool to enhance transparency, efficiency, and governance in their operations.

In both corporate and non-corporate entities, internal audits are conducted by either in-house internal audit departments or external audit firms hired for this purpose. The audit reports help organizations identify weaknesses and improve their overall performance and compliance.

In the realm of intricate business transactions and investments in India, our firm stands as a trusted provider of Due Diligence services. With a comprehensive understanding of the multifaceted due diligence landscape, we assist individuals and businesses in conducting thorough assessments before entering into significant agreements or transactions. From meticulous examination of financial records and legal documentation to the evaluation of operational frameworks and potential risks, our proficient team ensures that our clients have a clear and accurate picture of all relevant aspects. By identifying potential pitfalls and opportunities, we empower our clients to make informed decisions that align with their strategic objectives. Our commitment to delivering reliable due diligence insights enables our clients to navigate complex business landscapes with confidence, ensuring that their investments and ventures are built on a foundation of sound information and meticulous analysis.

The purpose of due diligence is to provide a comprehensive and objective evaluation of the entity's financial health, risk factors, and compliance with applicable laws and regulations. CAs play a crucial role in conducting due diligence in various scenarios, such as mergers and acquisitions, investments, loan approvals, and other business transactions.

The process of due diligence by CAs in India typically involves the following steps:

i. Gathering Information:

The first step is to collect relevant information and documentation related to the entity or transaction being assessed. This includes financial statements, tax returns, legal agreements, contracts, licenses, permits, and other relevant records.

ii.  Financial Analysis:

CAs analyze the financial statements and financial records to assess the company's financial position, profitability, liquidity, and overall financial performance. They identify any financial irregularities, discrepancies, or red flags.

 iii. Compliance Check:

CAs verify the company's compliance with various laws and regulations, such as tax laws, company laws, environmental laws, labor laws, and any other industry-specific regulations.

 iv. Risk Assessment:

CAs evaluate the potential risks associated with the entity or transaction, including financial risks, legal risks, operational risks, and reputational risks.

v.  Operational Assessment:

The operational aspects of the business are also evaluated, focusing on its efficiency, processes, internal controls, and management practices.

 vi. Legal Due Diligence:

CAs work in collaboration with legal experts to conduct legal due diligence, which involves reviewing contracts, agreements, litigations, and other legal documents to identify any legal issues or liabilities.

vii. Reporting:

After completing the due diligence process, CAs prepare a detailed report highlighting their findings, observations, and recommendations. The report is presented to the client or the relevant stakeholders.

Due diligence by CAs is vital in providing a comprehensive understanding of the potential risks and benefits associated with a business or investment opportunity. It helps clients make informed decisions and ensures transparency and credibility in various financial and business transactions.

It's important to note that due diligence procedures may vary based on the specific nature and complexity of the transaction or engagement. Additionally, due diligence reports are subject to the   confidentiality agreements and terms agreed upon with the clients or stakeholders involved.

Amidst the dynamic realm of business operations in India, particularly in the context of inventory management, our firm takes pride in delivering specialized Stock Audit services. With a keen understanding of supply chain intricacies and financial intricacies, we aid organizations in conducting meticulous stock audits. From precise evaluation of stock levels to thorough assessment of inventory controls and valuation methods, our adept team ensures that our clients' stock-related processes are in line with industry standards and regulatory requirements. By identifying discrepancies and suggesting improvements, we empower businesses to streamline their inventory management, reduce potential risks, and optimize working capital utilization. Our commitment to ensuring the accuracy and reliability of stock records enables our clients to confidently manage their inventory while focusing on their core business objectives.

Sock or inventory audit means physical verification of stock of a company or institution. There are many stock audits, depending on the purpose, and every stock audit requires a different approach. Every business organization at least needs to conduct a stock audit once a year to update and ensure that the physical stock count and the computed stock in the books match. A stock audit helps in analyzing the correct discrepancies between the actual physical inventory and stock register maintained by the management.

A. The objectives of a stock audit include:

I. Physical Verification:

The primary objective of a stock audit is to physically count and verify the inventory items present in the company's warehouses, stores, or premises.

II. Accuracy of Records:

The auditor ensures that the inventory records maintained by the company accurately reflect the physical count of inventory items.

III. Valuation:

The auditor verifies the valuation of the stock, ensuring that it is done as per the applicable accounting standards and methodologies.

IV. Identification of Discrepancies:

Any discrepancies between the physical count and the recorded inventory are identified and investigated to determine the reasons behind the differences.

 V. Compliance:

The stock auditor checks whether the company complies with applicable accounting standards, tax laws, and other regulatory requirements related to stock valuation and reporting.

B. Process of Stock Audit by CA in India:

i. Planning:

The auditor plans the stock audit, which includes understanding the client's business, assessing risks, and designing the audit procedures.

 ii. Physical Verification:

The auditor physically counts the inventory items present in the company's premises. This may involve visiting multiple locations, warehouses, or stores, depending on the company's operations.

iii. Documentation:

The auditor documents the findings during the physical verification process and compares them with the inventory records maintained by the company.

iv. Valuation and Verification:

The auditor examines the inventory valuation methods used by the company and verifies the accuracy of the valuation.

 v. Reconciliation:

The auditor reconciles the physical count with the recorded inventory, identifying any discrepancies and investigating their causes.

vi. Reporting:

After completing the stock audit, the CA prepares a stock audit report. The report includes observations, findings, discrepancies, and recommendations for improvement, if any.

Stock audits are often conducted periodically, annually, or as required by banks, financial institutions, or other stakeholders for loan approvals, credit facilities, or financial assessments.

The stock audit report provides valuable insights to business owners, management, lenders, and other stakeholders, helping them make informed decisions and ensuring the accuracy and reliability of the company's financial statements.

Within the realm of regulatory compliance and nonprofit organizations operating in India, our firm takes pride in providing specialized FCRA (Foreign Contribution Regulation Act) Audit services. With a deep understanding of the intricate FCRA provisions and their implications, we assist NGOs and other eligible entities in conducting comprehensive FCRA audits. From meticulous examination of financial transactions to ensuring compliance with foreign contribution utilization, our adept team ensures that our clients' activities align with the stringent requirements of the FCRA framework. By meticulously reviewing records and processes, we empower organizations to maintain transparency, adhere to legal obligations, and ensure the ethical utilization of foreign contributions. Our commitment to delivering accurate FCRA audit results enables our clients to uphold their reputation, foster trust, and continue their vital contributions to society with confidence and accountability.

FCRA (Foreign Contribution (Regulation) Act) audit in India refers to the statutory audit conducted under the provisions of the FCRA, 2010. The FCRA is an important legislation that regulates the acceptance and utilization of foreign contributions by various individuals, associations, and NGOs in India. The act aims to ensure that foreign contributions are utilized for legitimate and lawful purposes and not for any activities that may be detrimental to India's national interest.

Entities Covered by FCRA: The FCRA applies to the following entities:

1. NGOs and Associations: Non-Governmental Organizations (NGOs), associations, and societies that are registered under the FCRA or seek to receive foreign contributions.

2. Individuals: Individuals receiving foreign contributions for any specific purpose as defined under the FCRA.

FCRA Audit Requirements:
As per the FCRA rules, any entity or individual receiving foreign contributions exceeding a prescribed threshold during a financial year is required to get their accounts audited by a qualified Chartered Accountant. The audit report is then submitted to the Ministry of Home Affairs (MHA), which is the regulatory authority for FCRA compliance in India.

The threshold for FCRA audit is specified in Rule 17 of the Foreign Contribution (Regulation) Rules, 2011. As of my last update in September 2021, the threshold for FCRA audit is:

If the foreign contributions received during the financial year exceed Rs. 10,00,000 (10 lakhs), then a mandatory FCRA audit is required.

Process of FCRA Audit: The FCRA audit process involves:

 i. Preparation of Financial Statements:

The entity or individual subject to FCRA audit must prepare their financial statements, including income and expenditure statement, balance sheet, and receipts and payments account, as per the requirements of the FCRA rules.

ii. Appointment of Auditor:

A qualified Chartered Accountant is appointed to conduct the FCRA audit. The auditor must not have any conflict of interest with the entity being audited.

iii. Conducting the Audit:

The auditor examines the financial records, accounting practices, and utilization of foreign contributions to ensure compliance with the FCRA provisions.

iv. Audit Report:

After completion of the audit, the auditor issues an FCRA audit report in the prescribed format, including observations, findings, and recommendations, if any.

v. Submission of Audit Report:

The FCRA audit report is submitted to the Ministry of Home Affairs (MHA) along with the Annual FCRA return within the specified due date.

Non-compliance with FCRA audit requirements can lead to penalties, suspension, or cancellation of the registration under the FCRA. It is essential for entities and individuals covered under the FCRA to ensure timely and accurate compliance with the audit and reporting requirements to maintain transparency and accountability in the use of foreign contributions.

Amidst the diverse landscape of nonprofit organizations and charitable entities in India, our firm stands as a dedicated provider of Trust and Society Audit services. With a profound understanding of the unique operational and financial dynamics of trusts and societies, we assist these organizations in conducting thorough and insightful audits. From meticulous examination of financial statements to evaluating the compliance with legal regulations and governance norms, our proficient team ensures that our clients' activities are in alignment with their stated objectives and obligations. By identifying areas for improvement and offering strategic recommendations, we empower trusts and societies to enhance their transparency, accountability, and overall impact. Our commitment to delivering accurate and reliable audit insights enables our clients to navigate the intricate landscape of nonprofit operations with confidence, ensuring that their efforts contribute to societal well-being while upholding the highest standards of integrity and stewardship.

The audit of trusts and societies in India is governed by their respective acts, i.e., the Indian Trusts Act, 1882, and the Societies Registration Act, 1860. Additionally, depending on the nature and activities of the trust or society, they may also be subject to audit requirements under the Income Tax Act, 1961.

1. Audit of Trusts under the Indian Trusts Act, 1882:

The Indian Trusts Act does not specifically mandate a statutory audit for trusts. However, certain circumstances may trigger the need for an audit:

a. Public Trusts:

In some states, there may be specific state laws that require public trusts to undergo an audit. For example, in Maharashtra, Public Trusts are required to conduct an annual audit under the Maharashtra Public Trusts Act, 1950.

b. Trust Deed Provisions:

The trust deed may contain provisions that mandate an audit of the trust's accounts.

c. Legal Requirements:

If the trust is involved in commercial or business activities and exceeds the prescribed turnover limit (for example, under the Goods and Services Tax (GST) laws), it may be required to undergo a statutory audit under other laws.

2. Audit of Societies under the Societies Registration Act, 1860:

Similar to trusts, the Societies Registration Act does not explicitly require societies to undergo a statutory audit. However, some states may have specific regulations or provisions in their respective state societies acts that mandate societies to conduct an annual audit.

3. Audit of Trusts and Societies under the Income Tax Act, 1961:

Trusts and societies that claim tax exemptions or deductions under the Income Tax Act are subject to audit requirements under Section 12A and Section 80G.

a. Trusts:

If a trust seeks registration under Section 12A of the Income Tax Act to claim tax exemption on its income, it needs to get its accounts audited by a qualified Chartered Accountant. This audit is commonly referred to as the 12A audit.

b. Societies:

Societies that are eligible for tax deduction benefits under Section 80G are also required to get their accounts audited.

It's important to note that the audit requirements may vary based on the specific state laws, size, activities, and funding sources of the trust or society. Non-profit organizations like trusts and societies should consult with qualified professionals or legal experts to understand and comply with the applicable audit and regulatory requirements. Additionally, they should maintain proper financial records and adopt sound financial management practices to ensure transparency and accountability in their operations.