The objective of a statutory audit is to provide an independent assessment of a company’s financial statements, including its income statement, balance sheet, and cash flow statement, to ensure that they are accurate, complete, and compliant with accounting standards and legal requirements.

The Companies Act, 2013 requires all companies to undergo a statutory audit every year, irrespective of their size or nature of business. The statutory audit in India is conducted by a chartered accountant who is registered with the Institute of Chartered Accountants of India (ICAI). The auditor is required to follow the auditing standards and guidelines issued by the ICAI, as well as any other relevant regulations or laws.

The Regulatory framework in India, coupled with a dynamic business environment has caused the role of an auditor to become vital. The purpose of the audit is to express opinion and test the validity of the assertions in financial statements. Statutory audit engagements are based on strict adherence to independence and conflict of interest rules and are based on the application of national and international auditing standards. The statutory audit report is an important document that is used by various stakeholders, such as shareholders, lenders, and regulators, to assess the financial health and performance of the company. The audit report provides assurance that the financial statements are reliable and can be used to make informed decisions.

In India, the complexity of the regulatory environment coupled with risks are faced by organizations, calls for the need for greater transparency in disclosures, stricter liability and accountability of executives and operational management towards the stakeholders. In such an environment of competitive pressures and increased attention to Corporate Governance the importance of Statutory Assurance has enhanced.

There are several statutes in India that require mandatory statutory audits.
Some of the key statutes are:

• The Companies Act, 2013 – All companies registered under this Act, including private and public limited companies, are required to undergo a statutory audit every year.

• The LLP Act, 2008 – According to Rule 24 of LLP Rules, 2009, any LLP whose turnover exceeds, in any financial year, 40 (forty) lakh rupees, or whose contribution exceeds 25 (twenty five) lakh rupees, is required to get its accounts audited.

• The Income Tax Act, 1961 – Popularly known as Tax Audit, all entities and individuals that are subject to tax under this Act are required to maintain books of accounts and undergo a Tax Audit if their annual turnover or gross receipts exceed a certain threshold or they declare presumptive income lesser than the statutory prescribed in case of certain class of businesses and professions.

• The Banking Regulation Act, 1949 – All banks in India, including commercial banks, cooperative banks, and regional rural banks, are required to undergo a statutory audit every year.

• The Insurance Act, 1938 – All insurance companies in India are required to undergo a statutory audit every year.

• The Securities and Exchange Board of India (SEBI) Regulations – All listed companies in India, as well as mutual funds and other entities regulated by SEBI, are required to undergo a statutory audit every year.

Apart from these, there may be other specific statutes and regulations that require mandatory statutory audits in India depending on the nature of the entity and the business activities it engages in.