A statutory audit is an independent examination of an entity’s financial statements, books of account, and supporting records to express an opinion on whether the statements present a true and fair view and comply with the applicable financial reporting framework. For companies, the requirement arises under the Companies Act, 2013. Similar statutory audit obligations apply to LLPs, certain co-operative entities, and other bodies where law or regulation requires an auditor’s report.
The engagement covers understanding the entity and its environment, assessing risks of material misstatement, testing internal controls where relevant, and substantively verifying account balances, classes of transactions, and disclosures. Particular attention is given to revenue recognition, purchases and expenses, inventories, receivables and payables, borrowings, related-party transactions, and subsequent events. Accounting policies are reviewed for consistency and for conformity with applicable Accounting Standards or Ind AS.
Workpapers document planning, risk assessment, sampling, confirmations, and conclusions. The auditor’s report is issued in the form prescribed by law and by the Standards on Auditing issued by ICAI. Where the audit identifies control weaknesses, classification errors, or disclosure gaps, these are communicated to those charged with governance through a management letter, so that corrections can be made before the statements are approved.
The statutory audit also supports downstream filings such as Form AOC-4, tax audit reporting where applicable, and bank or lender reviews that rely on audited figures. The objective is a set of financial statements that management, members, lenders, and regulators can use with a documented basis for the opinion expressed.