Sections 139 to 148 of Companies Act, 2013, CARO 2020 & ICAI Standards on Auditing (SAs 200–799)

Statutory Audit

Independent statutory financial auditing and attestation conducted in strict accordance with the Companies Act 2013 (Sections 139 to 148), CARO 2020 all 21 clauses, Section 143(3)(j) Rule 11(g) audit trail mandates, and ICAI Standards on Auditing (SAs) with UDIN as required by ICAI.

CA Due Diligence

Official Portal Filing

State Stamp Advisory

Statutory Filing

MCA & Tax Practice

Relevant RegulatorMinistry of Corporate Affairs & ICAI, Government of India

MCA V3 Official Portal & ICAI UDIN Portal

The official Government of India portal for e-filing audited financial statements in Form AOC-4 / AOC-4 XBRL, checking Director DIN statuses, verifying statutory auditor appointments (Form ADT-1), and validating CA signatures via the ICAI UDIN portal (udin.icai.org).

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STATUTORY OVERVIEW

Independent Financial Statement Auditing & True and Fair Assurance

A Statutory Audit is a mandatory audit framework enacted under Sections 139 through 148 of the Companies Act, 2013. Designed to provide independent assurance that financial statements exhibit a true and fair view of a corporate entity's financial position, operational results, and cash flows, statutory audits constitute the cornerstone of investor, lender, and regulatory confidence. Guided by the Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of India (ICAI) and regulatory oversight from the National Financial Reporting Authority (NFRA), our audit procedures deliver objective evaluations backed by empirical audit evidence and mandatory UDIN authentication.

Statutory & Practice Summary • At-A-Glance

ICAI UDIN Authentication Mandate

Governing Framework

Sections 139 to 148 of Companies Act, 2013, CARO 2020 & ICAI Standards on Auditing (SAs 200–799)

Regulatory Authority

Ministry of Corporate Affairs (MCA), National Financial Reporting Authority (NFRA) & The Institute of Chartered Accountants of India (ICAI)

Professional Assurance

Chartered Accountants Attestation under ICAI Standards & Code of Ethics

DOCUMENTATION MATRIX

Mandatory Documents Checklist

Self-attested scanned copies required

1. Promoters / Partners / Directors KYC

✓Director Identification Numbers (DIN) and KYC verification of all Board Directors
✓Digital Signature Certificate (Class 3 DSC) of the Managing Director / Chief Financial Officer
✓Written Management Representation Letter under ICAI SA 580 on company letterhead

2. Registered Office & Premises Proof

✓Registered Office address verification corresponding to MCA Master Data records
✓Bank Account Confirmation letters received directly from all operational lenders and bankers under SA 505

3. Specific Statutory Declarations & Enclosures

•Trial Balance, General Ledgers, and draft Financial Statements (Balance Sheet, P&L, Cash Flow, Notes to Accounts)
•Fixed Assets Register with physical verification certificates and title deeds for immovable property (CARO Clause 1)
•Accounting software audit trail (edit log) validation logs operating continuously under Rule 11(g)
•Minutes of Board Meetings, Audit Committee meetings, and General Meetings of shareholders
•Aging schedule of trade payables at financial year-end identifying Micro & Small Enterprises [formerly Section 43B(h)]
•Statements submitted to banks for working capital facilities exceeding ₹5 Crores reconciled with books of account

PROCEDURAL ROADMAP

Step-by-Step Filing & Approval Process

Structured execution roadmap managed by our Chartered Accountants from pre-filing due diligence to certificate allotment.

01Month 1

Engagement, Independence & Risk Planning

Executing formal engagement letters, confirming independence under ICAI Code of Ethics, assessing entity risks, and determining materiality under SA 320.

02Month 2

Substantive Vouching & IFCoFR Testing

Performing walkthroughs across revenue, procurement, payroll, and fixed assets; testing Internal Financial Controls over Financial Reporting (IFCoFR).

03Month 3

CARO 2020 & Rule 11(g) Audit Trail Verification

Auditing all 21 clauses of CARO 2020, verifying continuous tamper-evident edit logs in accounting software, and reconciling statutory tax dues.

04Final Month

Independent Auditor's Report & UDIN Issuance

Issuing the Independent Auditor's Report under SA 700/705, generating mandatory 18-digit ICAI UDIN, and facilitating electronic Form AOC-4 filing on MCA V3.

Statutory Reporting & Exhaustive CARO 2020 Examination

COMPANIES ACT 2013 • CARO 2020

We systematically examine general ledgers, trial balances, supporting transaction vouchers, and note disclosures in conformity with Indian Accounting Standards (Ind AS / AS) and Schedule III of the Companies Act, 2013.

Section 143(11) MandateAll 21 Clauses of CARO 2020 Verification

Reporting is compulsory across immovable property titles, benami proceedings, inventory verifications, working capital bank reconciliations (> ₹5 Cr), and transactions under the Income-tax Act.

1. Immovable Assets & Inventory Controls (Clauses 1 & 2)

Asset Verification

Physical audit of tangible assets and working capital collateral:

•Verification of title deeds of all immovable property held in company name
•Physical verification of raw materials, WIP, and finished goods inventory (SA 501)
•Reconciliation of quarterly stock/debtor returns submitted to banks exceeding ₹5 Crores
•Tracking of non-fund based credit utilization and bank sanction covenants

2. Loans, Deposits & Statutory Dues (Clauses 3 to 10)

Prudential Governance

Regulatory scrutiny of funds, inter-corporate lending, and undisputed tax arrears:

•Loans and investments made under Section 185 and 186 of Companies Act, 2013
•Public deposit acceptance adherence under Section 73 through 76 rules
•Undisputed statutory dues (GST, TDS, PF, ESI, Customs) outstanding beyond 6 months
•Unrecorded transactions surrendered before Income Tax authorities during search/surveys

Internal Financial Controls (IFCoFR) & Mandatory MCA Audit Trail (Rule 11g)

IFCOFR & AUDIT TRAIL COMPLIANCE

Under Section 143(3)(i) of the Companies Act, 2013, we assess whether the corporate entity maintains adequate Internal Financial Controls over Financial Reporting (IFCoFR) and evaluate their operating effectiveness through rigorous walkthroughs.

1. Continuous Accounting Edit Log Audit (Rule 11g)

Audit Trail Mandate

Technical validation of statutory electronic record maintenance:

•Verification that accounting software featured an enabled edit log facility throughout the year
•Testing for zero tampering, overrides, or unauthorized admin log disablement
•Retention of audit trail logs in compliance with statutory preservation rules
•Auditor reporting in the Independent Auditor's Report without qualification

2. Financial Reporting Control Testing (IFCoFR)

Internal Controls

Risk-based evaluation of automated and manual financial controls:

•Order-to-cash, procure-to-pay, and payroll authorization matrix testing
•Segregation of duties (SoD) across corporate accounting enterprise systems
•Independent third-party bank, debtor, and creditor balance confirmations under SA 505
•Substantive review of journal vouchers and non-standard closing adjustments

Independent Auditor's Report & MCA Form AOC-4 Support

AUDIT CERTIFICATION & FILING

Upon concluding field procedures, analytical reviews, and management representation evaluations under ICAI SA 580, we issue the Independent Auditor's Report with system-generated UDIN authentication.

1. True & Fair Audit Opinion under ICAI Standards

ICAI SA 700/705

Objective evaluation backed by empirical audit documentation (SQC 1):

•Issuance of clean or modified Independent Auditor's Report with mandatory 18-digit UDIN
•Identification and disclosure of Key Audit Matters (KAM) under SA 701 where applicable
•Evaluation of Going Concern assumptions under ICAI SA 570
•Management Representation Letter (MRL) formalization under ICAI SA 580

2. Board Disclosures & Electronic Form AOC-4 ROC Filing

MCA Secretarial Synergy

Guiding finance and secretarial leadership through statutory ROC lodgments:

•Assisting in Annual General Meeting (AGM) financial statement pack preparation
•Compliance with Section 135 CSR obligations (transfer of unspent amounts under 135(5)/135(6))
•XBRL taxonomy tagging and validation for Form AOC-4 XBRL mandates
•Final electronic submission with Director and Auditor digital signatures on MCA V3

STATUTORY MATRIX

Statutory Provisions & Regulatory Comparative Matrix

Comparative analysis of governing sections under the new framework alongside legacy statutory references.

Corporate Statutory Audit Mandate	Governing Section: Companies Act, 2013	Statutory Reporting Scope & Compliance Condition
Mandatory Statutory Financial Audit	Section 139 read with Section 143	Compulsory for all Private Ltd, Public Ltd, OPC, and Section 8 companies regardless of turnover or capital.
CARO 2020 Order (All 21 Clauses)	Section 143(11) read with Order 2020	Applicable to companies other than those excluded by the Order, including banking and insurance companies, Section 8 companies, One Person Companies, small companies, and private companies with paid-up capital and reserves not above ₹1 Cr, borrowings not above ₹1 Cr and revenue not above ₹10 Cr.
Internal Financial Controls (IFCoFR)	Section 143(3)(i) of Companies Act, 2013	Auditor must report on adequacy and operating effectiveness of internal financial controls over financial reporting.
Audit Trail (Edit Log) in Accounting Software	Section 143(3)(j) read with Rule 11(g)	Auditor must report whether accounting software had a tamper-evident audit trail facility enabled throughout the entire financial year.
Statutory Auditor Appointment (Form ADT-1)	Section 139(1) of Companies Act, 2013	Filed with ROC within 15 days of AGM appointing the auditor for a 5-year tenure.

ONGOING GOVERNANCE

Mandatory Post-Registration Compliances

Failing to complete statutory post-incorporation actions carries steep daily penalties. Our CA firm manages continuous compliance:

Form AOC-4 on MCA V3Within 30 days of Annual General Meeting (AGM)

Form AOC-4 / AOC-4 XBRL Filing

Mandatory filing of audited financial statements, Board's Report, and Auditor's Report with the Registrar of Companies (ROC).

Form MGT-7 on MCA V3Within 60 days of AGM

Form MGT-7 / MGT-7A Annual Return

Filing of the annual return of the company with shareholding patterns and director attendance particulars.

Unspent CSR Account / Schedule VII FundWithin 6 months / 30 days of FY close

CSR Unspent Amount Transfer (Section 135)

Mandatory transfer of unspent CSR amounts under Section 135(5) or Section 135(6) to prevent penal liabilities on directors.

ICAI SQC-1 ComplianceMinimum 7 Years

Audit Working Paper Retention (SQC 1)

Preserving audit documentation files, external third-party balance confirmations, and management letters.

FREQUENTLY ASKED QUESTIONS

Statutory FAQs & Practical Guidance

Frequently asked questions and procedural guidance regarding Statutory Audit.

Is a Statutory Audit compulsory even if a private company has zero revenue?

Yes. Under Section 139 of the Companies Act, 2013, every company incorporated in India—including newly incorporated companies, dormant companies, and entities with zero turnover or losses—must get its books of account audited by a practicing Chartered Accountant for every financial year without exception.

What are the consequences if the accounting software does not have an audit trail enabled under Rule 11(g)?

Under Rule 11(g), if the company's accounting software does not possess an edit log feature, or if the feature was disabled or modified during any part of the financial year, the statutory auditor is mandated to issue a modified report (qualification) in the Independent Auditor's Report, alerting shareholders, lenders, and the Ministry of Corporate Affairs.

Which private companies are exempt from CARO 2020 reporting?

A private limited company is exempt from CARO 2020 only if it meets all three criteria concurrently: (1) paid-up share capital and reserves do not exceed ₹1 Crore on the balance sheet date, (2) total borrowings from banks and financial institutions do not exceed ₹1 Crore at any point during the financial year, and (3) total revenue (including discontinued operations) does not exceed ₹10 Crores during the financial year.

What is the tenure of appointment of a Statutory Auditor under Section 139?

Under Section 139(1), a statutory auditor is appointed at the first Annual General Meeting (AGM) to hold office for a period of 5 consecutive years until the conclusion of the 6th AGM. In listed companies and specified public/private companies crossing threshold limits, rotation of auditors is mandatory after one term of 5 years (for an individual CA) or two terms of 5 years (for a CA audit firm).

STATUTORY ADVISORY DESK • PRACTICE INQUIRIES

Statutory Inquiries & Practice Advisory

Information on Statutory Audit is provided for general reference. Office addresses and contact details are listed on the Contact page.

Contact Practice Office +91 99140-14949