Statutory Audit in India: A Complete Guide for Business Owners

• Auditing and Assurance
• ||
• May 12, 2026

If you run a company in India, there is one compliance you simply cannot skip — the statutory audit. Whether you are a first-time founder with a brand-new startup or a seasoned CFO managing a large enterprise, understanding what a statutory audit is, who needs it, and what happens if you miss it can save you from serious legal and financial trouble.

Deadline of Statutory Audit- September 30, 2026

What Is a Statutory Audit?

A statutory audit is an independent, legally mandated examination of a company’s financial statements and accounting records. It is called “statutory” because it is required by a statute — specifically, the Companies Act, 2013 in India.

A qualified, independent Chartered Accountant (CA) or a registered CA firm conducts this audit. They will verify whether your company’s financial statements — the balance sheet, profit & loss account, and cash flow statement — give a true and fair view of the company’s financial position.

💡 Simple Definition: Think of a statutory audit as an annual financial health check-up for your business — conducted by an expert (your CA) who is trusted not just by you, but also by your shareholders, lenders, and the government.

The statutory audit is different from an internal audit (which you do for your own management insights) or a tax audit (which is done under the Income Tax Act based on turnover thresholds). The statutory audit is mandatory for all companies, regardless of whether they are profitable, loss-making, or even dormant.

Who needs to conduct a Statutory Audit in India?

This is one of the most frequently asked questions — and the answer is clear under Indian law. Under the Companies Act, 2013:

Every company, whether Private Limited, Public Limited, OPC, or Section 8 Company, must get its accounts audited. There is no minimum turnover exemption for companies.

Let’s understand:

Key Rule: Every company registered under the Companies Act 2013 must undergo a statutory audit every year — no exceptions based on size or turnover. Even if your company had zero transactions in the financial year, the audit is still required.

Key Legal Provisions You Must Know About Statutory Audit in India

The Companies Act, 2013 dedicates an entire chapter (Sections 139 to 148) to audit-related requirements:

• Section 139 — Mandates the appointment of a statutory auditor at the first AGM, for a term of 5 years (individual CA) or 10 years (CA firm).
• Section 141 — Specifies eligibility criteria. Only a practicing Chartered Accountant or CA firm can be appointed as a statutory auditor.
• Section 143 — Defines the powers and duties of the auditor, including the right to access all company books and records.
• Section 143(10) — Requires auditors to follow auditing standards notified by the Central Government (issued by ICAI).
• Section 147 — Lays down penalties for non-compliance by both the company and the auditor.Statutory Audit Process: Step by Step

If you are wondering how the statutory audit actually works, here is a clear breakdown:

Step 1 — Appoint a Statutory Auditor

Your company must appoint a statutory auditor within 30 days of incorporation (by the Board of Directors). At the first AGM, the appointment is formalized for a 5-year term (individual CA) or 10-year term (CA firm). The appointment must be reported to the ROC via Form ADT-1 within 15 days of the AGM.

Step 2 — Prepare Your Financial Records

The auditor will examine your balance sheet, profit & loss account, cash flow statement, notes to accounts, and all supporting records — bank statements, invoices, payroll data, GST returns, TDS challans, contracts, and board resolutions.

Step 3 — Auditor Conducts the Audit

The CA independently verifies all records, checks for any misstatements, confirms compliance with accounting standards (Ind AS or AS, as applicable), examines internal controls, and reviews related party transactions and statutory dues.

Step 4 — Audit Report Is Issued

The auditor issues an Audit Report, which must state whether the financial statements give a true and fair view. Since April 1, 2023, the auditor must also report on whether the company’s accounting software has a functioning audit trail (edit log) feature enabled — a new MCA requirement.

Step 5 — File with MCA

Audited financial statements are then placed before shareholders at the AGM and filed with the Ministry of Corporate Affairs (MCA) via Form AOC-4.

Due Date of Filing Statutory Audit

For companies (FY 2025-26), the Statutory Audit must be completed before the Annual General Meeting (AGM), generally by September 30, 2026. Subsequently, the audited financial statements (Form AOC-4) must be filed with the ROC within 30 days of the AGM, typically by October 30, 2026.

In short: you need to complete the audit process before 30th September, and the audit reports must also be signed before 30th September by a CA authorized by ICAI in India. After 30th September, you can file AOC-4 on the Ministry of Corporate Affairs portal by 30th October 2026.

Important Deadlines for Statutory Audit

Missing these dates can lead to penalties. Mark them in your calendar:

Penalties for Non-Compliance

Non-compliance with statutory audit requirements is taken very seriously under Indian law. By 2025, MCA enforcement is increasingly automated. Here is what you risk:

⚠️ Warning: If a company fails to file audited financial statements, it cannot update records on the MCA portal, open new bank accounts, raise investment, or apply for loans. The company may also be marked as “Active Non-Compliant” — visible to all regulators.

How to Appoint Statutory Auditor (Section 139)

First Auditor

• Appointed by the Board within 30 days of incorporation.
• If not appointed, members must appoint within 90 days.

Subsequent Auditor

• Appointed at the AGM for a 5-year term.
• Form ADT-1 must be filed with ROC.

If Auditor Resigns (Casual Vacancy)

• Filled by the Board within 30 days.
• If vacancy is due to resignation, members must approve.

Eligibility of Auditor

Eligible:

• Chartered Accountant in practice
• CA Firm (majority partners must be CAs)

Disqualified:

• Employee of the company
• Person having financial interest in the company
• Internal auditor cannot act as statutory auditor
• Any other person who is not independent as per the Companies Act ,2013

Documents Required for Statutory Audit (Key Checklist)

Businesses should keep the following ready:

• Financial Statements
• Books of Accounts
• Bank Statements & Reconciliation
• GST & TDS Returns
• Fixed Asset Register
• Loan Agreements
• Debtors & Creditors List
• Board Meeting Minutes

Services Not Allowed to be Provided by Statutory Auditor

Under Section 144 of the Companies Act, 2013, a statutory auditor is strictly prohibited from rendering specific non-audit services to the company:

To maintain independence, the auditor cannot provide:

• Accounting or bookkeeping services
• Internal Audit
• Financial Information System Design and Implementation
• Actuarial Services
• Investment advisory or banking services
• Management services
• Outsourced Financial Services:
• Any other prohibited services

Why Statutory Audit Is Good for Your Business

Beyond just avoiding penalties, a statutory audit delivers real business value:

• Investor Confidence: Audited financials are a prerequisite for raising funds from angel investors, VCs, or applying for bank loans.
• Fraud Detection: An independent CA review often uncovers errors, irregularities, or internal fraud that management may have missed.
• GST & Tax Readiness: A clean audit makes GST reconciliations and income tax filings far smoother and reduces the risk of scrutiny.
• Better Business Decisions: Accurate, audited financial data helps you make smarter decisions on pricing, hiring, and expansion.
• Stakeholder Trust: Suppliers, customers, and lenders trust audited companies more — it signals financial discipline and transparency.
• Regulatory Credibility: Audited companies face fewer notices and inspections from the MCA, RBI, and SEBI.

How can Mercurius help?

Mercurius provides end-to-end support in your statutory audit filing form, from start to end:

Our firm has more than 400 professionals providing a wide range of compliance services to companies. Apart from statutory audit, we also offer several non-audit services, including:

1. Pre-Audit Financial Review & Books Clean-Up — GST reconciliation, TDS verification, bank reconciliations, fixing discrepancies before the audit begins

2. Other Identifications— balance sheet, P&L, cash flow, Ind AS/AS compliance, CARO 2020 reporting, MCA Audit Trail (edit log) compliance, UDIN-issued report

3. Post-Audit MCA Filing & AGM Support — Form AOC-4, Form MGT-7, AGM minutes, board resolutions, deadline tracking

4. Advisory on Compliance & Financial Health — internal control gap identification, tax-saving opportunities, GST audit prep, long-term advisory partnership

Why Choose Mercurius — Choose Mercurius for statutory audits with 17+ years of experience, 2000+ businesses served every year, 100% compliance support, faster turnaround times, transparent pricing, and our USP—a tech-driven audit process that makes compliance quicker, smoother, and hassle-free.

Ready to Get Your Statutory Audit Done Right?

Mercurius is a trusted audit, tax, and compliance firm helping businesses across India stay audit-ready — on time, every time. Our team of experienced CAs handles everything from auditor appointment to ROC filing.

📧 info@masllp.com     |   📞 Contact us for a free consultation +91 966 777 9615

Frequently Asked Questions

Q1. Is statutory audit mandatory for small private limited companies?
Yes. Every private limited company registered under the Companies Act 2013 must undergo a statutory audit every year — regardless of turnover, capital, or whether the company is even actively trading.

Q2. What is the difference between a statutory audit and a tax audit?
A statutory audit is required under the Companies Act 2013 and applies to all companies. A tax audit is required under the Income Tax Act 1961 only if turnover exceeds ₹1 crore (or ₹10 crore for digital transactions). Both may apply to the same company.

Q3. Who can conduct a statutory audit in India?
Only a practicing Chartered Accountant (CA) or a CA firm registered with ICAI can conduct a statutory audit. A company’s own employees cannot do the statutory audit.

Q4. Does an LLP need a statutory audit?
An LLP needs a statutory audit only if its annual turnover exceeds ₹40 lakh or its capital contribution exceeds ₹25 lakh. Below these thresholds, audit is optional for LLPs.

Q5. How much does a statutory audit cost in India?
Audit fees depend on the complexity, size, and location of the business. For small private limited companies, fees typically start from ₹15,000–₹25,000. Larger or more complex companies may pay ₹1 lakh or more.

Q6. What is the audit trail requirement introduced by MCA?
Since April 1, 2023, companies must use accounting software that maintains an audit trail (edit log) for every transaction. The statutory auditor is required to report whether this trail was enabled throughout the financial year.

Disclaimer: This blog is written for informational purposes only and does not constitute legal or financial advice. Laws and regulations may change; please consult a qualified professional for guidance specific to your business. © 2025 Mercurius. All rights reserved.