Audit and Assurance Services
Statutory Audit
This usually involves analysing different financial records or other areas. During a financial audit, reports of a company with respect to revenue or benefits, returns on investment, expenditures, and other things can be included in the audit process.
A statutory audit is intended to determine if an organisation delivers an honest and accurate representation of its financial position by evaluating information, such as bank balances, financial transactions, and accounting records.
All companies (Private Limited Company, One Person Company, Limited Liability Partnership, Section 8 Company, Nidhi Company, Producer Company), irrespective of nature of business and sales turnover must appoint a Statutory Auditor.
The accounts of a Limited Liability Partnership (LLP) must be audited if it has an annual turnover of Rs.40 lakhs or more or Rs.25 lakhs or more capital contribution.
Tax Audit
Tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax viewpoint.
A tax audit is a critical process conducted by tax authorities to ensure compliance with tax laws and regulations.
A tax audit provides an opportunity for taxpayers to improve their financial management practices and enhance transparency in their operations.
By undergoing a tax audit with diligence and honesty, taxpayers can not only avoid penalties but also gain insights into potential areas for optimization and risk mitigation.
Moreover, it fosters trust between taxpayers and authorities, contributing to a fairer and more efficient tax
system overall.
Transfer Pricing Audit
Transfer pricing is a common practice in multinational companies, where transactions take place between two or more entities belonging to the same group or company. Such transactions involve the transfer of goods, services, or intellectual property, and it is essential to ensure that they are conducted at arm’s length, i.e., at a fair market price. To prevent the manipulation of transfer pricing to reduce taxable income, the Indian government has implemented Transfer Pricing Audit under Section 92E of the Income Tax Act, 1961.
The primary objective of Section 92E is to ensure that the transfer pricing policies adopted by companies do not result in the erosion of the Indian tax base. As per the Act, any entity involved in an international transaction or specified domestic transaction must maintain proper documentation to support the prices adopted in such transactions. The transfer pricing audit is conducted by the tax authorities to determine the accuracy of the prices charged or paid by the parties involved in such transactions.
GST Audit
GSTR-9 is a comprehensive annual return that needs to be filed by regular taxpayers under the Goods and Services Tax (GST) regime in India. Here’s a breakdown
Under GST regulations, regular taxpayers whose turnover is above 2 crores are obligated to file GSTR-9, an annual return detailing sales, purchases, input tax credit (ITC) claims, taxes paid, and more for the entire financial year. Different versions include GSTR-9A for composition scheme taxpayers and GSTR-9C, which requires reconciliation with audited financial statements for taxpayers exceeding turnover limits of 2 crores. The form necessitates comprehensive information on outward and inward supplies, ITC, taxes, and refunds, reconciling monthly/quarterly returns. Typically, due by December 31st of the subsequent financial year, the deadline for GSTR-9 may be extended. Late filing incurs penalties and interest.
GSTR-9C: Reconciliation Statement The GSTR-9C is a reconciliation statement that needs to be filed along with the annual return GSTR-9 by taxpayers whose annual turnover exceeds a specified threshold under the Goods and Services Tax (GST) regime in India. Here’s a breakdown:
GSTR-9C serves to reconcile figures reported in GSTR-9 with audited financial statements, ensuring alignment between GST returns and financial records, Self-certified by tax payer. It requires reconciliation of turnover, tax paid, and input tax credit, with disclosure of any discrepancies. Due on December 31st, extensions may apply, with penalties for non-compliance or discrepancies. Engaging qualified professionals is common due to its complexity and certification requirements, emphasizing its critical role in maintaining accuracy and consistency in business tax filings.
Forensic Audit
Forensic audit is an analysis and review of the financial records of a company or person to extract facts, which can
be used in a court of law. Forensic auditing is a specialty in the accounting industry, and most major accounting firms have a department forensic auditing. Forensic audits include the experience in accounting and auditing practices as well as expert knowledge of forensic audit’s legal framework.
Forensic audits cover a large spectrum of investigative activities. There may be a forensic audit to prosecute a party for fraud, embezzlement or other financial crimes. The auditor may be called in during the process of a forensic audit to serve as an expert witness during trial proceedings. Forensic audits could also include situations that do not involve financial fraud, such as bankruptcy filing disputes, closures of businesses, and divorces.
Internal Audit
Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. These types of audits ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection. Internal auditors are hired by companies who work on behalf of their management teams. These audits also provide management with the tools necessary to attain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit.
Companies in India are required to appoint internal auditors based on specific financial parameters. For listed companies, the obligation is clear. However, for unlisted public companies, the criteria include: Paid-up Share Capital: ₹50 crore or more OR Turnover: ₹200 crore or more OR Outstanding Loans/Borrowings: Exceeding ₹100 crore at any point during the previous financial year OR Outstanding Deposits: ₹25 crore or more at any point during the previous financial year. Private Companies, on the other hand, need to appoint internal auditors if they meet: Ads by Turnover: ₹200 crore or more OR Outstanding Loans/Borrowings: Exceeding ₹100 crore at any point during the previous financial year.
Due Diligence Audit
A due diligence audit involves the examination of a business in order to evaluate its standing as a business, and its financial performance – the audit can either be of a legal nature, or for a personal inquiry.
The purpose of a due diligence audit is to help the client make an informed assessment of the company in relation to its ability, potential, history, performance, and reputation. Due diligence audit is to verify the accuracy and correctness of the information presented in the purchase or sales transaction.
Most commonly, individuals or firms who are looking to do business with a company request this kind of report in order to help in their decision-making process.
It will also reduce the possibility that a buyer will undervalue the business, aid in the negotiation and drafting of the transaction documents and disclosure schedule, and reduce the time and effort required for the due diligence process.
