Audit of Private Limited Company

An Audit is a systematic examination of Financial Statements, books and records of the company, etc, to check if they are representing True & Fair view.

Overview

Every company is registered under Companies Act 2013 and as per sec 139, every private limited company is required to appoint an auditor within 30 days of incorporation.

Due to the regulation of government and accordance with law, once in a year, every company requires having their accounts audited by the auditor. This audit is known as 'Statutory Audit.'

Appointment of Auditor

As per Section 139 of Companies Act 2013, Appointment of an Auditor is mandatory under law. An auditor can only be a Chartered Accountant who holds the COP(Certificate Of Practice). Once an auditor is appointed, he/she shall be the auditor for the tenure of 5 years.

Tax audit is also required in private limited company, but only those companies who have crossed the turnover of Rs. 1 Crore.

True and Fair view of the Financial Statements, other books and records are to be disclosed by the Auditors report. 

Terminology of Auditor Report

• Un-Qualified Opinion This Means auditor does not found any false statements in the books and records.
• Qualified Opinion It means auditor found some fake or false statements in the books and records which are not affecting the books so much.
• Adverse Opinion When auditor found all the books and records filled with fake and false statements then auditor gives the Adverse Opinion

Removal Of Auditor

The auditor can be removed for 2 reasons.

1. Resign on his own

2. End of the tenure period

Resign on his own

Auditor has to give proper notice, in which he/she needs to describe the proper reason for ceasing to hold the office. The notice should be given at least 14 days prior to the end of the tenure to appoint a new auditor at the Private Limited Company's registered office.

End of Tenure Period

Section 140 of Companies Act 2013 states that Every Auditor will be rotated after 5 consecutive years from the date of auditor appointment.

The auditor will be rotated after passing the special resolution in a General Meeting. Central Government approval will be required to rotate the auditor.

Penalty

If any provision of section 139 to section 146 is contravened then: