Financial Statement Audit - Mandatory for Every Company, Any Size
A financial statement audit is the independent examination of your company's annual financial statements - balance sheet, profit & loss, and cash flow statement - by a practicing chartered accountant, confirming they present a true and fair view. Under the Companies Act, 2013, every company incorporated in India must get this done annually, regardless of turnover, profit, or number of employees - there is no small-company exemption. This page explains what the audit actually covers and why it applies to you, in plain language, for small and mid-sized private companies specifically. If you already know you need a statutory audit filed and want the process handled end-to-end, see our full statutory audit service.
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The key facts, in one place
Everything a founder usually has to piece together from five different pages, in one place.
- Who must comply
- Every registered companyPrivate, public, OPC - no turnover-based exemption
- What's audited
- Balance sheet, P&L, cash flowPlus notes to accounts and disclosures
- Who performs it
- Independent practicing CACannot be an employee or an interested party
- Frequency
- Every financial yearBefore the AGM and annual ROC filing
- Government fee
- None for the audit itselfProfessional fee only - ROC filing fees are separate
- Starting price
- ₹9,999Varies by company size and transaction volume
- Typical turnaround
- 2-4 weeksDepends on how audit-ready your books are
What is a financial statement audit?
A financial statement audit is an independent examination of a company's annual financial statements by a practicing chartered accountant, resulting in an audit opinion on whether those statements present a 'true and fair view' of the company's financial position and performance. It covers the balance sheet, the statement of profit and loss, the cash flow statement (where applicable), and the notes and disclosures that accompany them.
In India, this is not optional for companies. Under the Companies Act, 2013, every company - private limited, public limited, One Person Company, regardless of turnover, profit, or size - must have its books audited annually by an auditor who is independent of the company's management. This is sometimes referred to as the 'statutory audit' because the requirement itself comes from statute, not from a lender, investor, or internal decision.
This page is written specifically for small and mid-sized private companies and founders who are encountering this requirement for the first time and want to understand what it actually involves before diving into the filing mechanics. If you already understand the requirement and want the full statutory audit process - audit report formats, CARO applicability, and XBRL filing support - see our dedicated statutory audit service page.
For a deeper walkthrough, read our full statutory audit service for the filing and reporting process.
This page vs our statutory audit service
Both cover the same underlying legal requirement - here's how to pick which page you need.
Financial Statement Audit (this page)
Founders and small private companies who want to understand the requirement first
Statutory Audit Service
Companies ready to engage an auditor and start the audit process
| Aspect | Financial Statement Audit (this page) | Statutory Audit Service |
|---|---|---|
| Best for | Founders and small private companies who want to understand the requirement first | Companies ready to engage an auditor and start the audit process |
| Focus | ✕ What the audit covers, why it's mandatory, plain-language explanation | ✓ Full process, audit report formats, CARO applicability, XBRL filing |
| Underlying law | Companies Act, 2013 | Companies Act, 2013 |
| Who it's priced for | Small and mid-sized private companies | All company sizes, including larger entities |
Who needs a financial statement audit?
Unlike tax audit (which has turnover thresholds) or GST audit, a financial statement audit under the Companies Act applies to every company - there is no small-company carve-out.
- Every Private Limited Company, regardless of turnover, paid-up capital, or number of employees
- Every Public Limited Company
- Every One Person Company (OPC)
- Companies with zero revenue or that are dormant/inactive still need an audit as long as they remain registered
- Newly incorporated companies - the first financial statement audit is typically due for the first financial year after incorporation
- Companies that have never filed annual returns before but remain on the MCA register - the audit obligation continues to accrue and needs to be caught up
What documents do you need for a financial statement audit?
Common to every entity
- Books of accounts (ledgers, journals, cash book) for the financial yearMandatory
- Bank statements for all company accounts for the financial yearMandatory
- Sales and purchase invoices / GST returns filed during the yearMandatory
- Fixed asset register and depreciation workings, if applicable
- Loan agreements, if the company has taken or given loans
- Previous year's audited financial statements and audit report (if not the first audit)
- Details of related party transactions, if anyMandatory
- PAN, incorporation certificate, and MOA/AOA of the companyMandatory
How a financial statement audit works
For a small private company with reasonably organised books, this is a fairly linear process.
Engagement and planning
We understand your business, review last year's financials (if any), and plan the audit approach and timeline based on your transaction volume.
Books and document review
We review your ledgers, bank statements, invoices, and supporting documents, and flag gaps or reconciliation issues early so they don't hold up the audit later.
Testing and verification
We verify balances, test a sample of transactions, confirm bank balances and major receivables/payables, and check related party transactions and statutory dues.
Draft financial statements and queries
We share draft financial statements and any audit queries with you, and work through clarifications before finalising.
Audit report and sign-off
Once satisfied, we issue the independent auditor's report along with the signed financial statements, ready for your board's approval and the AGM.
The single biggest driver of audit turnaround and quality is how organised your books are before we start - not the size of your company. A small company with messy, unreconciled books can take longer to audit than a larger company with clean records. We'll flag bookkeeping gaps early rather than discover them at the last minute.
How much does a financial statement audit cost?
There is no government fee for the audit itself - it is a professional service. Our fee is scoped by company size and transaction volume, starting from ₹9,999.
Starter
Small private companies, low transaction volume
- Financial statement audit and opinion
- Independent auditor's report
- Basic ratio and observation summary
- Support through AGM approval
Growth
Growing companies, moderate transaction volume
- Everything in Starter
- Related party transaction review
- CARO applicability check
- Priority turnaround
Established
Larger private companies, higher transaction volume
- Everything in Growth
- Detailed management letter on internal controls
- Coordination with tax audit, if applicable
- Dedicated engagement manager
Full fee breakdown
| Particulars | Government fee | Professional fee |
|---|---|---|
| Financial statement audit (government fee) | Nil - no government fee for the audit itself | N/A |
| Financial statement audit (professional fee) | N/A | Starting ₹9,999, varies by company size |
| ROC annual filing (AOC-4, MGT-7), after audit | As per MCA fee slab | Quoted separately |
| Tax audit (if turnover exceeds Income Tax Act thresholds) | Nil | Quoted separately |
Not included in any tier:
- ✕ ROC annual filing (AOC-4, MGT-7) - available as a separate service
- ✕ Income tax audit under the Income Tax Act, where applicable based on turnover
- ✕ Bookkeeping or catch-up accounting, if your books are not maintained during the year
- ✕ GST audit or reconciliation work
Which audit plan fits your company?
Answer three quick questions and we'll recommend the right plan.
Has your company been audited before?
What is your approximate annual turnover?
How soon do you need the audit completed?
Why a proper financial statement audit matters
Compliance and legal standing
- Meets the mandatory requirement under the Companies Act, 2013 - avoiding penalties for non-compliance(Companies Act, 2013)
- A clean audit report is required before your AGM can approve the financial statements and before ROC annual filing
Credibility with stakeholders
- Audited financials are typically required by banks and NBFCs before sanctioning loans or credit lines
- Investors and acquirers routinely ask for audited financials during due diligence, even for early-stage companies
Operational value
- The audit process itself often surfaces bookkeeping gaps, reconciliation issues, or control weaknesses worth fixing
- Gives founders and management an independent, outside check on the numbers they're running the business on
Why get your financial statement audit through us
Frequently asked questions
Yes. Under the Companies Act, 2013, every registered company - private, public, or OPC - must get its annual financial statements audited, regardless of turnover, profit, or size. There is no small-company exemption from this requirement, unlike tax audit which has turnover thresholds.
A financial statement audit under the Companies Act examines your annual financial statements and applies to every company regardless of size. A tax audit under the Income Tax Act is a separate requirement that applies only once turnover crosses specific thresholds, and focuses on tax compliance rather than overall financial statement fairness.
They cover the same legal requirement. This page is written to explain the requirement in plain language for small and mid-sized private companies encountering it for the first time. Our statutory audit service page covers the fuller process - audit report formats, CARO applicability, and XBRL filing - for companies ready to start the engagement.
Yes. As long as a company remains registered with the Registrar of Companies, it must get its financial statements audited annually, even if it had no revenue or is currently dormant.
No. The audit itself is a professional service performed by a chartered accountant - there is no government fee for the audit. Government fees apply separately to the ROC annual filing (AOC-4, MGT-7) that follows the audit.
Only a practicing chartered accountant who is independent of the company - not an employee, director, or someone with a disqualifying relationship or financial interest in the company - can be appointed as its statutory auditor.
For a small private company with reasonably organised books, a typical audit takes 2-4 weeks. Companies with unreconciled books, missing documentation, or higher transaction volumes can take longer.
Non-compliance can attract penalties on the company and its officers under the Companies Act, and it also blocks the company from completing its ROC annual filing (AOC-4/MGT-7) on time, which compounds into further late-filing penalties.
Most banks and NBFCs require at least the last 1-3 years of audited financial statements before sanctioning a business loan or credit line, even for small companies, so staying current on your audits also protects your ability to raise debt.
At minimum: books of accounts, bank statements, sales and purchase invoices or GST returns for the year, and details of any related party transactions or loans. Having last year's audited financials (if not your first audit) also speeds things up.
No. The statutory auditor must be independent of the company - someone who is an employee, or otherwise closely involved in maintaining the company's books, cannot also serve as its independent auditor under the Companies Act.
CARO (Companies (Auditor's Report) Order) requires auditors to comment on specific matters beyond the standard audit opinion - such as fixed assets, inventory, and statutory dues - for most companies, though small companies and certain other categories are exempt from some CARO reporting requirements. We check applicability as part of the audit.
First audits typically take slightly longer since there's no prior audited baseline to work from, and we'll need to review opening balances carefully. We flag this upfront and build extra time into the plan for first-time engagements.
Not directly. The financial statement audit focuses on whether your financial statements give a true and fair view under the Companies Act. GST audit/reconciliation and income tax audit are separate, distinct engagements, though we can coordinate all three if needed.
Our pricing starts from ₹9,999 for small private companies with lower transaction volumes, scaling up to ₹49,999 or more for larger companies with higher transaction volumes and more complex reporting needs - we scope and quote based on your actual size and complexity.
Written by Meera Pillai, SME Audit & Assurance Lead · Reviewed by CA Arjun Rao, FCA, conducts statutory audits for small and mid-sized private companies
Last updated 9 September 2026
Sources
- Companies Act, 2013 - Section 139-147 (Audit and Auditors)
- Companies (Audit and Auditors) Rules, 2014
- Companies (Auditor's Report) Order, 2020 (CARO 2020)
- ICAI - Standards on Auditing
This page provides general guidance for small and mid-sized private companies and does not constitute an audit opinion or legal advice. Applicability of specific provisions (such as CARO) depends on your company's facts - confirm scope with our team before engagement.
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