"Audit" arrives in a founder's life wearing many uniforms — the company auditor who signs annual accounts, the tax audit your CA mentions every September, the GST officers' version, the bank's stock auditor. Each is a different exercise under a different law with different thresholds. Confusing them costs deadlines and penalties. Here is the full parade, and exactly which ones your business must salute.
Statutory audit: every company, every year
- Who: all companies (private or public, any size, profit or loss) under the Companies Act; LLPs above ₹40 lakh turnover or ₹25 lakh contribution
- What: an independent CA examines and opines whether the financial statements show a true and fair view
- When: annually — feeding the AGM and ROC filings (AOC-4) on their calendar
- Founder's note: auditor appointment, rotation and the audit-trail software rule are board responsibilities; a qualified opinion follows the company into every bank file
Proprietorships and ordinary partnerships have no statutory audit — their audit lives under tax law, below.
Tax audit: Section 44AB's thresholds
The Income-tax audit applies by size: businesses above ₹1 crore turnover (relaxed to ₹10 crore where cash receipts and cash payments each stay within 5% — the digital-business concession); professionals above ₹75 lakh gross receipts (raised from ₹50 lakh with the same digital condition); and presumptive-scheme cases that declare profits below the deemed rates while exceeding basic exemption. The output is Form 3CA/3CB with the detailed 3CD annexure — filed by 30 September (as extended year to year). Miss it and Section 271B penalties reach 0.5% of turnover (capped at ₹1.5 lakh); worse, the return rides on it.
GST 'audit': two different creatures
- Self-side: the annual return GSTR-9 with self-certified reconciliation GSTR-9C above ₹5 crore — a filing, not a visit
- Department-side: audit under Section 65 (notice ADT-01, your premises or their office) or special audit under Section 66 — selection-based, not annual
- Your defence for both is identical: monthly reconciliations and a document binder maintained in peacetime
Company? Statutory audit — always. Turnover past ₹1 crore (₹10 crore if fully digital)? Tax audit. Past ₹5 crore? Add GSTR-9C. Bank limits sanctioned? Expect stock audits. None of the above and no company? You may legitimately have no audit at all.
Internal and management audits: optional, underrated
Internal audit is mandatory only for larger companies (by turnover/borrowing thresholds under Section 138), but voluntarily it is the owner's best fraud-and-leak detector: an independent professional testing purchases, cash, inventory and approvals quarterly. Related species: stock audits (lenders verify inventory behind CC limits — cooperate well; adverse stock audits freeze limits), concurrent audits in high-cash businesses, and due-diligence audits when investors or buyers arrive. Businesses that run internal checks meet every external audit already rehearsed.
Living with audits gracefully
One calendar: statutory accounts closed by June, tax audit fieldwork in July–August, 3CD filed September, GSTR-9/9C by December — with the monthly closes feeding all of them. One binder per year: financials, ledgers, reconciliations, statutory challans, agreements. And one attitude: auditors document what exists — businesses that treat them as adversaries get findings; businesses that treat them as annual health checks get advice. The cost of audit-readiness is a discipline; the cost of audit-surprise is a season.
How Aidwish helps
Aidwish maps which audits apply to each client, builds the single calendar and binder, prepares books to pass first time, and coordinates auditors — so audit season becomes administration, not archaeology.