A statutory audit is an independent examination of an entity's financial statements by a qualified auditor, required by law, ending in an opinion on whether the statements give a true and fair view. For companies it is required every year under the Companies Act, 2013, whatever the size.
Facts checked: 9 October 2026, for FY 2025-26 (year ended 31 March 2026). Always confirm against the current Act, Rules and MCA notifications before relying on a date.
Statutory audit definition in plain words
"Statutory" means the audit exists because a statute demands it, not because the owner or a bank asked. The auditor reports to the members (shareholders), not to management. The work is done under the ICAI's Standards on Auditing, and the output is an opinion on the financial statements.
Who needs a statutory audit
| Entity | Audit requirement | Law |
|---|---|---|
| Every company (private, public, listed, small, Section 8) | Annual audit of the financial statements, whatever the size | Companies Act 2013, ss.139-143 |
| LLP | Required if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh | LLP Act 2008, s.34 and LLP Rules |
| Banks | Statutory central/branch auditors, appointed with RBI approval | Banking Regulation Act 1949 and RBI directions |
| Insurers | Joint auditors under insurance law and IRDAI rules | Insurance Act 1938, IRDA Act |
| Co-operative societies | Audit under the relevant state or multi-state co-operative law | Respective Co-operative Societies Act |
Partnership firms and proprietorships have no statutory audit as such; their audits come from the tax or bank side. See types of audit in India.
Appointment and rotation basics
- First auditor: appointed by the Board within 30 days of incorporation (s.139(6)); if the Board fails, members appoint within 90 days.
- Later auditors: appointed by members at the AGM for a term of five years (until the sixth AGM). Yearly ratification is no longer required. Form ADT-1 is filed with the registrar after appointment.
- Rotation (s.139(2)): for listed companies, unlisted public companies with paid-up capital of ₹10 crore or more, private companies with ₹50 crore or more, and companies with public borrowings or deposits of ₹50 crore or more, an individual auditor may serve one term of five years and a firm two terms. A five-year cooling-off follows.
- Eligibility and removal: s.141 covers disqualifications and the limit on the number of company audits one auditor can hold; s.140 covers removal and resignation.
What the auditor reports
- Audit report on the standalone and consolidated financial statements, with the opinion and basis for it (format template).
- Report on internal financial controls over financial reporting under s.143(3)(i), where applicable.
- CARO 2020 matters, for companies within the Order. Private companies escape it only if paid-up capital plus reserves, borrowings and revenue all stay within ₹1 crore, ₹1 crore and ₹10 crore, and they are not a holding or subsidiary of a public company. Read the clause-by-clause CARO 2020 guide.
- Fraud reporting under s.143(12), when the auditor suspects an offence of fraud.
Key dates for a March year-end
| Event | Timing | Provision |
|---|---|---|
| AGM | Within 6 months of year-end, so by 30 September; gap between two AGMs not above 15 months | s.96 |
| Filing of financial statements (AOC-4) | Within 30 days of the AGM | s.137 |
| Annual return (MGT-7) | Within 60 days of the AGM | s.92 |
| LLP Form 8 | 30 October (30 days after six months of the year) | LLP Rules |
Listed companies work to a tighter SEBI calendar for results. The audit calendar tracks these.
Worked example
Meridian Components Pvt Ltd has a March year-end, paid-up capital ₹60 lakh, a ₹2.5 crore cash credit limit and revenue of ₹18 crore. It is a company, so audit is compulsory. CARO 2020 applies because borrowings and revenue are above the private-company limits. If the AGM is held on 27 September 2026, AOC-4 is due by 27 October 2026.
Frequently asked questions
Is a statutory audit the same as a tax audit?
No. Statutory audit gives an opinion on the financial statements under company law. A tax audit is a separate report under section 44AB of the Income-tax Act. Compare them in internal vs statutory vs tax audit.
Can a company skip audit because it has no turnover?
No. Under the Companies Act, audit is annual for every company, even one with no turnover. Size changes the reporting load (for example CARO 2020), not the need for an audit.
Who appoints the statutory auditor?
Members at the AGM, on the Board's recommendation. The Board appoints the first auditor and fills casual vacancies.
For the full process, see the statutory audit workflow guide. Standards are listed in the Ind SA resource and terms in the audit glossary.
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error