An audit consists of the review, by an accounting expert, of the accounts of a company to prove, before third parties, the reasonableness of the veracity and reliability of its content.
The most common audit is the one that is carried out, compulsorily, on the company’s annual accounts and concludes, after review by the audit firm, with a report that manifests itself on said accounts, reasonably collecting the true image of the company.
Contrary to what many people think, the objective of an audit is not to detect fraud- although in the course of the work they can be evidenced, rather it intends to give the social agents information on the correctness of the accounting information that the entity revised is posting.
Who does an audit?
The audit report must be signed by an independent expert or audit firm in Delhi. The auditor does not work alone but has a team of qualified professionals who, following the regulations established in the Audit Law, carry out fieldwork.
Audit types
The most common audit is the mandatory audit of the annual accounts of a company. It is what mercantile companies are obliged to carry out, under the Law, when they exceed, for two consecutive years, following some parameters.
The audit of consolidated annual accounts is also mandatory when the parameters indicated for individual accounts are exceeded, in this case, multiplied by four.
However, the audit of the annual accounts can also be carried out voluntarily. Many are the companies that do it as an exercise of transparency before third parties (investors, partners, banks, suppliers, etc.).
There are also other jobs performed by auditors that, not being audits themselves, need to use audit procedures and are regulated by the regulations on this matter.
How and when to audit?
In addition to compliance with the parameters indicated by the commercial legislation, which would lead to the need to audit the accounts compulsorily, various reasons can lead a company to audit its accounts.
They can be voluntary, basically in search of transparency and reliability, or for other reasons established by law, as is the case of listed entities, public offering companies, financial inter mediation companies, and some insurance branches.
It should be considered that the provider of auditing services in Delhi is going to demand from the company and its staff the maximum collaboration and, for a few weeks, the accounting-administrative department will collapse. In addition, to compare it with the accounts, it will request information about the company and its accounting balances from banks, advisers, clients, and creditors.
Why request an audit: benefits and advantages?
Finally, in those corporations or limited companies that are not obliged to be audited, the partners with a stake of more than 5% may request an audit. With the help of auditing and taxation services in India, they will achieve maximum transparency and reliability in their investment.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by:
CA Aman Aggarwal
AKGVG & Associates