1. Statutory Audit

A statutory audit is a mandatory audit conducted as per the requirements of various laws (e.g., the Companies Act, 2013 for companies in India). The purpose is to ensure that a company's financial statements give a true and fair view of its financial position.

Key Compliances for Statutory Audit:

• Appointment of Auditor
• Filing of Financial Statements
• Auditor’s Report
• Audit Report Submission
• Internal Control Evaluation

Timeline:

• Statutory audits should be completed within six months from the end of the financial year, and the audited financial statements need to be filed with the RoC within 30 days from the AGM.

Applicable Laws:

• Companies Act, 2013
• Indian GAAP (Generally Accepted Accounting Principles)
• IFRS (if applicable)

2. Tax Audit

A tax audit is conducted to ensure that a taxpayer (typically a business entity) is complying with the tax laws, particularly Income Tax laws. This audit is mandatory for certain categories of taxpayers, such as businesses with a turnover exceeding a specified limit.

Key Compliances for Tax Audit:

• Appointment of Auditor
• Income Tax Return (ITR) Filing
• Form 3CD
• Tax Audit Report Submission

Timeline:

• Tax audits need to be completed before the due date for filing the Income Tax Return, which is typically 30th September following the end of the financial year (for non-corporate taxpayers).

Applicable Laws:

• Income Tax Act, 1961
• Income Tax Rules, 1962
• Specific provisions under Section 44AB of the Income Tax Act (for taxpayers required to undergo a tax audit)

Penalties for Non-compliance:

• Statutory Audit: Failure to conduct a statutory audit may lead to penalties under the Companies Act, including fines and potential disqualification of directors.
• Tax Audit: Non-compliance with tax audit provisions may lead to penalties under Section 271B of the Income Tax Act, which can be up to 0.5% of the turnover or ₹1,50,000, whichever is less.