Audit Readiness & Support

Audit readiness support prepares your finance team, records and controls before the statutory audit begins. It is separate from the statutory audit itself, which only your independently appointed auditor can perform and sign. Under the Companies Act, the auditor must remain independent of the work being audited, so our role is to organise documentation, reconcile accounts, review controls and coordinate with the auditor, rather than to form or issue the audit opinion.

A statutory audit under the Companies Act 2013 is mandatory for every company, irrespective of turnover, profit or size, and there is no small-company exemption from the audit itself. This differs from a tax audit, which is required under the income tax law only above prescribed turnover limits. For most enterprises the question is not whether an audit applies, but how to prepare for it efficiently.

Several deadlines set the audit calendar. The Annual General Meeting must be held within six months of the financial year end, which is 30 September for a March year-end. The audited financial statements are filed with the Registrar of Companies in Form AOC-4 within 30 days of the AGM, and the annual return in Form MGT-7 within 60 days. Because the audit must finish before the AGM, readiness work usually starts soon after year-end to protect these dates.

Under Section 139 of the Companies Act, the first auditor is appointed by the Board within 30 days of incorporation, and at the first AGM the shareholders appoint an auditor for a five-year term. The appointment is reported to the Registrar of Companies in Form ADT-1 within 15 days. The company appoints and the shareholders ratify the auditor; a readiness firm does not make this appointment, and instead prepares the company for whichever auditor is engaged.

Auditors typically request the trial balance, general ledger, and the draft balance sheet, profit and loss account and cash flow statement, along with bank statements and reconciliations, the fixed asset register, inventory records, debtor and creditor listings, GST and TDS returns, loan agreements, related-party details, and board and AGM minutes. This is often called the provided-by-client, or PBC, list. We assemble and index these in advance so the auditor receives a complete, cross-referenced pack rather than piecemeal documents.

Internal Financial Controls are the systems a company uses to keep its financial reporting accurate and its assets safeguarded, and every company's board is responsible for maintaining them. Separately, the statutory auditor must formally report on the operating effectiveness of these controls for all listed companies, and for unlisted public and private companies once turnover reaches Rs 50 crore or borrowings reach Rs 25 crore. Most enterprises fall within this reporting requirement, so we review the control framework and its documentation before the auditor tests it.

CARO 2020, the Companies (Auditor's Report) Order, requires the statutory auditor to report on 21 specified matters in an annexure to the audit report. These cover areas such as property and intangible assets, inventory, loans and investments, statutory dues, default in borrowings, the use of funds raised, fraud and whistle-blower complaints, related-party transactions, and going concern. It applies to most companies, with exemptions for one-person companies, small companies and certain small private companies. Enterprises generally fall within it, so we prepare the supporting evidence each clause requires.

Since 1 April 2023, a company that maintains its books in accounting software must use software with a functioning audit trail, or edit log, that records changes to each transaction and cannot be disabled. The statutory auditor is required to report on whether this feature operated throughout the year. As part of readiness we confirm the audit trail is enabled across the relevant systems and that the supporting documentation is available, since a gap here draws a specific comment in the audit report.

Schedule III to the Companies Act sets the format and disclosures for the financial statements. Recent amendments added several disclosures that auditors now examine closely, including ageing schedules for trade receivables and payables, a set of specified financial ratios with explanations for significant variances, promoter shareholding, and disclosures on funds advanced or borrowed. We review the draft statements against the current Schedule III format so these items are complete before the auditor begins.

Two frameworks exist. Indian Accounting Standards (Ind AS) apply to listed companies and to companies with net worth of Rs 250 crore or more, together with their holding, subsidiary, associate and joint-venture companies. Other companies follow the Accounting Standards (AS). The framework affects measurement, presentation and the disclosures the auditor expects, so we confirm which set applies and prepare the statements and notes accordingly.

Preparation shortens the audit because the auditor spends less time chasing documents and reconciling unexplained differences, and more time testing a clean, indexed set of records. Issues surfaced and corrected before fieldwork do not become formal findings, and a well-organised handover reduces the back-and-forth that extends timelines. The practical results are a faster audit, fewer observations, and less disruption to your finance team during the busy closing period.

Common observations include unreconciled bank or inter-company balances, incomplete fixed-asset and inventory records, related-party transactions not approved or disclosed correctly, statutory dues paid late, gaps in Schedule III disclosures, and weaknesses in internal financial controls. Most are avoidable with preparation. We test these areas during the readiness review and resolve them before the auditor encounters them.

We act as the single point of contact between your team and the auditor. That includes agreeing the timeline and information-request list at the start, tracking each request to closure, channelling auditor queries to the right person, and keeping the engagement on schedule. Clear coordination prevents duplicated requests and keeps the audit moving toward sign-off.

After fieldwork, the auditor raises observations and any adjustments. We help draft management responses, agree corrections to the accounts where needed, and develop a remediation plan for control or process gaps, with owners and timelines. We also prepare a closure record for each point, so the same issues do not recur in the next audit cycle.