A statutory audit is an independent examination of a company's books of accounts, records and transactions that is required by law. In simple words, a qualified Chartered Accountant checks whether the financial statements prepared by the company give a true and fair view and comply with applicable accounting standards and legal requirements. Under the Companies Act 2013, every company in India, including private limited companies, must get its annual financial statements audited, and the word "statutory" simply means the audit is mandatory, not optional.

The applicability of statutory audit under the Companies Act 2013 extends to every company registered in India — private limited, public limited, one person company and even small companies — irrespective of turnover or paid-up capital. There is no turnover-based exemption for companies, unlike income tax audit which applies only above certain turnover limits. LLPs also require an audit once their turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh, and the audit must be conducted every financial year by an independent practicing Chartered Accountant.

For companies with a 31 March year end, the statutory audit must be completed and the audit report signed before the annual general meeting, which has to be held within six months of the financial year end — by 30 September for most companies. The audited financial statements are then filed with the ROC in Form AOC-4 within 30 days of the AGM. The first auditor of a new company must be appointed by the board within 30 days of incorporation, and Form ADT-1 for subsequent appointments is filed within 15 days of the AGM. Note that income tax audit deadlines are separate from the statutory audit due date.

Start by verifying your appointment and eligibility under Section 141 and obtaining an engagement letter. Then plan the audit by understanding the company's business, key processes and risk areas, evaluate the accounting system and internal financial controls, and perform procedures such as vouching of transactions, verification of assets and liabilities, bank and debtor confirmations, related party checks and verification of statutory dues like GST and TDS. Working through a statutory audit checklist that covers accounting standards compliance, Schedule III presentation, CARO 2020 clauses and subsequent events helps ensure nothing is missed before the audit report is signed.

A statutory auditor is an independent professional appointed by a company's shareholders to audit its financial statements, and in India only a practicing Chartered Accountant, or a firm or LLP where the majority of partners are practicing Chartered Accountants, can be appointed. The path is to clear the CA course through ICAI — Foundation, Intermediate, the prescribed practical training (articleship) and Final — and then obtain a Certificate of Practice. Once in practice, you can be appointed as a statutory auditor by companies, subject to the disqualifications under Section 141 of the Companies Act 2013, such as indebtedness to the company, certain business relationships with it, or relatives employed by the company.

Internal financial controls under the Companies Act 2013 are defined in Section 134(5)(e) as the policies and procedures adopted by a company for ensuring the orderly and efficient conduct of its business, including safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. Directors are responsible under Section 134 for ensuring proper internal financial controls, and under Section 143(3)(i) the statutory auditor has to report on whether the company has an adequate internal financial controls system and whether it is operating effectively.

Internal financial controls over financial reporting are the part of internal financial controls that relate to the reliability of financial reporting and preparation of financial statements — controls over transaction recording, authorisations, reconciliations, IT access to accounting systems and period-end closing. Since the definition of internal financial controls in the Companies Act 2013 is very broad, the statutory auditor generally restricts the evaluation to internal financial controls over financial reporting, testing key controls in significant processes and considering whether any deficiency affects the audit report.

The applicability of internal financial controls to private companies is often misunderstood — these provisions are not restricted to large or listed companies. Every private limited company falls under Section 134(5)(e) as regards the directors' responsibility, and the statutory auditor reports on the adequacy and operating effectiveness of internal financial controls under Section 143(3)(i) as part of the annual statutory audit. In practice the evaluation is generally limited to internal financial controls over financial reporting, and the smallest companies, such as one person companies and small companies, get relief under some related requirements like the CARO report, so it is worth confirming the current position for your company's size.

Begin by identifying significant processes such as revenue, purchases, payroll, treasury and financial closing, and perform a walkthrough of each to document how transactions flow and where key controls exist. Assess design effectiveness first, then test operating effectiveness using inquiry, observation, inspection of documents and re-performance on a sample basis. Evaluate the deficiencies identified, classify them as control deficiencies, significant deficiencies or material weaknesses, communicate them to management and those charged with governance, and consider their impact on the audit opinion.

Start with a risk assessment and map the major processes end to end. For each process, define key control objectives and design preventive and detective controls such as approval and authorisation limits, segregation of duties, periodic reconciliations, IT access controls and management reviews. Document them in process flowcharts or control matrices, train employees on them, and monitor them through internal audit or periodic self-assessment so gaps can be remediated and controls updated as the business grows.

The applicability of Ind AS in India covers listed companies and companies intending to get listed, as well as unlisted companies with a net worth of ₹250 crore or more, for whom following Ind AS is mandatory. Unlisted companies below this threshold can adopt Ind AS voluntarily, but once adopted they must continue applying it in subsequent years. Banking companies, insurance companies and similar regulated entities continue to prepare their financial statements under the existing framework, and Ind AS is notified under Section 133 of the Companies Act 2013.

Ind AS 115 is the Indian accounting standard on revenue from contracts with customers, converged with IFRS 15 and applicable for periods beginning on or after 1 April 2018, replacing Ind AS 11 and Ind AS 18. It prescribes a five-step model: identify the contract with the customer, identify the performance obligations, determine the transaction price, allocate the price to the performance obligations, and recognise revenue when or as each performance obligation is satisfied.

Ind AS 116 is the Indian accounting standard on leases, converged with IFRS 16 and effective for periods beginning on or after 1 April 2019, replacing Ind AS 17. For lessees, it removes the earlier distinction between operating and finance leases — almost every lease is now recognised on the balance sheet as a right-of-use asset with a corresponding lease liability, with limited exemptions for short-term and low-value leases. Lessor accounting continues broadly on the earlier finance and operating lease basis.

Start with your resume and be ready to explain every articleship assignment, the industries you handled and your specific role in each engagement. Revise the core technical subjects relevant to the role — accounting standards or Ind AS, auditing and assurance, taxation and corporate law — and brush up on tools like Excel, Tally or the ERP the employer uses. Research the employer's business, practise commonly asked technical and HR questions, and take a few mock interviews so you can present your articleship experience clearly and confidently.

Neither option is universally better; it depends on your long-term goal. Practice, whether your own firm or a CA firm, exposes you to audit, taxation and compliance work across multiple clients, builds client-handling skills and eventually leads to independence and entrepreneurship. Industry offers deeper specialisation in one organisation, with roles in internal audit, FP&A, controllership and finance leadership, along with more structured growth and stability. A common route is to begin in practice or a Big 4 to build strong technical foundations and later move to industry, so weigh your articleship exposure, risk appetite and career goals before deciding.