Statutory audit under company law
All companies registered under the Companies Act are required to undergo a statutory audit. This audit is mandatory regardless of profit, turnover, or operational activity.

• Conducted under the Companies Act by a qualified Chartered Accountant
  
• Applies to private limited, public limited, one person, and section eight companies
  
• Auditor must be appointed within thirty days of incorporation
  
• Audit report is filed with the Registrar of Companies along with financial statements
  

Tax audit under the income tax act
Not all companies are subject to tax audit under the Income Tax Act. It becomes applicable when business turnover or receipts exceed specified thresholds.

• Tax audit is mandatory if turnover exceeds ten crore rupees in business
  
• For professionals, the limit is fifty lakh rupees in gross receipts
  
• Applicable under section 44AB of the Income Tax Act
  
• Audit report must be submitted in Form 3CA or 3CB along with Form 3CD
  

Applicability to dormant and inactive companies
Even companies that are not actively trading or earning revenue must comply with statutory audit. The Companies Act does not exempt such entities.

• Dormant companies must still appoint an auditor
  
• Financial statements must be prepared and audited annually
  
• MCA compliance requires submission of audited accounts
  
• Exemption may be sought only through formal dormancy approval
  

Audit requirements for startups and small companies
Startups and small companies are not exempt from statutory audits under the Companies Act. However, simplified processes or lesser scrutiny may apply in specific schemes.

• Audit is compulsory under company law regardless of startup status
  
• Tax audit exemption applies if turnover is below threshold and conditions are met
  
• Startups opting for presumptive taxation may avoid tax audit
  
• Separate exemptions are available under DPIIT recognition, not audit laws
  

Penalties for non-compliance with audit provisions
Failure to conduct mandatory audits may lead to penalties and prosecution. It affects the legal standing of the company and its ability to raise funds or file returns.

• Company and officers are liable for fines under the Companies Act
  
• Income Tax Department may reject returns without audit reports
  
• Delay in audit may delay tax filings and attract interest
  
• Non-audited accounts cannot be used for official or regulatory purposes
  

Internal audits under company law provisions
Some companies are required to conduct internal audits apart from statutory audits. These depend on turnover, paid-up capital, or sector-specific rules.

• Required for listed companies and certain unlisted public companies
  
• Mandated for companies meeting prescribed financial thresholds
  
• Conducted by internal audit teams or third-party professionals
  
• Focuses on internal controls, risk management, and governance
  

Recommended practices for timely audit compliance
Companies should prepare in advance to meet audit requirements smoothly. Appointing experienced auditors and maintaining accurate records ensures timely reporting.

• Maintain proper books of accounts throughout the year
  
• Coordinate with auditors for schedules and document needs
  
• Prepare financials in standard format for ease of auditing
  
• Use accounting software to track compliance and generate reports