Audit Requirement for Incorporated JVs

• If the JV is formed as a private limited company or public limited company, it must conduct a statutory audit under the Companies Act, 2013.
  
• Audit is mandatory irrespective of turnover or profit, meaning all companies must appoint a statutory auditor.
  
• The auditor must be a Chartered Accountant or a CA firm registered with the Institute of Chartered Accountants of India (ICAI).
  
• The audit report must be filed with the Registrar of Companies (RoC) along with Form AOC-4.
  
• Non-compliance may lead to penalties and disqualification of directors.
  

Audit Requirement for LLP JVs

• For JVs incorporated as Limited Liability Partnerships (LLPs), statutory audit is required if turnover exceeds ₹40 lakhs or capital contribution exceeds ₹25 lakhs in any financial year.
  
• Below these limits, audit is optional unless required by partners or lenders.
  
• The audit must be conducted by a Chartered Accountant and the report submitted during annual compliance.
  
• LLPs must file Form 8 and Form 11 annually with the RoC.
  

Unincorporated JVs (Contractual or Consortium)

• If the JV is not a registered legal entity, it may still be subject to audit under Income Tax Act if it qualifies as an Association of Persons (AOP).
  
• AOPs must undergo tax audit if turnover exceeds ₹1 crore (business) or ₹50 lakhs (profession) under Section 44AB of the Income Tax Act, 1961.
  
• Such JVs must file tax returns and include the audit report (Form 3CB and 3CD).
  
• In government projects, even unincorporated JVs may be required to submit audited accounts as part of contractual compliance.
  

Audit Coverage and Reporting

• The statutory auditor reviews the JV’s books of accounts, financial statements, internal controls, and compliance with applicable laws.
  
• The audit report must be annexed with the Balance Sheet, Profit & Loss Account, and Cash Flow Statement.
  
• Observations on related party transactions, internal control weaknesses, and fraud (if any) must be disclosed.
  
• Audited financials support decision-making, investor confidence, and legal compliance.
  
• The report must be signed by the auditor and approved by the Board before filing.
  

Other Types of Audits Applicable

• JVs may also be subject to tax audit, GST audit (if turnover exceeds ₹5 crore), and transfer pricing audit (Form 3CEB) for international transactions.
  
• Internal audits may be mandated based on company size or sectoral regulations (e.g., SEBI, RBI, or IRDAI guidelines).
  
• Foreign-invested JVs may face audit scrutiny from parent companies or foreign regulators.
  
• Audits required under contractual obligations or funding agreements must also be fulfilled.