Introduction
A One Person Company (OPC), though operated by a single individual, is treated as a separate legal entity under the Companies Act, 2013. This legal recognition brings with it several statutory responsibilities, including the requirement for financial auditing. Auditing is a critical aspect of corporate governance and financial transparency, even for small and single-promoter companies like OPCs. The process ensures that the financial statements of the company are accurate and comply with the relevant accounting standards and legal provisions.

Statutory Audit Requirement
Every OPC, irrespective of its size or turnover, is mandated by law to undergo a statutory audit under the Companies Act. This requirement applies regardless of whether the OPC makes profits or incurs losses during a financial year. The audit must be carried out by a qualified Chartered Accountant who is appointed as the statutory auditor. The auditor examines the books of accounts, financial statements, and related documents to verify the accuracy of the company’s financial reporting.

Appointment of Auditor
As per Section 139 of the Companies Act, 2013, an OPC must appoint its first auditor within 30 days of incorporation by the Board of Directors. This auditor shall hold office until the conclusion of the first Annual General Meeting (AGM), though OPCs are exempted from holding AGMs. For subsequent years, the auditor is appointed for a term of five years, subject to ratification as may be required. The appointment must be filed with the Registrar of Companies (ROC) through Form ADT-1.

Audit Process and Documentation
The statutory audit involves verification of financial transactions, ledger accounts, cash flow statements, and overall financial reporting. The auditor evaluates compliance with accounting standards and tax laws, reviews internal controls, and ensures proper documentation of expenses and revenues. The auditor also checks for any discrepancies or non-compliances that may require reporting. At the end of the audit, the auditor prepares an audit report that forms part of the company’s annual financial filings.

Thresholds for Tax Audit
Apart from the statutory audit under the Companies Act, an OPC may also be subject to tax audit under Section 44AB of the Income Tax Act, 1961. This applies if the turnover of the OPC exceeds ₹1 crore in case of business or ₹50 lakh in case of profession. In such cases, the tax audit is conducted by a Chartered Accountant, and the report must be submitted in Form 3CA/3CB and 3CD while filing the income tax return.

Filing of Audited Financial Statements
Once the audit is complete, the audited financial statements, including the balance sheet, profit and loss account, cash flow statement, auditor’s report, and board’s report, must be filed with the ROC. This is done using Form AOC-4 within 30 days of the financial year-end. Additionally, Form MGT-7A must be filed annually to report the company’s return, along with financials and shareholding structure.

Exemption from AGM but Not Audit
While OPCs are exempted from holding Annual General Meetings (AGMs), they are not exempted from conducting audits. The audited financial statements must still be approved by the Board and filed with the ROC. This exemption simplifies operational compliance but does not reduce the financial and statutory responsibilities concerning audits and annual filings.

Conclusion
Financial auditing is a legal obligation for OPCs and plays a vital role in maintaining transparency and trust in business operations. Despite having a single promoter, an OPC must adhere to the same audit standards applicable to other private companies. From appointing auditors to filing audited financials, OPCs must ensure timely and accurate compliance with both the Companies Act and the Income Tax Act. This structured approach to auditing safeguards the interests of stakeholders and promotes disciplined financial management within the company.

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