Introduction
A One Person Company (OPC) is a distinct legal entity under the Companies Act, 2013 that allows a single individual to form and operate a company with limited liability. While OPCs enjoy several compliance relaxations compared to other corporate forms, they are not exempt from statutory audit requirements. A statutory audit is a mandatory examination of a company’s financial records by an independent Chartered Accountant, conducted to ensure accuracy, legal compliance, and transparency in financial reporting. Regardless of size or turnover, OPCs are subject to statutory audits in India, making it essential for entrepreneurs to understand the scope, requirements, and implications of audit applicability for OPCs.

Mandatory Nature of Statutory Audit for OPCs
Under Section 139(1) and Section 143 of the Companies Act, 2013, all companies, including OPCs, are required to appoint an auditor and undergo an annual statutory audit. There is no exemption based on turnover, capital, or profitability. The statutory audit ensures that the financial statements reflect a true and fair view of the company’s affairs and are free from material misstatements. This audit requirement applies irrespective of the company’s level of activity, including dormant or minimally active OPCs.

Appointment of Auditor by OPC
An OPC must appoint its first auditor within 30 days from the date of incorporation by the Board of Directors. The appointed auditor shall hold office until the conclusion of the first Annual General Meeting, which is not mandatory for OPCs. Thereafter, the auditor is reappointed for a term of five years, subject to ratification at each Annual General Meeting, though this ratification requirement has been omitted as per the Companies (Amendment) Act, 2017. The appointment must be filed with the Registrar of Companies using Form ADT-1. If an OPC fails to appoint an auditor, the Central Government may appoint one at the company’s expense.

Audit Scope and Financial Statement Examination
The statutory auditor is responsible for examining the OPC’s books of accounts, including cash book, bank records, invoices, ledgers, and financial statements such as the balance sheet and profit and loss account. Although OPCs are exempt from preparing a cash flow statement, all other components of financial statements must be audited. The auditor verifies the accuracy of financial reporting, checks for compliance with accounting standards and laws, and evaluates internal controls. The audit culminates in an audit report that is submitted along with Form AOC-4 to the Registrar of Companies.

Reporting and Filing Obligations
After completion of the statutory audit, the OPC is required to file the audited financial statements with the Registrar of Companies within 180 days from the end of the financial year. The key forms include AOC-4 for submission of financial statements and MGT-7A for annual return filing. The audit report prepared by the Chartered Accountant is an integral part of these filings. These documents become part of the public record, enhancing the transparency and credibility of the company, which is especially important for attracting investors, creditors, or government support.

Tax Compliance and Audit Correlation
Though the statutory audit is governed by the Companies Act, it also supports compliance with tax regulations. If the turnover of the OPC exceeds ₹1 crore in a financial year, or if it qualifies under certain presumptive taxation schemes but chooses to declare lower profits, it must also undergo a tax audit under Section 44AB of the Income Tax Act. The statutory auditor may also conduct the tax audit, ensuring consistency in financial records and preventing duplication of efforts. Even when a tax audit is not applicable, a statutory audit provides a strong foundation for accurate tax filings.

Consequences of Non-Compliance
Failure to conduct a statutory audit or appoint an auditor attracts penalties under the Companies Act, 2013. The company may face a fine ranging from ₹25,000 to ₹5,00,000, and every officer in default may be fined or imprisoned depending on the gravity of the offense. Additionally, non-filing of audit-related forms leads to late fees and may trigger scrutiny from regulatory authorities. Continuous non-compliance can even result in the disqualification of the director, striking off the company, or restriction in accessing credit and public tenders.

Audit Exemptions and Clarifications
While OPCs do not receive an exemption from statutory audit, they do benefit from some procedural relaxations. For instance, they are not required to convene Annual General Meetings or board meetings with multiple directors, and they are exempt from rotating auditors as per Section 139(2). These simplifications reduce the administrative burden but do not eliminate the fundamental requirement of auditing. The audit is essential for ensuring that even the smallest companies operate within the legal and financial governance framework established by law.

Conclusion
Statutory audit is a non-negotiable compliance requirement for one-person companies under Indian corporate law. It ensures that the financial records of OPCs are accurate, transparent, and compliant with the applicable accounting and legal standards. Despite being a single-person entity, an OPC is treated as a full-fledged company for audit purposes, emphasizing the importance of financial integrity and corporate governance. Understanding and adhering to audit requirements enables OPCs to maintain credibility, fulfill regulatory expectations, and position themselves for growth, funding, and business opportunities in a legally compliant environment.

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