Statutory Audit of Companies in India — Process, Cost, CARO (2026)
Statutory audit of companies in India — process, Form AOC-4, CARO 2020, cost, deadline. From ₹14,999. CA firm-led.
Statutory audit is mandatory for every Pvt Ltd / Public company / LLP above threshold / Section 8 company in India under the Companies Act, 2013. In this guide, we cover the process, CARO 2020, AOC-4 filing, and cost.
What is Statutory Audit?
Statutory audit is an independent audit of the financial statements of a company by a Chartered Accountant firm, as required by the Companies Act, 2013. The auditor expresses an opinion on whether the financial statements give a "true and fair view" of the company's financial position.
Who Needs Statutory Audit?
- Every Pvt Ltd / Public / Section 8 company
- LLPs with turnover > ₹40L OR capital > ₹25L
- Foreign companies operating in India
- Nidhi companies
- Producer companies
Statutory Audit Process
Step 1: Appointment of Auditor
Auditor is appointed at the AGM. First auditor: appointed by the board within 30 days of incorporation. Subsequent: by the AGM. Tenure: 5 years (individual) / 10 years (firm). Mandatory rotation after tenure.
Step 2: Pre-Audit Planning
Auditor plans the audit: scope, materiality, risk assessment, audit strategy, resources, timing.
Step 3: Books Finalisation
Books of accounts are finalised by the company: P&L, Balance Sheet, Cash Flow, Notes to Accounts (Schedule III).
Step 4: Fieldwork
Auditor + team test transactions, verify vouchers, sample data, raise queries, visit branches, do physical verification of inventory + fixed assets.
Step 5: Audit Report + CARO
Auditor issues the audit report. For applicable companies, also issues CARO 2020 (Companies Auditor's Report Order).
Step 6: Filing with ROC
Audit report is placed before the AGM. Form AOC-4 is filed with the ROC within 30 days of AGM.
CARO 2020 — Companies Auditor's Report Order
CARO 2020 is an additional reporting requirement for statutory auditors. It includes 21 specific matters to be reported on. Applicable to companies with paid-up capital > ₹50Cr OR turnover > ₹250Cr.
- Maintenance of proper records + financial statements
- Physical verification of fixed assets
- Revaluation of fixed assets (if any)
- Title deeds of immovable properties
- Inventory physical verification
- Loans given by the company
- Loans taken by the company
- Compliance with Section 185 (loans to directors)
- Compliance with Section 186 (investments + loans)
- Public + deposits accepted
- Fraud reporting
- Managerial remuneration
- Compliance with Companies Act + Auditor's Report
- Nidhi companies compliance
- Related party transactions
- Internal financial controls
- Going concern
- Statutory dues (PF, ESI, GST, IT, etc.)
- Qualifications + emphasis of matter
- Maintenance of cost records (Section 148)
- Transfer to Investor Education and Protection Fund (IEPF)
AOC-4 Filing
- Form AOC-4: Financial statements + audit report + directors' report
- Due: 30 days from AGM
- Penalty: ₹300/day for late filing (Pvt Ltd)
- Documents: P&L, Balance Sheet, Cash Flow, Notes, Director's Report, Auditor's Report, CARO 2020 (if applicable)
Cost
| Type | Cost |
|---|---|
| Statutory audit (small Pvt Ltd) | From ₹14,999 |
| Statutory audit (mid-size Pvt Ltd) | From ₹24,999 |
| Statutory audit (large / multi-entity) | From ₹44,999 |
| Statutory audit + tax audit (combined) | From ₹24,999 |
| Statutory audit + GST audit (combined) | From ₹19,999 |
Penalty for Non-Compliance
- No statutory audit: ₹25,000-₹5 lakh + imprisonment up to 1 year (Section 147)
- Wrong audit report: ₹25,000-₹5 lakh per auditor
- AOC-4 late filing: ₹300/day (Pvt Ltd), ₹200/day (Public Ltd)
- CARO non-compliance: ₹25,000-₹5 lakh per auditor
- Auditor negligence: lose ICAI membership
Frequently Asked Questions
Q: What is the statutory audit deadline?
A: AGM within 6 months of FY end (by 30 September). Audit report placed before AGM. AOC-4 within 30 days of AGM.
Q: Can the same CA firm do tax audit and statutory audit?
A: Yes, if the CA firm is the same. The same firm can issue both reports, but the engagement letter + fee + scope are separate.
Q: What is CARO 2020?
A: Companies Auditor's Report Order, 2020. Additional reporting on 21 matters including internal controls, fraud, loans, related party transactions, fixed assets, inventory, statutory dues. Applicable to companies with paid-up capital > ₹50Cr OR turnover > ₹250Cr.
Q: How long is the auditor's tenure?
A: Individual: 1 term of 5 years. Firm: 2 terms of 5 years (10 years max). Mandatory rotation after that.