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Audit and Assurance for Startups

"Are you an LLP with a turnover of over Rs 40,00,000 or does your capital contribution exceed Rs 25,00,000? Are you a private limited company or a public limited"<br>TaxGuru is a platform that provides Updates On Amendments in Income Tax, Wealth Tax, Company Law, Service Tax, RBI, Custom Duty, Corporate Lawu00a0, Goods and Service Tax etc.<br>To know more visit https://taxguru.in/finance/audit-assurance-startups.html

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Audit and Assurance for Startups

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  1. AUDITANDASSURANCEFORSTARTUPS https://taxguru.in/finance/audit-assurance-startups.html AreyouanLLPwithaturnoverofoverRs40,00,000ordoesyourcapitalcontributionexceedRs25,00,000? Areyou a private limitedcompany or a publiclimited company? Ifyoufallundertheabovecategories,anauditofyourfinancialstatementsiscompulsory. WhatisanAudit? Theauditisthesystematicandindependentexaminationofthebooksofaccountsofalegalentitywhether profit-orientedornot witha viewto assessingif thefinancialstatements provideatrue andfair view. Whoshouldgettheiraccountsaudited? Themandatoryapplicabilityofauditdependsonthenatureofthelegalentity. InthecaseofLLP,anauditiscompulsorilyrequirediftheturnoverexceedsRs40,00,000orthecontribution exceedsRs 25,00,000 in any year. Foraprivatelimitedcompany,theiraccountshavetobecompulsorilyauditedeveryfinancialyear. Infact,aprivate limitedcompanyhasto appointanauditorwithin 30daysofincorporation. Incaseanauditorisnotappointedwithin30days,theshareholdersneedtobeinformed.Theywillberequiredto appointan auditor within 90 daysof incorporation. BenefitsofAudit Apartfromtheobviouspeaceofmindofcomplyingwithstatutoryrequirements,thereareseveralbenefitsof gettingthe books of account audited. StatutoryCompliance Itismandatorytocompletetheauditonceeveryfinancialyeartomeetthestatutoryrequirements.Completionof the audit on time provides the owners with peace of mind. The cost and temporary discomfort of the audit process is a small price to pay compared to the price of non-compliance. Statutory compliance is an important parameterto measure business enterprises by.

  2. BusinessProcessImprovements A proper detailed audit will take an unbiased look at your internal processes, systems and controls. The audit is theperfectopportunityforexpertstosuggestprocessimprovementsthatcanmakeyouroperationsmore efficient.Flawsin internalcontrols,governance, systemcontrols,accounting practicesandorganizational culture cancome tothe fore throughthe audit processgiving you theopportunity to fixthem. EnterpriseReputation Anauditisanindependentverificationofthefinancialstatementsofanenterprisethatisconsideredan importantparameterbyallstakeholders,bothexistingandprospective.Anauditprovidescredibilityand confidence that the financial situation is correctly depicted. This is especially important for potential investors as theaudit is an independent evaluation. EarlyIdentificationandPreventionofFraud A proper yearly audit helps to identify flaws or loopholes in the system that are being misused or have the potential to be misused in future. Early detection will help the enterprise to plug the loopholes and prevent the occurrenceoffraud.Intheabsenceofaudits,thesefraudscancontinueforaverylongtimewithoutbeing caught. BetterDecisionMaking A proper audit confirms the accuracy of the financial statements of the enterprise. This detailed examination along with audit observations provides startups with critical information regarding the financial health of their enterprise. This information helps the business owners in their decision-making process related to financial planning,capital expenditure and budgeting. Audit forms an important part of compliances and needs to be adhered to in order to avoid penalties. When you register your business entity, it is important to know the statutory requirements regarding audit and ensure that theneeds are complied with.

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