Guide · Audit
Audit Firm (India, 2026)
An audit firm is a chartered accountant practice that independently checks a business's financial records and reports whether they give a true and fair view. In India, different laws require different audits: company law requires a statutory audit, the income tax law requires a tax audit above certain limits, and many businesses also run an internal audit for control. This guide explains each kind of audit, when you need one, how to choose and verify an audit firm, and what the fee depends on.
- What an audit firm does: independently checks your accounts and signs an opinion; only a practising CA can sign.
- Statutory audit: required for every company and for LLPs above the notified limit, under the Companies Act 2013.
- Tax audit: required under section 44AB when turnover or receipts cross the notified threshold.
- Independence matters: your bookkeeper or accountant cannot sign your statutory audit.
- Verify: check the firm registration number (FRN) and membership on icai.org.
- Fee driver: clean, reconciled books make the audit faster and cheaper.
01What an audit firm does
An audit firm reviews your accounts independently and gives an opinion on them. In India, only chartered accountants in practice, registered with the Institute of Chartered Accountants of India (ICAI), can sign a statutory or tax audit report.
A typical audit involves:
- Checking the books of account, vouchers, bank statements and invoices.
- Confirming balances, stock, fixed assets and loans.
- Testing whether transactions follow the law and accounting standards.
- Reporting findings and signing an audit report with an opinion.
The point of an audit is independence: the person checking the accounts is not the person who prepared them. That is why your bookkeeper or in house accountant cannot sign your statutory audit.
02The main kinds of audit
| Type of audit | Required by | Who it applies to |
|---|---|---|
| Statutory audit | Companies Act 2013 | every company (Pvt Ltd, Ltd) and every LLP above the notified limits, regardless of profit or loss |
| Tax audit | Income tax law, section 44AB | businesses and professionals whose turnover or receipts cross the notified threshold |
| GST reconciliation (GSTR-9C) | GST law | registered taxpayers above the notified turnover; now a self-certified statement |
| Internal audit | Companies Act for certain companies; voluntary for others | larger companies and businesses that want ongoing control checks |
Statutory audit and tax audit are the two most people mean when they say "I need an audit firm". A company usually needs both: its statutory audit under company law, and a tax audit if its turnover crosses the income tax threshold.
03When your business needs an audit
Whether you need an audit depends on your structure and your numbers, not on choice:
- Every company: a Private Limited or Public Limited company must have a statutory audit each year, even if it made a loss or did no business. The auditor is appointed and filings are made with the Ministry of Corporate Affairs.
- LLPs above the limit: an LLP needs a statutory audit once its turnover or contribution crosses the notified limit.
- Tax audit: a proprietor, partnership or company whose business turnover or professional receipts cross the section 44AB threshold must get a tax audit and file the report by the due date. See the due date for filing the tax audit report.
- Small proprietor below the limit: if you are below the thresholds and not a company, you may not need any audit at all. Do not pay for one you are not required to have.
An audit is not the same as filing your return
A tax audit is a report a CA signs; your income tax return is a separate filing you still have to make (the audit report usually goes first). Many small businesses confuse the two. If you are below the audit threshold, you still file your return, just without an audit.
04How to choose and verify an audit firm
Because an audit report carries legal weight, verify the firm properly:
- Confirm ICAI registration: the firm must have a firm registration number (FRN) and the signing partner a membership number, both checkable at icai.org.
- Check independence: the auditor should not be your accountant, a relative, or otherwise disqualified under the Companies Act. Independence is the whole value of the audit.
- Ask about experience in your sector: a firm that audits businesses like yours will raise fewer avoidable queries.
- Agree scope and timeline: know what the audit covers and when the report will be ready, well before the due date.
If you are appointing an auditor for a company and want extra comfort, you can also run a background check. For how legal teams approach this, see running a litigation check before appointing an auditor.
The value of an audit comes from independence. If the person signing your audit also keeps your books, you are paying for a check that cannot really check anything.
05What the audit fee depends on
Audit fees are not fixed by law for most private work; they depend on the size and complexity of the business:
- Volume of transactions and number of locations or branches.
- Quality of the books: clean, reconciled accounts cost less to audit than messy ones.
- Type of audit: a statutory audit, a tax audit and a GST reconciliation are separate pieces of work.
- Deadlines: rushed, last minute audits often cost more.
Ask for the fee and scope in writing before the audit begins, and keep your books reconciled through the year so the audit is quicker and cheaper. Good bookkeeping is the single biggest lever on your audit cost.
06How Claw Tax helps
Claw Tax and Accounts is an online tax, GST and accounting service for India that connects you with a verified chartered accountant at a fixed, published price, with a Claw reviewer checking every filing before it is submitted.
Claw Tax helps most with the work around an audit: keeping your books reconciled through the year, preparing the financial statements, and handling the tax audit and tax filing cycle with a verified CA. Clean, ready books are what make any statutory audit faster and cheaper, whoever signs it.
Because it is an online service, there is no branch to visit; a verified chartered accountant handles the tax audit and accounts at a fixed, published price, with a Claw reviewer checking the work and reminders before each due date. You can book a free 20-minute call to see what your business actually needs. See the services and prices at clawlaw.in/tax.
This is general information, not tax advice; a verified CA handles the specifics of your case and signs any audit report.
07Frequently asked questions
What does an audit firm actually do?
An audit firm independently checks a business's financial records, confirms balances and transactions, tests whether the accounts follow the law and accounting standards, and signs an audit report giving its opinion. In India, only chartered accountants in practice, registered with ICAI, can sign a statutory or tax audit report. The core value is independence: the auditor is not the person who prepared the accounts.
What is the difference between a statutory audit and a tax audit?
A statutory audit is required under the Companies Act 2013 for every company (and LLPs above the limit), regardless of profit or loss. A tax audit is required under the income tax law (section 44AB) when a business or profession crosses the notified turnover or receipts threshold. A company often needs both. Confirm the current thresholds for the relevant financial year with a CA, as they are set by notification.
Does a small proprietor or small business need an audit?
Not always. If you are not a company and your turnover or receipts are below the section 44AB threshold, you may not need a tax audit at all, and you still file your income tax return normally. Companies and LLPs above the limit always need a statutory audit. Do not pay for an audit you are not legally required to have; check your numbers against the current thresholds with a CA.
Can my own accountant audit my business?
No. The person who prepares or maintains your books cannot also sign your statutory audit, because the whole point of an audit is independent review. You need a separate chartered accountant in practice, who is not disqualified under the Companies Act, to act as auditor. Verify the firm registration number and membership on icai.org before appointing.
How much does an audit cost in India?
There is no fixed legal fee for most private audits. The cost depends on the volume of transactions, the number of locations, how clean the books are, the type of audit (statutory, tax, or GST reconciliation), and the deadline. Agree the fee and scope in writing before work starts. Keeping your books reconciled through the year is the biggest single way to reduce the fee.
What documents does an audit firm need from me?
Typically the books of account, bank statements, sales and purchase invoices, expense vouchers, GST and TDS records, fixed asset and stock details, loan and investment papers, and the previous year's financial statements and audit report. A firm will share a checklist. The more organised and reconciled these are, the faster and cheaper the audit.