External Audit is conducted based on the laws applicable to the organization. It is an Independent examination of the financial statements prepared by the organization. With the Indian Government stressing on making the nation a tax compliant society, the need has arised for the organizations to undergo the following audits.
- Tax Audit – Tax Audit is conducted on business organizations in India if turnover in the previous year (i.e financial year) exceeds the turnover as specified under Section 44AB of Income Tax Act, 1961 in consonance with the Finance Act, as published in the official gazette of the parliament every year. It is conducted as per the provisions of Income Tax Act, 1961 and rules prescribed there under.
- Statutory Audit – As per section 139 of Companies Act, 2013 every company shall appoint an individual or a firm as an auditor. Every company, be it Public or Private or OPC has to appoint a Statutory Auditor and get the books of accounts audited as per the Companies Act, 2013.