What is Audit?

An audit is an official and independent examination of a company's financial statements and records to ensure their accuracy and compliance with accounting standards and regulations. Audits can be conducted internally by company employees or externally by a certified public accounting firm.

For Startups: A statutory audit by a Chartered Accountant is mandatory for all private limited companies in India. For a startup, a "clean" audit report (one without any qualifications or adverse remarks) is crucial for building trust with investors. During fundraising, investors will always ask for the latest audited financials as part of their due diligence process. A qualified audit report is a major red flag that can derail a funding round.

Example: A CA firm conducts an annual audit of a startup's books, verifying bank statements, invoices, and expense reports to certify that the financial statements present a true and fair view of the company's financial position.