What is Statutory Audit?
Nexa Consultancy | Startup & Finance Glossary
A Statutory Audit is a legally required external audit of a company's financial statements. In India, it is mandatory for all companies registered under the Companies Act, 2013, to have their accounts audited by an independent Chartered Accountant at the end of each financial year. The purpose is to ensure that the financial statements provide a "true and fair" view of the company's financial position and are free from material misstatement.
For Startups: The annual statutory audit is a critical compliance requirement. The audited financials are filed with the Registrar of Companies and are required for tax filings. For a startup looking to raise funds, clean, unqualified audited financials are essential for investor due diligence.
Example: A startup closes its books for FY 2023-24. It then engages a CA firm to conduct a statutory audit before its Annual General Meeting.