Types of Partners in Partnership Firm
May 13, 2020
Remuneration of Director
May 15, 2020
Role of CA in LLP Audit
Limited Liability Partnership (LLP) is an incorporated partnership formed and registered under the Limited Liability Partnership Act, 2008 with limited liability and perpetual succession. It is a separate legal entity. As in case of Private Limited company Audit is mandatory however in case of LLP audit is applicable on certain conditions. In this article we discussion about LLP audit applicability , due date, audit report and annual compliance.
LLP Audit is inspection of books of accounts of LLP by Independent Chartered Accountant firm. LLP audit is detail verification of data , records , statements & financial statements. Audit is performed to ascertain the validity and reliability of information. Key benefit of conducting LLP audit is to detect and prevent error, fraud in function of partnership firm. After verification LLP auditor shall issue his LLP audit report. In short, an audit implies an investigation and a report.
LLP Audit 2 Types
1.LLP Audit Under LLP Act 2008
2.Audit Under Income Tax Act 1961.
LLP Audit As per LLP Act 2008
LLP audit is an examination of or inspection of books of accounts by an auditor of LLP. As per Section 34(4) of the Act there is LLP audit requirement. turnover exceed prescribed limit Rs..40 lakhs or whose contribution exceed Rs.25 lakhs in any financial year. LLP must appoint Chartered Accountant firm for audit purpose.
LLP Audit As Per Income Tax Act, 1961
LLP Audit under Income Tax Act 1961 is mandatory if turnover exceeds ₹1 crore in case of business while ₹50 lakhs in case of profession. This tax audit need to be conducted by CA Firm. Auditor shall issue Income Tax audit report to LLP.
Who Will Conduct LLP Audit?
The audit of LLP may be done by a Chartered Accountant in practice only who shall be appointed for each financial year of the LLP.
Role of CA in LLP Audit
- Practicing Chartered Accountant firm shall verify books of account of LLP.
- LLP Auditor shall sign & certify audit report.
- Auditor has to make adequate disclosures in the Audit report regarding compliance of accounting standards.
- Express opinion about true & fair view of financial statements of LLP
- Make necessary disclosure in Tax audit report
Auditors Responsibility in LLP Audit
- Auditor shall verify remuneration paid to partners disclosed in profit and loss statement. LLP Agreement is key document to verify details.
- Auditor has right of lien on books of accounts, if fees for work has not been paid.
- Auditor shall comply with accounting standards and auditing standards.
- Auditor has to give reasons for qualifications or adverse remarks.
- Auditor is required to report fraud against LLP by officers or employees if he has reason to believe that an offense involving fraud is committed while conducting audit or while having access to books of accounts.
LLP Audit Report:
Under LLP Act 2008 , there is no specific format given for LLP Audit Report. However CA firm may shall issue LLP Audit report as per there reporting format. The content of LLP audit report are generally LLP name , LLP Registration number , address, CA firm details , membership number etc. Once audit is completed CA firm shall issue audit report.
Summary
On crossing of turnover or capital contribution LLP audit is statutory compliance. LLP designated partners are responsible to get LLP books of accounts audited. In case of LLP Tax audit due date of compliance is 30th September. These is no requirement to change auditor in five years time. Partners & CA shall mutually decide LLP audit fees remuneration.
