Audit and certification: answers to common questions
Statutory, tax, internal and bank audits, CARO, internal financial controls, and certificates issued by a Chartered Accountant. Each answer gives the short answer first, then the detail and the legal basis.
Audit and assurance
What is the difference between a statutory audit, a tax audit and an internal audit?
A statutory audit gives an independent opinion on whether the financial statements give a true and fair view; it is compulsory for every company. A tax audit, under the Income-tax Act, checks and reports the particulars the tax law needs, once turnover crosses the limit. An internal audit reviews controls, processes and risks for management; it is compulsory only for listed and larger companies. A company's statutory auditor cannot be its internal auditor.
Read the full answer · Reviewed 8 November 2026
How is a company's auditor appointed, and when must auditors be rotated?
The board appoints the first auditor within 30 days of incorporation. After that, members appoint the auditor at the AGM for a five-year term, and the company files ADT-1 within 15 days. Listed companies, and unlisted or private companies above specified sizes, must rotate auditors: an individual can serve one five-year term and a firm two, followed by a five-year gap. Small companies and OPCs need not rotate.
Read the full answer · Reviewed 8 November 2026
What is CARO 2020, and which companies does it apply to?
The Companies (Auditor's Report) Order, 2020 requires the auditor to report on 21 specific matters, such as title deeds of property, inventory, loans given, statutory dues, defaults, use of funds raised, fraud, related parties and CSR. It applies to most companies, but not to banks, insurers, Section 8 companies, OPCs, small companies, or private companies below certain capital, borrowing and revenue limits.
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What do qualified, adverse and disclaimer opinions in an audit report mean?
An unmodified opinion says the financial statements give a true and fair view. A qualified opinion says they do, except for a matter that is material but not pervasive. An adverse opinion says they do not, because misstatements are material and pervasive. A disclaimer means the auditor could not get enough evidence to form an opinion. An emphasis of matter paragraph draws attention to something without modifying the opinion.
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What is a concurrent audit of a bank branch, and what does it cover?
A concurrent audit is a continuous examination of a bank branch's or department's transactions, done at the same time as, or soon after, they take place, to detect irregularities and lapses early. Banks set it up under RBI's guidelines, according to a board-approved policy that decides which branches and activities are covered. Concurrent auditors may be the bank's own officers or outside Chartered Accountant firms, and report monthly, with serious matters reported at once.
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What is the auditor's report on internal financial controls, and which companies need it?
Besides the opinion on the accounts, a company's auditor reports on whether the company has adequate internal financial controls over financial reporting and whether they operated effectively. It applies to listed and public companies and to larger private companies. OPCs, small companies, and private companies with turnover below ₹50 crore and borrowings below ₹25 crore are exempt. Directors of listed companies also state that such controls are in place.
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Certificates by a CA
How can I verify a CA certificate or audit report using its UDIN?
Every certificate, audit report or attestation signed by a Chartered Accountant in practice carries an 18-character Unique Document Identification Number (UDIN). Go to ICAI's UDIN portal, choose 'Verify UDIN', enter the UDIN and the details asked for, and compare what the portal shows (member, firm, date, type of document and key figures) with the document. If the UDIN is missing, revoked or does not match, ask the issuing CA before relying on it.
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What documents are needed for a net-worth certificate from a Chartered Accountant?
A net-worth certificate states a person's assets less liabilities on a given date. The CA needs evidence for each item: bank statements and balance confirmations, deposit receipts, demat and mutual fund statements, insurance surrender values, property documents with a registered valuer's report, and statements of loans outstanding, along with PAN and recent income-tax returns. The certificate is issued only for figures that can be verified and carries a UDIN.
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What goes into a turnover certificate, a certificate for a bank loan, and a Form 15CB certificate?
A turnover certificate states turnover for given years, verified with audited accounts and reconciled with GST returns. Certificates for banks cover matters such as stock and book debts, end use of loan funds and project cost. A Form 15CB certificate (now Form 146) is given before a payment to a non-resident that is taxable in India; the CA examines the nature of the payment, the tax treaty, and the rate of TDS. Each certificate carries a UDIN.
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Why does every CA certificate carry a UDIN, and which documents need one?
ICAI requires a Unique Document Identification Number on every certificate, audit report and other attest document signed by a Chartered Accountant in practice. It lets anyone check, on ICAI's portal, that the document was really issued by that CA, on that date, with those figures. It was introduced to stop forged and altered certificates. A document that needs a UDIN but lacks one should not be accepted.
Read the full answer · Reviewed 8 November 2026