Audit of LLP Accounts

Audit of Accounts by LLP

Though the structure of an LLP is similar to that of a body corporate having a separate legal identity. The audit of LLP is governed by Limited Liability Partnership Act, 2008. The LLP shall maintain books of accounts containing transactions which shall disclose reasonable accuracy at any time and the financial position of the LLP at that particular point of time. It shall also enable the designated partners to ensure that the Statement of Account and Solvency prepared are in agreement with the requirements of the Act 

Audit under LLP Act

Every LLP whose turnover exceed Rs.40 lakhs or whose contribution exceed Rs.25 lakhs in any financial year has to mandatorily get its accounts audited by a Chartered Accountant.  One of the major advantages of an LLP is that, it is not mandatory to get the accounts audited unless the turnover / capital contribution criteria is met. Every LLP has to maintain the annual accounts showing the true and fair view of the state of affairs of the LLP.

Audit under Income Tax Act

Audit of accounts as per section 44AB of Income Tax Act, 1961 is mandatory only when turnover exceeds 1 crore rupees.

Appointment of Auditors

The LLP whose turnover/contribution exceeds the prescribed limit shall appoint a Chartered Accountant as its auditor for auditing its accounts. The partners of LLP have the right to appoint the auditor for each financial year and shall hold office either till the new auditors are appointed. There is no specific time line for appointment of auditors by LLP. Auditors should be appointed preferably before the end of financial year when the turnover/contribution of LLP exceeds the prescribed limits.

Change of LLP Auditors.

Unlike Company Audit, there is no specific guidelines for appointment / reappointment of Auditors. The partners of LLP are free to change the auditors from time to time.

Resignation of Auditors

An auditor of the LLP can resign at any time by sending a notice to the registered office of the LLP / its designated partner / partners. The partner of LLP can fill the vacancy by appointing another auditor.

Removal / Replacement of Auditors

There are no specific provisions for removal / replacement of auditors under LLP Act. The Partners of LLP have the complete freedom to change the auditors from time to time.

Filing of Statement of Accounts and Solvency / Annual Return

LLP is a body corporate and is required to file returns periodically with the Registrar. To ensure transparency, these returns are available to the public for inspection. The LLP Act made it mandatory for LLPs to file Annual Return and Balance Sheet every year whether the LLP do business or not. As per LLP act, date for filing returns are as given below.