Audit requirements for an LLP you need to take of in India

LLP is a way business structure that has the elements of a partnership firm and a company. It provides benefits of both, such as less legal and regulatory formalities and a corporate entity form. Professionals who use LLPs want to depend heavily on the reputation. Most of them are managed by experts who possess a lot of expertise, experience and clients. By bringing their resources, the partners tend to lower the costs of doing business while raising LLP’s capacity. They can share employees, office space and so forth. Reduction in the costs would enable partners to make more profits from their activities than they can individually. LLP’s partners can also be junior paid partners with future chances of turning them into normal partners. These junior partners will be given a salary and will have no stake or liability in the partnership.

They are designated experts and qualified to do the work that the partners bring in. It is another way that LLP audit assist the partners in scaling their operations. Junior employees and partners take away the comprehensive work and free up the partners to concentrate on bringing in the new business. An LLP registration can be more profitable since it possesses the ability to bring partners in and let the partners out. Because a partnership agreement exists for an LLP, associates can be admitted or retired, as mentioned by the agreement. This comes in handy as the LLP can always admit partners who bring existing business with them.

Generally, the decision to admit needs approval from all the existing partners. It becomes pertinent to carry out the limited liability partnership registration process in India before starting a business.

Submission of accounts and maintenance

The LLP is legally obliged to maintain annual accounts representing a fair and accurate view of its day-to-day affairs. A ‘statement of accounts and solvency’ in the mentioned form must be submitted by every LLP with the registrar annually.

Exemption from the audit to LLP

Such rules, among other things, outlines that any LLP, whose turnover does not go beyond, in any financial year, Rs. 40 lacs, or whose turnover does not go beyond Rs. Twenty-five lacs is not obliged to get its accounts audited. Nonetheless, if the partners of such LLP (limited liability partnership) choose to get accounts of such LLP audited, the accounts have to be audited only as per the rules. LLPs are obliged to appoint an an LLP auditor within one month before the end of the financial year. To put it in other words, an auditor should be appointed before the 1st of March every year.

Appointing by designated partners

The designated partners may appoint the auditor;

– At any time for the first financial year but before the end of FY.

– Within one month before the end of the FY.

It can be done to;

– To fill a general vacancy in the office of auditor.

– To fill a vacancy caused by the auditor’s removal.

Appointing by partners

If the designated partners have not been appointed, the partners are allowed to assume their responsibility.

Holding office

An auditor must hold office from the day the preceding auditor ceases to hold office and up to the end of the next period for appointing a new auditor until re-appointed.

Annual returns

Every LLP is obliged to submit an annual return in form 11 with RoC within two months of the closure of the financial year. The annual return would be available for public inspection on payment of stated fees to the registrar.

Penalty

Any LLP (limited liability partnership) that fails to abide by the requirements should be punished with a fine that should not be less than Rs—25000 but not beyond Rs. 5 lacs. Every designated partner should be punished with a penalty that should not be less than Rs—10000 but not going beyond Rs. 5 lacs.

Required documents for public inspection in the office of the registrar.

The accounts of every LLP (limited liability partnership) have to be audited as per rule 24 of the LLP Rules, 2009.

The list of documents or information will be needed for assessment by any person as given below for an LLP audit;

– Incorporation documents.

– Partners’ names and changes, if any, made therein.

– Statement of account and solvency.

– Annual returns.

The fees for such examination of the LLP are Rs. 50 and fees for certified copy or extract of any document under section 36 should be Rs. 5 per page.