Audit of accounts- Audit of Limited Liability Partnership shall be audited in accordance with such rules as may be prescribed.
Requirement of Audit
Rule 24 of limited liability partnership, 2009
- According to rule 24 of LLP – A LLP whose turnover does not exceed, in any financial year, for Rs. 40 lacs, or whose contributions do not exceed Rs. 25 lacs shall not be required to get its account audited.
- If a partner of such LLP decides to get their accounts audited the account shall be audited in accordance with these rules.
Eligibility of auditor
A person shall not be qualified for appointment as an auditor of LLP unless he is a Chartered Accountant in practice.
Period of Appointment
Auditors of LLP shall be appointed for each year of the financial year of LLP for auditing its account.
Appointment of auditor
The designated partner may Appoint auditor:
- At any time for the first financial year but before the end of the first financial year,
- At least 30 days before the end of each financial year( other than first financial year),
- To fill a casual vacancy in the office of auditor, including in case when the turnover of the contribution of LLP exceeds the limit, or
- To Fill up a vacancy caused by the removal of the auditor.
- Appointment of auditor by a partner where designated partner failed to appoint.
Tenure of Auditor
The auditor shall hold the office in accordance with the terms of his or their appointment and shall continue to hold such office till the period
- the new Auditors are appointed, or
- they are re-appointed
Advantage/Purpose/Need for Audit
There are various advantage of audit
- Detection of errors and Frauds
- Verification of financial statement
- Resolving disputed among partners in relation to the accounting matter
- Arrange in finance from the Bank and Financial Institutions
- Improved management of LLP
- Settlement of accounts between partners at any time of admission, death, retirement, insolvency, Insanity, etc.
Auditors duty regarding audit of LLP
- Auditors should obtain instruction in writing as to the work to be performed by him.
- The auditor should read the LLP agreement and note the following provisions:
- Nature of business of LLP
- Capital contributed by each partner
- Interest in respect of capital contribution
- Duration of partnership
- Drawing allowed to the partners
- Salary and commission acceptable to the partners
- Rights and duties of a partner
- Method of the settlement of accounts between the partners at a time of admission retirement, or
- Any loan Advanced by the partner
- Profit-sharing ratio
- Auditor should report
- Whether the record reflect the true and fair view
- Whether he obtained all the information and explanation
- Whether any restriction/limitation imposed upon him.
- If a minute book is being maintained, the auditor shall refer it for any resolution passed record regarding the accounts.