Audit of LLP

Audit of LLP

Setindiabiz TeamOctober 15, 2024

Overview: LLP in India as we all know is a corporate business form that provides the limited liability benefit of a company along with the flexibility of a partnership. Every LLP’s designated partner (s) is liable to maintain its books of account containing various financial records and statements. This brief guide on ‘audit of LLP’ highlights the entries/records that LLP’s books of account must contain.

Every LLP is required to maintain its books of account on the double entry accounting system at its registered office. The responsibility to maintain such books of account is on a designated partner of the LLP. The books of account to be maintained by the LLP must contain following

Entries from day to day of all sums of money received and expended by the LLP, and the matters in respect of which the receipt and expenditure take place.
Records of the assets and liabilities.
Statements of the cost of goods purchased.
Statement of inventories.
Statement of work-in-progress.
Statement of finished goods.
Statement of cost of goods sold and
Other details which the partner may decide.

The designated partners of the LLP are under a liability to prepare a statement of account and solvency, which inter-alia has to report to the Registrar of Companies in Form No.8. In general, an LLP is not required to get its financial statement audited, however, if the turnover of the LLP exceeds Rs.40 Lakhs or the capital of LLP is more than Rs.25 Lakhs then as per Section 34(4) of the Act, the accounts of the LLP shall be audited by a Chartered Accountant in practice who has been formally appointed to be auditor of the LLP.

The meaning of turnover for the purpose of a tax audit is an aggregate of the gross value of the realization made from the sales, supply or distribution of the goods or on account of services rendered or both during the financial year.

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Maintaining books of account on a double-entry accounting system for LLP is necessary in India. In this corporate structure, a designated partner is entrusted to maintain the books of accounts with essential records of income and expenses. The accounts of LLP shall be audited by a practicing CA who is appointed as an auditor. Stay compliant with concerned authorities to avoid unnecessary penalties by opting for Setindiabiz's professional services.

Conclusion

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