Audit requirements for a Limited Liability Partnership in India

Limited liability partnership is an alternate corporate business form that provides the advantages of indebtedness of a corporation and therefore the flexibility of a partnership. The LLP may be a separate legal entity, is susceptible to the complete extent of its assets but the liability of the partners is restricted to their agreed contribution within the LLP. Further, no partner is liable on account of the independent or unauthorized actions of other partners in the LLP firm. The rights and duties of the partners in a Limited Liability Partnership firm are governed by an agreement between the partners or between the partners.  LLP has elements of both ‘a corporate structure’ also as a partnership firm structure’. LLP is named a hybrid between a corporation and a partnership.

ADVANTAGES OF LLP FIRMS

• LLP is a separate legal entity from its partners.
• It can raise funds from Partners, Banks, and NBFCs.
• The procedure for Incorporation, conversion, and closure of LLP is simple and easy.
• It has assets and liabilities that are break free that of the promoters.
• LLP can easily Transfer its ownership.

AUDITOR

Auditor may be a one that is appointed by the firm to try to audit. LLPs are required to urge their books of accounts audited, as long as they cross the certain turnover limit, or when the whole capital contribution of partners exceeds a specific limit. The accounts of every LLP are audited according to Rule 24 of LLP, Rules 2009. Such rules provide that any Limited Liability Partnership, whose turnover does not exceed, in any financial year  40,00,000 or whose contribution doesn't exceed twenty-five lakh rupees, isn't required to urge its accounts audited.

APPOINTMENT OF AUDITOR

The designated partners may appoint an auditor: (a) at any time for the first financial year but before the highest of the first financial year. (b) a minimum of 30 days before the highest of each financial year (other than the first financial year.

FOR CONDUCTING THE AUDIT, LLP AUDITOR POSSESSES TO CONCENTRATE TO THE NEXT ASPECTS:

1. Obtain sufficient and appropriate audit evidences for the material transactions; 2. Consider the danger of fraud and error within the financial statements; 3. Consider the inside controls in LLP.

LLP ANNUAL FILING

Annual return could even be a compulsory filing to be made by all LLPs in India. The annual return must be filed within the prescribed format with the Ministry of Corporate Affairs. The filing of annual returns with the MCA is different from the filing of annual returns with the tax department. The annual return of an LLP is due within 60 days of the close of the monetary year. LLPs must uniformly maintain a fiscal year that starts on April 1st and ends on March 31st, therefore the Annual return of an LLP is due on or before May 30th of every fiscal year. On the opposite hand, the Statement of Accounts and Solvency of an LLP is due within 30 days from the very best of six months of the close of the monetary year. Statement of Accounts and Solvency could even be a compulsory filing that's required for all LLPs in India. information associated with the statement of assets and liabilities and statement of income and expenditure of the LLP in India.

LIABILITY OF LLP FOR AUDIT

The LLP whose turnover exceeds Rs.40,00,000/- or whose contribution exceeds Rs.25,00,000/- are required annual accounts audited by an accountant in practice. So, all other LLP’s are exempted from a mandatory audit of their accounts.

EXEMPTION OF LLP FOR AUDIT

Such rules, among other things, outlines that any Limited Liability Partnership, whose turnover doesn't transcend, in any financial year, Rs.40,00,000/- or whose turnover doesn't transcend Rs25,00,000/- isn't obliged to urge its accounts audited. Nonetheless, if the partners of such LLP (limited liability partnership) like better to get accounts of such LLP audited, the accounts got to be audited only as per the principles. LLPs are obliged to appoint an LLP auditor within one month before the highest of the financial year. to put it in other words, an auditor should be appointed before the primary of March once a year.

PENALTY

Any LLP which fails to suits the requirements shall be punishable with a fine which shall not be but Rs.25,000 but not exceeding Rs.5,00,000. Every partner who is designated shall be punishable with fine which shall Rs.10,000 but not exceeding Rs.5,00,000/-

ANNUAL RETURN

Every Limited Liability Partnership is required to file an annual return in Form 11 with ROC within 60 days closer of the monetary year. The annual return is going to be available for public inspection only on payment of prescribed fees to the Registrar.

FORM 11

What consists of Form 11? Form -11 contains annual return. It contains the tiny print of all the partners, their contributions towards the Limited Liability Partnership, etc. What is the maturity of filing of this Form-11? Form-11 should be filed within 60 days of the highest of the monetary year. i.e. on or before 30th May once in a year. Who shall sign the form? It must be Digitally signed by one of the Designated Partners of the LLP. just in case the total obligation of the contribution of partners of the LLP exceeds Rs.50 lakhs or turnover of LLP exceeds Rs.5 crores, then LLP Form 11 must be certified by an organization Secretary in whole-time practice.

WHAT ARE THE DOCUMENTS REQUIRED TO FILE LLP FORM 11?

Basic details like Total obligation of contribution, total contribution received by partners of the LLP, Summary of Designated Partners and Partners, etc. Further, details of the Limited Liability Partnership and/ or company during which the partner/ designated partner could also be a director/ partner are attached to the form.

FINANCIAL STATEMENT

LLPs with a turnover of Rs 40 lakhs or more, or a contribution of Rs 25 lakhs or more are to appoint an accountant to undertake to their audits once a year. LLPs are required to wish care of their book of accounts during a double-entry system. they have to rearrange the Statement of Solvency once a year by 31st March. once a year, the same should be filed within shape 8 with the registrar of companies by 30th October.

INCOME TAX

Tax Audit of the accounts is mandatory for an LLP with an annual turnover of Rs.100 lakh or more. (up to FY 2019-20). However, from 2020-21, it might be applicable for turnover above 500 Lakhs. Income tax returns got to be filed under ITR 5. and thus the speed for an LLP is 30%. this is often to be filed no matter the audit applicability Section 115JC states that the tax payable by an LLP should not be but 18.5% of the adjusted total income, If an LLP’s turnover doesn’t exceed Rs.40,00,000/- it doesn’t require Limited Liability Partnership Audit and thus the maturity to file the tax is 31st July. Those with a turnover of quite Rs40,00,000/- will be got to file their tax by 30th September.

 DOCUMENTS AVAILABLE FOR PUBLIC INSPECTION WITHIN THE OFFICE OF REGISTRATION

The following documents/information are going to be available for inspection by any person:-

• Incorporation document,
• Names of partners and changes, if any, made therein,
• Statement of Account and Solvency
• Annual Return

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