Business Laws and Ethics · Limited Liability Partnership Act, 2008

Financial Disclosures, Accounts and Audit of LLP

Updated 10 October 2026 · Fact-checked

An LLP must keep proper books of account on cash or accrual basis using double entry, prepare and file a Statement of Account and Solvency within the prescribed time, file an annual return within sixty days of year end, and have accounts audited under the rules. Defaults attract daily penalties or fines.

Understand Financial Disclosures, Accounts and Audit of LLP

A Limited Liability Partnership is a separate legal entity, and its partners enjoy limited liability. Because outsiders deal with it on that basis, the Act requires it to keep accounts and disclose its position publicly. Sections 32 to 36 and 41 of the LLP Act, 2008 carry these duties.

Books of account (Section 34(1)). The LLP must maintain proper books of account relating to its affairs for each year of its existence. They may be kept on cash basis or accrual basis, but always on the double entry system. They are kept at the registered office for the prescribed period. The Act leaves the books and the period to the rules.

Statement of Account and Solvency (Section 34(2) and (3)). Within six months from the end of each financial year, the LLP prepares this statement as at the last day of that year, in the prescribed form. The designated partners must sign it. It is then filed with the Registrar within the prescribed time, in the prescribed form and manner, with the prescribed fee. Anyone can inspect it at the Registrar's office on payment of the prescribed fee (Section 36).

Annual return (Section 35). Every LLP files a duly authenticated annual return with the Registrar within sixty days of the closure of its financial year. Form, manner and fee are prescribed. Note the difference: the six months is for preparing the Statement of Account and Solvency, and the sixty days is for filing the annual return.

Audit (Section 34(4)). Accounts are audited in accordance with the prescribed rules. The Central Government may, by notification, exempt any class or classes of LLPs from this requirement. The Act itself gives no turnover or contribution limit for audit. Any such limit sits in the rules, so do not quote a figure as part of the Act.

Contribution of partners (Section 32). A contribution can be tangible, movable or immovable, or intangible property, or any other benefit to the LLP. It includes money, promissory notes, agreements to contribute cash or property, and contracts for services performed or to be performed. The monetary value of each partner's contribution must be accounted for and disclosed in the accounts in the prescribed manner.

Key rules to remember

Books of account: Proper books | cash or accrual basis | double entry | at registered office | for prescribed period; Section 34(1). Books and period are prescribed by rules.
Statement of Account and Solvency: Prepare within 6 months from end of financial year; signed by designated partners; file with Registrar within prescribed time; Section 34(2) and (3). Prepared as at the last day of the financial year.
Annual return: File within 60 days of closure of financial year; Section 35(1). Must be duly authenticated.
Audit: Accounts audited as per prescribed rules; Central Government may exempt classes by notification; Section 34(4). No monetary limit is stated in the Act.
Penalty for late filing (Statement or annual return): ₹100 per day; maximum ₹1,00,000 for the LLP and ₹50,000 for each designated partner; Sections 34(5) and 35(2), as substituted w.e.f. 1-4-2022.
Fine for default in books, preparing the statement, or audit: LLP: ₹25,000 to ₹5,00,000; each designated partner: ₹10,000 to ₹1,00,000; Section 34(6), covering sub-sections (1), (2) and (4).
Winding up for default: Default in filing Statement of Account and Solvency or annual return for any five consecutive financial years; Section 64(e). The Tribunal may wind up the LLP.
Form of contribution: Property (tangible or intangible), money, promissory notes, agreements to contribute, contracts for services performed or to be performed; Section 32(1). Value is accounted for and disclosed as prescribed (Section 32(2)).

How to solve Financial Disclosures, Accounts and Audit of LLP questions

Most questions give a scenario of an LLP and ask what it must do, by when, and what happens on default. Use the same sequence every time.

1Identify the obligation: books, Statement of Account and Solvency, annual return, audit, or contribution.
2Recall the section: 34 for books, statement and audit; 35 for annual return; 32 for contribution; 36 for inspection; 41 for enforcement.
3State the time limit exactly. Six months to prepare the statement, sixty days to file the annual return.
4Name who must act: the LLP, and the designated partners who sign the statement.
5Check what the Act leaves to rules (form, fee, books, audit norms) and say so instead of inventing figures.
6State the consequence of default: penalty under 34(5) or 35(2), fine under 34(6), order under 41, or winding up under 64(e).
7Conclude in one line with the answer to the exact question asked.

Quickest way: Match the default to its consequence

When to use it: For MCQs and short-note questions where you must pick the correct time limit, signatory or penalty.

Annual return means 60 days. Statement of Account and Solvency means 6 months.
Signed by designated partners, not all partners.
Late filing means ₹100 per day, capped at ₹1,00,000 (LLP) and ₹50,000 (designated partner).
Not keeping books, not preparing the statement, or not auditing means a fine, not a daily penalty.
Five consecutive years of default in filing means winding up ground.

Common mistakes in Financial Disclosures, Accounts and Audit of LLP

Saying the annual return is due in six months.
Students mix it with the Statement of Account and Solvency.
Fix: Remember 60 days for the return (Section 35) and six months to prepare the statement (Section 34(2)).
Quoting a turnover or contribution limit for audit as if it is in the Act.
Notes and search results quote rule-based limits.
Fix: Say audit is as per prescribed rules under Section 34(4) and that the Central Government may exempt classes. Quote a limit only if the question supplies it.
Saying books must be kept only on accrual basis.
Students assume company practice applies.
Fix: The Act allows cash or accrual basis, but double entry is mandatory.
Saying all partners sign the Statement of Account and Solvency.
Confusing LLP with a general partnership.
Fix: Only the designated partners sign.
Mixing up penalty and fine amounts.
Two similar provisions in Section 34.
Fix: Filing default under 34(3) carries ₹100 per day with caps. Defaults under 34(1), (2) and (4) carry fines of ₹25,000 to ₹5,00,000 for the LLP and ₹10,000 to ₹1,00,000 for each designated partner.
Thinking a contribution must be cash.
Everyday idea of capital.
Fix: Section 32(1) allows property, benefits, promissory notes and contracts for services, valued in money terms and disclosed in the accounts.

Worked examples

Example 1

Sundaram Traders LLP has a financial year ending 31 March. Its designated partners filed the annual return 40 days late. Is the LLP liable to a penalty? Compute the penalty and state the maximum.

Show the solution

The annual return is due within sixty days of closure of the financial year (Section 35(1)).
Filing 40 days late is a failure under Section 35(2).
The penalty is ₹100 per day: 40 × ₹100 = ₹4,000.
Both the LLP and its designated partners are liable, each subject to a cap.
The cap is ₹1,00,000 for the LLP and ₹50,000 for the designated partners. ₹4,000 is below both caps.

Answer: Yes. The LLP and its designated partners are liable to a penalty of ₹4,000 each at ₹100 per day for 40 days; it is within the caps of ₹1,00,000 and ₹50,000.

Example 2

Ananya contributes services to be rendered to Kaveri Associates LLP and Rohan contributes a building. Can these be contributions? How must they be shown in the accounts? Also state the time for preparing the Statement of Account and Solvency and who signs it.

Show the solution

Section 32(1) says a contribution may be tangible or intangible property or other benefit, including contracts for services performed or to be performed.
So Ananya's future services and Rohan's building (immovable property) are both valid contributions.
Section 32(2) requires the monetary value of each partner's contribution to be accounted for and disclosed in the accounts in the prescribed manner.
The Statement of Account and Solvency must be prepared within six months from the end of the financial year, as at its last day (Section 34(2)).
It is signed by the designated partners and filed with the Registrar within the prescribed time (Section 34(3)).

Answer: Both are valid contributions, with their money value accounted for and disclosed. The statement is prepared within six months of year end and signed by the designated partners.

Exam tips

Write the section number with every time limit. It shows precision and earns step marks.
For MCQs, test the two clocks: 60 days for annual return and 6 months for the statement.
In descriptive answers, separate what the Act fixes from what the rules prescribe, such as form, fee, books and audit norms.
Learn the penalty figures as a pair: ₹100 per day with caps for filing default, and fines for default in books, statement or audit.
Link the five-year default to winding up under Section 64(e) when a question asks about consequences.

Practice questions from Limited Liability Partnership Act, 2008

Financial Disclosures, Accounts and Audit of LLP in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA IntermediateFinancial Disclosures, Accounts and Audit of LLP

Financial Disclosures, Accounts and Audit of LLP: frequently asked questions

When must an LLP file its annual return?

Within sixty days of the closure of its financial year, duly authenticated, in the prescribed form and with the prescribed fee. Delay attracts ₹100 per day, capped at ₹1,00,000 for the LLP and ₹50,000 for designated partners.

What is the Statement of Account and Solvency?

It is a statement of the LLP's affairs as at the last day of the financial year, in the prescribed form. It must be prepared within six months of year end and signed by the designated partners. It is then filed with the Registrar.

Is there a turnover limit for LLP audit?

Section 34(4) says accounts are audited as per the prescribed rules, and the Central Government can exempt classes of LLPs. The Act itself states no turnover limit, so check the rules or the figures given in the question.

Can a partner contribute services instead of money?

Yes. Section 32(1) allows contributions such as property, benefits, promissory notes and contracts for services performed or to be performed. Their monetary value must be accounted for and disclosed in the accounts.