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CA Intermediate · Auditing and Ethics · Special Features of Audit of Different Type of Entities

CA Anil audits Sunrise Hospitality LLP, whose turnover is ₹60 crore. The LLP's partners are not required by the LLP agreement to get accounts audited, but the LLP Act, 2008 and rules set a threshold. Which is the correct audit position?

An LLP must get its accounts audited if its annual turnover exceeds ₹40 lakh or its contribution exceeds ₹25 lakh. With turnover of ₹60 crore, audit is mandatory irrespective of what the LLP agreement says; only small LLPs below both limits are exempt.

  1. AAudit is compulsory for every LLP irrespective of size
  2. BAudit is compulsory only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh, so this LLP must be auditedCorrect
  3. CAudit is never required for an LLP
  4. DAudit is required only if the partners resolve so in the agreement

Explanation

Under the LLP Rules, accounts must be audited if the annual turnover exceeds ₹40 lakh or the contribution exceeds ₹25 lakh. With turnover of ₹60 crore the threshold is crossed, so audit is mandatory regardless of the agreement. Option A is wrong because small LLPs below both limits are exempt.

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