Whether audit of all LLP’s would be mandatory
The accounts belonging to every limited liability partnership must be audited according to Rule 24 of LLP Rules, 2009.
LLP’s need to have its accounts audited with the help of a practising chartered accountant if its turnover is more than Rs 40 Lakhs in any financial year or whose participation exceeds Rs. 25 Lakhs. If the Turnover or participation is less than the designated limits then LLP need not be expected to get its accounts audited. Nevertheless, if the partners of such limited liability partnership choose to get the accounts of such LLP audited, such accounts will be audited only according to such rules.
Given further if the partners of such LLP decides on not getting audit of accounts of LLP, then such LLP must include in the statement of account and safety a statement by the partners so that the partners accept their obligations for complying with the demands of the act and the rules in accordance to the development of books of accounts and a certificate in the form specified in Form 8.
Qualification for appointment as auditor
A person cannot be qualified for appointment as an auditor of a limited liability partnership except when he is a Chartered Accountant in practice.
Appointment of Auditor
An auditor or auditors of a limited liability partnership needs to be appointed for each financial year of the LLP for auditing its accounts. The selected partners can appoint an auditor or auditors
At least 30 days before the end of every financial year (except for the first financial year).
To appoint and fill a casual vacancy in the office of the auditor.
At any time for the first financial year, however, prior to the end of the first financial year.
To fill up the vacancy occurred due to the removal of an auditor.
If the designated partners haven’t been appointed then the partners can choose to appoint an auditor or auditors.
Holding of Office
An Auditor or auditors of an LLP need to hold office according to the terms of his or their appointment and thus continue to hold the office until the new auditors are elected or they are re-appointed.
In the case where no auditor has been appointed, an auditor in office shall be considered to be re-appointed, except when the LLP agreement required the real re-appointment or the majority of partners have decided that could not be re-appointed and have given a notice to this conclusion to the LLP.
Penalty for Non-compliance
Any LLP who fails in complying with the conditions shall be punishable with fine which will not be less than Rs. 25,000 that does not exceed Rs. 5,00,000. Also the every assigned partner shall be condemned with fine which shall not be less than Rs. 10,000 and not more than Rs. 1,00,000.