Audit Requirements explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
One threshold measures activity and the other measures capital. Crossing either brings the LLP into audit.
The two thresholds in the LLP audit requirements
The LLP framework sets its audit requirement by reference to two figures — turnover of Rs. 40 lakh and partners' obligation of contribution of Rs. 25 lakh. An LLP that remains below both is outside the statutory audit requirement; crossing either brings it in.
The same two figures decide who certifies the annual Statement of Account and Solvency: in case total turnover of the LLP / FLLP exceeds Rs. 40 lakhs or partner's obligation of contribution exceeds Rs. 25 lakhs then certification by auditor of the LLP / FLLP shall be required. Otherwise the form is certified by Designated Partner in case of LLP and shall be additionally certified by a practicing professional i.e. Chartered Accountant / Company Secretary / Cost Accountant.
Most exemption thresholds in Indian company law use a single measure — turnover, or capital, or net profit. The LLP audit test uses two, and they capture different things.
Turnover measures activity. An LLP transacting above Rs. 40 lakh a year has enough volume that its accounts affect suppliers, customers and the revenue authorities, whatever its capital base.
Obligation of contribution measures what the partners have committed. An LLP with Rs. 25 lakh of committed contribution has capital at stake that creditors may look to, even if it has yet to trade meaningfully.
Because the two are alternatives, each catches a case the other misses. A professional services LLP with high fees and almost no capital is caught by turnover. A property-holding LLP with substantial contribution and negligible revenue is caught by contribution.
Note what follows for the annual filing. Where an audit is required, the auditor is already engaged and certifies Form 8. Where it is not, the LLP needs two certifications instead — a designated partner and, additionally, a practising professional. The exemption removes the audit; it does not remove professional involvement.
These thresholds and the audit rule have been the subject of amendment since this January 2021 publication, and the LLP framework now also distinguishes small LLPs for certain purposes. Confirm the current rule text and limits before advising on any specific LLP.
Where the thresholds appear
| Purpose | Threshold | Consequence of crossing |
|---|---|---|
| Statutory audit | Turnover Rs. 40 lakh or contribution Rs. 25 lakh | Accounts must be audited |
| Form 8 certification | The same two figures | Certification by the auditor rather than by a designated partner plus a practising professional |
| Form 11 certification | Contribution Rs. 50 lakh or turnover Rs. 5 crore | Certification by a company secretary in whole-time practice |
The Form 11 thresholds are substantially higher, so an LLP can require an audit and still certify its own annual return.
What the publication supplies
Two annexures accompany the calendar:
- Annexure I — Draft Audit Report, a model report for an LLP audit.
- Annexure II — Formats of Financial Statements for Limited Liability Partnerships as per Schedule III to the Companies Act 2013 and Limited Liability Partnership Act, 2008.
The second is the more significant. The LLP Act does not prescribe a statement format of its own, and drawing the financial statements on Schedule III gives an LLP the same presentation structure as a company — which is what lenders, investors and counterparties expect to read.
Where the audit requirements do not bite
An LLP below both thresholds may still have its accounts audited, and frequently should. Lenders ask for audited accounts before extending credit; incoming partners want them before contributing; and a conversion or sale process will require them.
The decision is also easier to take early than late. An LLP that has never been audited and then crosses a threshold presents its first auditor with unaudited comparatives.
Common mistakes
- Testing only turnover and overlooking obligation of contribution.
- Applying the Form 11 thresholds to the audit requirements.
- Assuming an audit exemption also removes the need for professional certification of Form 8.
- Relying on the 2021 thresholds without confirming the current rule.