CA Urges Government Not to Remove Mandatory Statutory Audit for Small Companies

Several online news sources are claiming that the government is planning to end the audit requirement for small companies having a turnover of less than 1 crore. As per reports, this move will reduce the compliance cost and unnecessary burden on these small companies. However, many Chartered Accountants are criticising this move.

CA Rohit Ruwatia Agarwal has shared a post, urging the government not to remove mandatory statutory audits for companies with a turnover below Rs 1 crore. Agarwal highlighted that even the smallest companies need audits because they build trust among the stakeholders.

While many small business owners may feel audits are just an extra burden, Agarwal highlighted that audits help maintain proper financial discipline and build trust with banks, suppliers, customers, and investors so that MSMEs can easily get loans. He explained that the audits were introduced by the government to protect the public money and strengthen the compliance culture of India. The audits ensure that small frauds are identified early so that they do not cause big problems.

The CA explained that removing the compulsory audit requirement for small companies will harm the transparency and reduce the creditworthiness, and increase the risks for lenders, investments and MSMEs too. He stressed that as India is moving toward becoming one of the world’s biggest economies, there is a need to build trust among the stakeholders.

He suggested better solutions to give relief to the companies by introducing simpler annual returns, easing AGM-related processes through wider use of technology, and rationalising penalties for minor and first-time defaults. According to him, these steps would make doing business easier without weakening the audit system.

Chartered Accountants are not just auditors, we are guardians of financial discipline.

It’s heard from newspapers, etc that govt is considering to remove company audit below 1 crore of turnover.

Removing compulsory audits for companies below ₹1 crore turnover may look like…

— CA. (Dr). ROHIT RUWATIA AGARWAL 🇮🇳 (@ruwatiaofficial) November 27, 2025