Books of Accounts and Audit of LLP

11/06/2015 C.A. Vishnu Kr Tulsyan V.K.Tulsyan & Co.

Books of A/Cs and

Audit of LLP

About LLP:

LLP, a legal form available world-wide, now introduced in

India and is governed by the Limited Liability Partnership

Act 2008, with effect from April 1, 2009

Limited Liability Partnership (LLP) is a corporate business

vehicle that provides both the benefits of a company and

partnership firm i.e. limited liability and allows its members

the flexibility of organizing their internal structure as a

partnership based on a mutually arrived agreement.

C.A. Vishnu Kr Tulsyan

Books Of AccountsLimited Liability Partnerships are also required to maintain books of account in respect of their income and expenditure. These books of account are required to be kept at the registered office of the Limited Liability Partnership unless the Partners decide otherwise as per the terms of the LLP Agreement.

The books of account shall contain :•Particulars of all sums of money received and expended by the limited liability partnership and the matters in respect of which the receipt and expenditure takes place;

•A record of the assets and liabilities of the limited liability partnership;

•Statements of cost of goods purchased, inventories, work-in- progress, finished goods and cost of goods sold; and

•Any other particulars which the partners may decide.3C.A. Vishnu Kr Tulsyan

Methods of AccountingLimited Liability Partnerships are required to maintain

their Books of Account on cash basis or accrual basis

and according to the double entry system of accounting.

Currently the accounting standards are not applicable to LLP.

Financial StatementsLLP is required to prepare the following statement annually:

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A Balance Sheet To give a true and fair view of the State of affairs of the LLP as at the end of financial year

An Income and Expenditure Account

To give a true and fair view of the Income and Expenditure of the LLP for a particular Financial Year.

Statement of Solvency It is in form of declaration by the LLP, that it will be able to pay its debts in full as they become due in the normal course of business.

11/06/2015 C.A. Vishnu Kr TulsyanStatutory Audit of LLP

Statutory Audit Of LLP

• Limited Liability Partnership whose contribution exceed Rs. 25 Lakhs or the Limited Liability Partnership whose turnover exceed Rs. 40 lakhs are required to annually get their accounts audited by any Chartered Accountant in practice.

• The LLP, which are not required to get their accounts audited, are required to In furnish a statement in the Statement of Account and Solvency by the partners to the effect that the partners acknowledge their responsibilities for complying with the requirements of the Act and the Rules with respect to preparation of books of account

• The Designated Partners responsible for the compliances of LLP will appoint the auditor also. However if the designated partner fails to appoint the auditor then the partners may appoint the auditor.


Tax Audit Of LLP

Where the total sales, turnover or gross receiptsof the business exceed Rs. 100 lakhs (Rs. 25lakhs in case of profession) in any financial yearof the company, than the accounts shall beaudited by chartered accountant and tax auditreport based on the same, is required to besubmitted to the tax authorities’ along with theReturn of Income of the business.


Appointment

of

Auditors By DPs11/06/2015 C.A. Vishnu Kr Tulsyan

Appointment of Auditors By DPs

LLPs have to appoint Auditor for each financial year unless itis exempt from audit. It can appoint more than one auditorsfor the purpose.

The Designated Partners may appoint an Auditor:

i. At any time for the first financial year. However, theappointment has to be made before the end of the firstfinancial year

ii. Within 30 days before the end of Financial year

iii. To fill a casual vacancy in the office of Auditor

iv. To fill up the vacancy caused by removal of an Auditor

If the designated partners have not appointed the auditor asstated above, then the partners may appoint the Auditor.

Only Chartered Accountants can be appointed as Auditor.11/06/2015 9C.A. Vishnu Kr Tulsyan

Remuneration

The DPs can fix the remuneration of the

auditor. However, if there is any specific

provision regarding fixing remuneration in

the LLP agreement, then that provision has to be followed.

Removal of Auditor

The Auditor can be removed by the LLP by following theprocedure laid out in the LLP Agreement.

If the LLP Agreement is silent is silent about the removal ofthe Auditor, then consent of all the partners is required toremove the Auditor.

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Appointment of Auditors By DPs

10C.A. Vishnu Kr Tulsyan

PENALTIES

Any LLP which fails to comply with the above stated requirements for appointment of Auditors shall be punishable with fine ONLY of


i. Rs. 25,000 but not exceeding Rs. 5,00,000. ii. Every DP be punishable with fine - not be

less than Rs. 10,000 but exceeding Rs. 1,00,000.

Form and Content of the AUDIT REPORT

i. Statement of Account & Solvency in e-Form 8.

ii. Annual Return in e-form 11.

The Designated Partners can upload the e-forms on theLLP portal at his convenience.

Certification from PCS

In case of LLPs with

i. turnover more than 5 crores rupees in a financialyear OR

ii. contribution more than 50 (fifty) lakh rupees,

iii. the Annual return shall be certified by a PCS


Filing Annual Accounts, Annual Return & Income Tax Returns

Filing Annual Accounts

All LLPs - FORM 8 to be filed with the registrar of LLPs on or before 30th

October every year.

Filing Annual Return

Every LLP - Annual Return in FORM 11 to the Registrar within 60 daysfrom the closure of financial year i.e. the Annual Returns has to be filedon or before 30th May every year.

Filing Income Tax Returns

i. In case where Audit is required - 30th September every year,

ii. Wherein business which do not fall under the Audit requirementscriteria will have to file Income Tax Returns on or before 31st July everyyear.


Penalty for NON - FILING

If there is delay in filing form No. 8 and11 of LLP - Rs. 100 per day till it iscomplied. You cannot close or wind upyour LLP without filing Annual Accounts.

So, if it is not filed on time, your LLP turnsinto unlimited statutory liability till the dayit is complied.


Thank You!

CA Vishnu Kr Tulysan+91 98310 54180 / [email protected]

www.vktulsyan.com/

CA Vishnu Kr Tulsyan is practicing Chartered Accountant & Company Secretary with over 15 years of exhaustive experience in the filed of Finance, Accounts, Corporate Compliance & Advisory, Regulatory Changes Implementation.


http://vktulsyan.com/

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Books of Accounts and Audit of LLP