02 May 2013
Q 1.Whether audit of all LLPs would be mandatory? A. The accounts of every LLP shall be audited in accordance with Rule 24 of LLP, Rules 2009.Such rules, inter-alia, provides that any LLP, whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty five lakh rupees, is not required to get its accounts audited. However, if the partners of such limited liability partnership decide to get the accounts of such LLP audited, the accounts shall be audited only in accordance with such rule. The above q & a has been downloaded from MCA Portal on audit of LLP. It is clear that both conditions are to be fulfilled i.e. Rs.25Lacs contribution and Rs.40Lacs turnover for statutory audit of LLP. However,while going thru the subject on CA Club, I find that majority view is that if one condition is fulfilled audit is required. Would any one clarify the correct position? Also wish to furnish the following additional information FAQ:LIMITED LIABILITY PARTNERSHIP FAQs ON AUDITORS 1. Which Companies require audit? As per Rule 24(8) of the Limited Liability Partnership Rules (LLP Rules), 2008, every limited liability partnership (LLP) which fulfils the following two criteria is required to get its accounts audited a. turnover exceeds Rs.40 lacs in any financial year and b. whose contribution exceeds Rs.25 lacs in any financial year.
2. Will there be a requirement of audit if an LLP fulfills any one of the criteria mentioned in Question 1 above? Under Rule 24(8) of the LLP Rules, 2008, an exemption from audit is available for all those LLPs which fulfill any one of the above mentioned criteria.
Q.2.Is there any format of audit report, P & L & B/Sheet specified in the statute?
Q.3. Whether amount of interest on capital remuneration to working partner & share of profit credited to capital a/c during the financial year (after formation of LLP) amounts to contribution?
Rule 24 (8) of the LLP Reules prescribed the requirement of audit in the following manner: The accounts of every limited liability partnership shall be audited in accordance with these rules: Provided that a limited liability partnership whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty-five lakh rupees shall not be required to get its accounts audited.
You see the word "OR" has been used.
Turnover does not exceed forty lakh "OR" contribution does not exceed twenty five lakh.
Therefore, two conditions are independent to each other. On fulfiling any one condition accounts require to be audited.
Position would have been different if instead of "OR" the word "AND" would had been used. In that case both the conditions were required to be fulfilled to get the accounts audited.
Do remember. If FAQ & Answers are provided by any department for the benefit of common people and if any answer contradicts with the standing rule,the rule would always prevail over the answer. One has to follow the standing rule.
Contribution
Sec. 32 (1) of the LLP Act defined the contribution in the following manner.
A contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or to be performed.
If you go through the definition, it would be cleared to you that interest on capital, partners' remuneration and share of profit which were not withdrawn by partners but credited to capital a/c would form part of contribution.
14 June 2013
Yes I agree with the expert. Now, let me tell you that LLP is modified form of a Pvt. Ltd company. Those who were hesitating to form Pvt. can form LLP and the same regulation is applicable.
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