For which of the following Audit is optional?
B. Joint stock companies
C. Proprietorship concern
D. None of the above
Answer: Proprietorship concern
Audit is optional for Proprietorship concern. If your business is a proprietorship concern, it does not need to be audited compulsorily if its turnover is less than Rs. 40 lakhs (previous threshold was Rs. 20 lakhs) in the previous year. This means that you may opt out from getting your books of accounts audited if your turnover is less than Rs. 40 lakhs in the previous year.
An Audit is an independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form. When a business or an organization engages in a financial transaction, it is imperative that there be a check and balance mechanism to ensure that all transactions are above board. This is where the role of an auditor comes in.