Accounting refers to the systematic recording, classification and reporting of financial transactions, while audit is the independent examination of financial records to verify their accuracy and compliance. Every Public Limited Company should maintain proper books of accounts and comply with applicable audit requirements under the Companies Act, 2013.
| Particular | Details |
|---|---|
| Topic | Accounting & Audit |
| Applicable For | Public Limited Company |
| Governing Law | Companies Act, 2013 |
| Key Areas | Accounting, Financial Statements, Audit |
| Objective | Financial Transparency & Compliance |
| Long-Term Goal | Strong Financial Governance |
What is Accounting?
Financial management is one of the most important responsibilities of a Public Limited Company.
Professional accounting and audit generally help businesses:
- Maintain Financial Discipline
- Improve Corporate Governance
- Strengthen Compliance
- Improve Decision-Making
- Build Investor Confidence
Strong financial systems support sustainable corporate growth.
Accounting is the systematic process of recording, classifying and reporting financial transactions.
Professional accounting generally includes:
- Bookkeeping
- Ledger Maintenance
- Bank Reconciliation
- Financial Reporting
- Record Management
Accurate accounting forms the basis of reliable financial information.
What is Audit?
Audit is the independent examination of a company's financial statements and accounting records.
Professional audits generally help:
- Verify Financial Information
- Improve Transparency
- Detect Errors
- Strengthen Internal Controls
- Improve Stakeholder Confidence
Audit supports reliable financial reporting.
Accounting & Audit Summary Table
Why are Accounting & Audit Important?
Professional accounting and audit generally help:
- Improve Financial Transparency
- Maintain Legal Compliance
- Strengthen Corporate Governance
- Improve Financial Planning
- Reduce Financial Risks
These activities support long-term business sustainability.
Major Accounting & Audit Areas
Professional Public Limited Companies generally focus on:
- Books of Accounts
- Financial Statements
- Statutory Audit
- Bank Reconciliation
- Internal Controls
- Financial Reporting
- Record Management
- Compliance
Benefits of Accounting & Audit
Professional financial management generally provides:
- Better Financial Control
- Improved Governance
- Stronger Compliance
- Investor Confidence
- Organised Business Operations
Vakilkaro Insight
Many businesses consider accounting only as a tax requirement.
In reality, professional accounting and audit help management understand the financial health of the business and support strategic decision-making.
Founder Checklist
Before implementing an accounting system, ensure:
✔ Accounting Policy Prepared
✔ Books of Accounts Planned
✔ Accounting Software Selected
✔ Bank Accounts Organised
✔ Financial Reporting Framework Ready
✔ Audit Planning Completed
✔ Internal Controls Established
✔ Professional Accountant Appointed
Accounting & Audit Journey
Company Incorporation
↓
Accounting System Setup
↓
Books of Accounts
↓
Financial Statements
↓
Audit
↓
Continuous Financial Compliance
Why Choose Vakilkaro?
Vakilkaro assists businesses with:
- Accounting Advisory
- Audit Coordination
- Financial Documentation
- Corporate Compliance
- ROC Compliance
- Long-Term Financial Advisory
Our experts help Public Limited Companies establish professionally managed accounting and audit systems that support transparency, compliance and sustainable business growth.
Accounting & Audit Process
A professionally managed Public Limited Company should establish an organised accounting and audit framework immediately after incorporation.
Accounting and audit are continuous processes that help the company maintain:
- Financial Accuracy
- Legal Compliance
- Corporate Governance
- Business Transparency
- Investor Confidence
Strong financial systems support sustainable corporate growth.
Step 1 – Establish an Accounting System
Every Public Limited Company should establish a structured accounting system before commencing regular business operations.
Professional accounting systems generally include:
- Chart of Accounts
- Accounting Policies
- Financial Procedures
- Approval Matrix
- Record Management System
A well-designed accounting framework improves consistency and financial reporting.
Step 2 – Maintain Books of Accounts
Professional companies generally maintain proper books of accounts throughout the financial year.
Books of accounts generally include:
- Cash Book
- Bank Book
- Journal
- General Ledger
- Purchase Register
- Sales Register
- Expense Register
Regular accounting helps maintain financial discipline.
Step 3 – Record Financial Transactions
Every business transaction should be properly recorded with supporting documents.
Professional companies generally record:
- Sales
- Purchases
- Receipts
- Payments
- Expenses
- Bank Transactions
- Capital Contributions
Accurate transaction recording improves financial reliability.
Step 4 – Bank Reconciliation
Professional companies generally reconcile accounting records with bank statements periodically.
Bank reconciliation generally helps:
- Detect Errors
- Identify Missing Entries
- Verify Transactions
- Improve Financial Accuracy
Regular reconciliation strengthens financial controls.
Step 5 – Prepare Financial Statements
At the end of the accounting period, professional companies generally prepare financial statements.
These generally include:
- Balance Sheet
- Statement of Profit & Loss
- Cash Flow Statement (where applicable)
- Notes to Accounts
Financial statements provide a summary of the company's financial position.
Step 6 – Conduct Statutory Audit
Public Limited Companies are generally required to conduct a statutory audit in accordance with the applicable legal framework.
A statutory audit generally helps:
- Verify Financial Statements
- Review Accounting Records
- Strengthen Financial Transparency
- Improve Corporate Governance
Audit reports should be maintained as part of the company's records.
Step 7 – Implement Internal Controls
Professional companies generally establish internal controls to safeguard:
- Financial Assets
- Business Records
- Accounting Systems
- Business Processes
Internal controls generally include:
- Approval Procedures
- Segregation of Duties
- Financial Authorisations
- Documentation Standards
Strong controls reduce operational and financial risks.
Step 8 – Maintain Financial Records
Professional Public Limited Companies generally preserve:
- Accounting Books
- Invoices
- Bills
- Payment Vouchers
- Bank Statements
- Tax Records
- Audit Reports
Proper record maintenance supports audit and regulatory compliance.
Step 9 – Financial Reporting
Professional financial reporting generally provides management with information relating to:
- Revenue
- Expenses
- Profitability
- Cash Position
- Financial Performance
Timely reporting supports better business decisions.
Step 10 – Continuous Financial Review
Professional companies generally review their financial systems periodically.
Regular reviews generally help:
- Improve Accounting Quality
- Detect Errors Early
- Strengthen Internal Controls
- Improve Financial Planning
Continuous improvement supports long-term financial stability.
Major Books of Accounts
Professional companies generally maintain:
- Cash Book
- Bank Book
- Journal
- General Ledger
- Sales Register
- Purchase Register
- Fixed Asset Register
- Expense Register
These records support accurate financial reporting.
Financial Documents
Professional accounting generally includes:
- Invoices
- Receipts
- Payment Vouchers
- Bank Statements
- Financial Statements
- Audit Reports
- Supporting Documents
Proper documentation strengthens financial governance.
Common Accounting & Audit Mistakes
Many companies experience financial governance issues because of avoidable mistakes.
Common mistakes generally include:
- Delayed Bookkeeping
- Weak Documentation
- Poor Bank Reconciliation
- Missing Supporting Records
- Incorrect Accounting Entries
- Delayed Financial Statements
- Weak Internal Controls
- Poor Record Management
- Delayed Audit
- No Professional Financial Review
Professional accounting systems significantly reduce these risks.
Accounting & Audit Checklist
Before completing the financial year, ensure:
✔ Books of Accounts Updated
✔ Financial Transactions Recorded
✔ Bank Reconciliation Completed
✔ Financial Statements Prepared
✔ Supporting Documents Organised
✔ Statutory Audit Conducted
✔ Internal Controls Reviewed
✔ Financial Reports Verified
✔ Accounting Records Preserved
✔ Professional Audit Review Completed
Best Practices
Professionally managed Public Limited Companies generally:
- Record transactions regularly.
- Complete bookkeeping throughout the year.
- Maintain organised accounting records.
- Reconcile bank accounts periodically.
- Preserve supporting documents securely.
- Conduct statutory audits on time.
- Review financial statements regularly.
- Strengthen internal controls.
- Maintain financial transparency.
- Obtain professional accounting and audit guidance whenever required.
Vakilkaro Expert Insight
Many businesses focus only on preparing financial statements at the end of the financial year.
In reality, effective accounting begins on the first day of business operations and continues throughout the company's lifecycle.
Professionally managed Public Limited Companies generally strengthen:
- Accounting Systems
- Internal Controls
- Financial Reporting
- Audit Readiness
- Corporate Governance
Companies that maintain disciplined accounting and audit systems generally experience stronger financial management, better compliance, improved investor confidence and sustainable long-term business growth.
Benefits of Accounting & Audit
Accounting and Audit are not merely statutory requirements—they are the financial backbone of every professionally managed Public Limited Company.
A strong accounting and audit framework generally helps businesses:
- Improve Financial Transparency
- Strengthen Corporate Governance
- Support Better Decision-Making
- Build Investor Confidence
- Maintain Legal Compliance
- Achieve Sustainable Business Growth
Companies with organised financial systems generally operate more efficiently and face fewer compliance challenges.
Better Financial Transparency
One of the biggest advantages of proper accounting and audit is financial transparency.
Professional accounting generally provides:
- Accurate Financial Records
- Reliable Financial Statements
- Clear Business Performance Reports
- Organised Financial Documentation
Transparent financial information strengthens stakeholder confidence.
Better Corporate Governance
Professional accounting supports effective corporate governance.
Well-maintained financial systems generally help:
- Board Oversight
- Management Accountability
- Financial Discipline
- Strategic Planning
Reliable financial information enables better governance decisions.
Better Decision-Making
Management decisions should be based on accurate financial information.
Professional accounting generally helps management evaluate:
- Revenue
- Expenses
- Profitability
- Cash Flow
- Business Performance
Reliable financial reports improve strategic decision-making.
Better Investor Confidence
Investors generally prefer companies with:
- Accurate Financial Statements
- Transparent Accounting
- Professional Audit Reports
- Strong Internal Controls
Well-managed financial systems improve investor trust and business credibility.
Better Banking & Financial Credibility
Banks and financial institutions generally review a company's financial position before extending financial services.
Professional accounting generally improves:
- Financial Credibility
- Business Reputation
- Loan Readiness
- Banking Relationships
Strong financial reporting supports institutional confidence.
Better Internal Controls
Accounting and audit generally strengthen internal controls relating to:
- Cash Management
- Asset Protection
- Financial Approvals
- Documentation
- Fraud Prevention
Effective controls reduce operational and financial risks.
Better Regulatory Compliance
Professional accounting generally supports compliance with:
- Companies Act, 2013
- MCA Requirements
- Income Tax Laws
- Audit Requirements
- Financial Reporting Standards
Timely compliance reduces regulatory issues.
Better Cash Flow Management
Accurate accounting generally helps businesses monitor:
- Cash Inflows
- Cash Outflows
- Working Capital
- Business Liquidity
Effective cash flow management supports business continuity.
Better Business Planning
Professional financial reporting generally assists businesses in:
- Budget Preparation
- Revenue Forecasting
- Expense Planning
- Investment Decisions
Reliable financial information improves long-term planning.
Better Risk Management
Accounting and audit generally help identify:
- Financial Risks
- Accounting Errors
- Compliance Gaps
- Internal Control Weaknesses
Early identification supports timely corrective action.
Better Business Reputation
Companies with transparent accounting and professionally audited financial statements generally enjoy stronger credibility among:
- Investors
- Banks
- Customers
- Government Authorities
- Business Partners
Financial transparency strengthens corporate reputation.
Long-Term Business Sustainability
Professional accounting systems generally support:
- Financial Stability
- Governance
- Organised Administration
- Sustainable Growth
Strong financial management contributes to long-term business success.
Practical Challenges
Although accounting and audit provide several benefits, companies may experience practical challenges such as:
- Maintaining Accurate Records
- Managing Financial Documentation
- Timely Bookkeeping
- Internal Control Implementation
- Audit Preparation
Professional accounting systems help overcome these challenges.
Common Accounting & Audit Mistakes
Many Public Limited Companies experience financial and compliance issues because of avoidable mistakes.
Common mistakes generally include:
- Delayed Bookkeeping
- Weak Documentation
- Missing Supporting Records
- Poor Bank Reconciliation
- Delayed Financial Statements
- Weak Internal Controls
- Delayed Audit
- Poor Record Management
- Lack of Financial Review
- No Professional Accounting Support
Professional accounting and audit practices significantly reduce these risks.
Best Practices
Professionally managed Public Limited Companies generally:
- Maintain books of accounts throughout the year.
- Record every financial transaction promptly.
- Reconcile bank accounts regularly.
- Preserve supporting documents securely.
- Prepare financial statements on time.
- Conduct statutory audits promptly.
- Strengthen internal financial controls.
- Review financial performance periodically.
- Maintain transparency in financial reporting.
- Obtain professional accounting and audit advisory whenever required.
Founder Accounting & Audit Checklist
Before closing every financial year, ensure:
✔ Books of Accounts Updated
✔ Financial Transactions Verified
✔ Bank Reconciliation Completed
✔ Financial Statements Prepared
✔ Supporting Documents Organised
✔ Statutory Audit Completed
✔ Internal Controls Reviewed
✔ Financial Reports Verified
✔ Accounting Records Preserved
✔ Professional Accounting & Audit Review Conducted
Vakilkaro Expert Insight
Many entrepreneurs view accounting only as a compliance activity.
In reality, accounting and audit are strategic business management tools that help companies understand their financial health and make informed business decisions.
Professionally managed Public Limited Companies generally benefit from:
- Better Financial Control
- Stronger Governance
- Improved Investor Confidence
- Better Business Planning
- Sustainable Corporate Growth
Companies that invest in disciplined accounting and regular audits generally build stronger financial foundations, improve operational efficiency and achieve long-term business stability.
Frequently asked questions
What is accounting in a Public Limited Company?+
Accounting is the systematic process of recording, classifying and reporting the financial transactions of a Public Limited Company. It generally includes: • Bookkeeping • Financial Records • Financial Statements • Bank Reconciliation • Financial Reporting
What is a statutory audit?+
A statutory audit is the independent examination of a company's financial statements and accounting records in accordance with the applicable provisions of the Companies Act, 2013. It generally helps verify the accuracy and reliability of financial information.
Is accounting mandatory for a Public Limited Company?+
Yes. A Public Limited Company is generally required to maintain proper books of accounts and financial records in accordance with the applicable provisions of the Companies Act, 2013 and other applicable laws.
Can Vakilkaro help with accounting and audit?+
Yes. Vakilkaro assists with: • Accounting Advisory • Audit Coordination • Financial Documentation • Annual Compliance • Corporate Governance • Financial Reporting Support Professional guidance helps businesses maintain financial compliance.
Why are books of accounts important?+
Books of accounts generally help: • Record Financial Transactions • Prepare Financial Statements • Support Audit • Maintain Financial Transparency Accurate books strengthen financial management.
What books of accounts should a Public Limited Company maintain?+
Professional companies generally maintain: • Cash Book • Bank Book • Journal • General Ledger • Sales Register • Purchase Register • Expense Register • Fixed Asset Register The exact records depend upon the nature and scale of business.
Why are financial statements important?+
Financial statements generally provide information regarding: • Financial Position • Profitability • Business Performance • Cash Flow These reports support management decisions and statutory compliance.
What is bank reconciliation?+
Bank reconciliation is the process of comparing the company's accounting records with bank statements to identify and resolve differences. Regular reconciliation generally improves financial accuracy.
Why are internal controls important?+
Professional internal controls generally help: • Protect Company Assets • Reduce Financial Errors • Prevent Fraud • Improve Financial Governance Strong controls improve operational efficiency.
Why is financial transparency important?+
Financial transparency generally improves: • Investor Confidence • Business Credibility • Corporate Governance • Regulatory Compliance Transparent reporting supports sustainable business growth.
Can accounting improve decision-making?+
Yes. Professional accounting generally provides management with reliable financial information that supports: • Budgeting • Business Planning • Cost Control • Strategic Decisions
Why should accounting records be updated regularly?+
Regular updates generally help: • Improve Accuracy • Reduce Errors • Simplify Audit • Improve Financial Reporting Continuous bookkeeping supports organised financial management.
What documents should be preserved for accounting?+
Professional companies generally preserve: • Invoices • Bills • Receipts • Payment Vouchers • Bank Statements • Accounting Records • Financial Statements Proper documentation supports audit and compliance.
Can accounting improve investor confidence?+
Yes. Professional accounting generally demonstrates: • Financial Discipline • Transparency • Organised Business Management Reliable financial information improves investor confidence.
Why is statutory audit important?+
Professional audits generally help: • Verify Financial Statements • Improve Transparency • Strengthen Internal Controls • Improve Corporate Governance Audit improves the reliability of financial reporting.
Can accounting improve banking relationships?+
Yes. Banks generally review: • Financial Statements • Accounting Records • Business Performance Organised financial reporting generally improves banking credibility.
Why should financial records be organised?+
Professional record management generally helps: • Improve Governance • Support Audit • Maintain Compliance • Improve Financial Reporting Organised records improve operational efficiency.
Can accounting reduce business risks?+
Yes. Professional accounting generally helps identify: • Cash Flow Issues • Financial Errors • Operational Inefficiencies • Compliance Risks Early identification supports timely corrective action.
What is the biggest benefit of accounting and audit?+
Professional accounting and audit generally provide: • Financial Transparency • Better Governance • Reliable Decision-Making • Strong Business Credibility • Long-Term Financial Stability
Why should companies conduct accounting throughout the year?+
Continuous accounting generally helps: • Maintain Accurate Records • Reduce Year-End Workload • Improve Compliance • Simplify Audit Professional companies avoid delaying bookkeeping until the end of the financial year.
Can audit improve corporate governance?+
Yes. Professional audit generally strengthens: • Accountability • Financial Discipline • Internal Controls • Governance Independent review improves corporate credibility.
Why should accounting software be used?+
Professional accounting software generally helps: • Automate Record Keeping • Improve Accuracy • Generate Reports • Simplify Financial Management Technology improves operational efficiency.
What are the common accounting and audit mistakes?+
Common mistakes generally include: • Delayed Bookkeeping • Weak Documentation • Poor Bank Reconciliation • Missing Financial Records • Delayed Audit • Weak Internal Controls Professional financial management significantly reduces these risks.
Can Vakilkaro review accounting records?+
Yes. Vakilkaro assists with reviewing: • Books of Accounts • Financial Statements • Accounting Records • Audit Readiness • Corporate Documentation Professional review improves financial governance.
Why should companies maintain accounting records after audit?+
Accounting records generally support: • Future Compliance • Taxation • Banking • Business Planning • Financial Analysis Proper record preservation strengthens long-term corporate administration.
Can accounting support business expansion?+
Yes. Reliable financial information generally helps businesses: • Plan Expansion • Assess Funding Requirements • Monitor Profitability • Evaluate Business Performance Professional accounting supports strategic growth.
Why should promoters seek professional accounting advice?+
Professional guidance generally helps: • Improve Financial Planning • Reduce Accounting Errors • Strengthen Compliance • Improve Governance Professional accounting supports sustainable business growth.
Can accounting improve operational efficiency?+
Yes. Professional accounting generally helps management: • Monitor Expenses • Control Costs • Improve Budgeting • Measure Performance Financial discipline contributes to operational efficiency.
How do accounting and audit support long-term business success?+
Together they generally help: • Improve Governance • Maintain Transparency • Build Investor Confidence • Strengthen Financial Discipline • Support Sustainable Growth Professional financial management forms the foundation of long-term corporate success.
Why choose Vakilkaro for Accounting & Audit advisory?+
Vakilkaro provides complete assistance including: • Accounting Advisory • Audit Coordination • Financial Documentation • Annual Compliance • ROC Compliance • Corporate Governance Advisory • Legal Documentation • Long-Term Financial Support Our experts help Public Limited Companies establish professionally managed accounting and audit systems that strengthen compliance, governance and long-term business sustainability. Common Myths "Accounting is only required for tax filing." Incorrect. Accounting also supports financial management, corporate governance, business planning and strategic decision-making. "Audit is only conducted to detect fraud." Incorrect. A statutory audit generally verifies financial statements, improves transparency and strengthens corporate governance. "Accounting can be completed only at the end of the financial year." Incorrect. Professionally managed companies generally maintain accounting records throughout the year. "Small Public Limited Companies do not need organised accounting." Incorrect. Every Public Limited Company benefits from disciplined accounting and financial reporting regardless of its size. "Professional accounting support is unnecessary." Incorrect. Professional guidance generally improves compliance, financial reporting, governance and long-term business performance. Related Guides Foundation Guides • Public Limited Company Registration Service Page • PAN, TAN & Bank Account Guide • Share Capital Guide • Directors & Shareholders Guide Growth Guides • Benefits Guide • Corporate Governance Guide • Business Expansion Guide Compliance Guides • Annual Compliance Guide • Board Meeting & AGM Guide Schema Recommendation Implement: • FAQ Schema • Article Schema • Breadcrumb Schema • Organization Schema Developer Notes • Place the Accounting & Audit Summary Table within the running main content after the relevant explanatory H2 section. • Apply FAQ Schema to all FAQs. • Highlight the Accounting & Audit Checklist as a visual callout. • Display the Accounting & Audit Journey as a process diagram. • Internally link to the Public Limited Company Registration Service Page, Annual Compliance Guide, Board Meeting & AGM Guide, Corporate Governance Guide, PAN, TAN & Bank Account Guide, and Share Capital Guide.