# Audit of LLP (Limited Liability Partnership)

LLP is governed by the LLP Act, 2008.

## Basics of LLP

Minimum 2 partners are required to form an LLP
At least 2 partners must be Designated Partners
Designated partners require Designated Partner Identification Number (DPIN)

## Concept of Small LLP

A Small LLP is one where:

Criterion	Threshold
Contribution	Does not exceed Rs 25,00,000 (or such higher amount as prescribed, not exceeding Rs 5 crore)
Turnover (as per Statement of A/c and Solvency for immediately preceding FY)	Does not exceed Rs 40,00,000 (or such higher amount as prescribed, not exceeding Rs 50 crore)

## Books of Account to be Maintained

LLPs must maintain BOA containing:

1. Particulars of all sums of money received and expended and matters in respect of which receipt/expenditure took place

2. Record of assets and liabilities of LLP

3. Statements of costs of goods purchased, inventories, WIP, finished goods and cost of goods sold

4. Any other particulars decided by partners

## When is Audit Mandatory?

Audit is NOT required if:

Turnover does not exceed Rs 40,00,000 in any FY, OR
Contribution does not exceed Rs 25,00,000

Note: Partners may voluntarily get audit done, but as per prescribed rules.

## Returns to be Filed by LLP

Return	Form	Due Date
Annual Return	Form 11	Within 60 days of closure of FY (filed with ROC)
Statement of A/c and Solvency	Form 8	Within 30 days from end of 6 months of FY

Annual return is available for public inspection on payment of prescribed fees.

## Appointment of Auditor

Auditor may be appointed by Designated Partners of LLP:

At any time for the first FY, but before end of first FY
At least 30 days prior to end of each FY (other than first FY)
To fill casual vacancy
To fill casual vacancy caused by removal of auditor

If designated partners fail to appoint - Partners may appoint auditors.

## Advantages / Purpose / Need of Audit of LLP

1. Detection of Errors

2. Disputes - resolution among partners

3. Reliability - for banks, investors

4. Better Compliance and Management

5. Reconstitution - useful on admission/retirement/death

## Auditor's Duty in LLP Audit

### 1. Engagement Letter

Obtain a clear engagement letter from the LLP.

### 2. Minutes Book

Review minutes of partners' meetings.

### 3. LLP Agreement

Read the LLP Agreement and note provisions on:

Nature of business of LLP
Amount of capital contributed by each partner
Interest on additional capital contributed
Duration of partnership
Drawings allowed to partners
Salaries, commission etc. payable to partners
Borrowing powers of LLP
Rights & duties of partners
Method of settlement of accounts at admission/retirement
Any loans advanced by partners
Profit sharing ratio

## Reporting by Auditor

The auditor's report should mention:

Whether records of the firm appear correct and reliable
Whether he was able to obtain all information and explanations necessary
Whether any restriction was imposed upon him

Worked example

### Example 1

Example - Mandatory Audit Determination:

An LLP has during FY 2025-26:

Contribution: Rs 30,00,000
Turnover: Rs 35,00,000

Analysis: Audit is mandatory because contribution exceeds Rs 25 lakh threshold. The exemption requires BOTH limits to be within the threshold.

### Example 2

Example - Form Filing Deadlines:

LLP with FY ending 31st March 2026:

Form 8 (Statement of A/c & Solvency): Due within 30 days from end of 6 months → by 30th October 2026
Form 11 (Annual Return): Due within 60 days of FY close → by 30th May 2026

### Example 3

Example - Small LLP Classification:

LLP with contribution of Rs 20 lakh and turnover of Rs 35 lakh:

Contribution Rs 20 lakh ≤ Rs 25 lakh
Turnover Rs 35 lakh ≤ Rs 40 lakh
Both conditions met → Classified as Small LLP

⚠️ Common exam mistakes

Confusing the audit exemption threshold (contribution Rs 25 lakh / turnover Rs 40 lakh) with Small LLP threshold limits (similar but different statutory purpose)
Mixing up Form 8 and Form 11 due dates - Form 11 (Annual Return) within 60 days; Form 8 (Statement of A/c) within 30 days of 6 months from FY end
Forgetting that the 30-day prior appointment rule applies only from second FY onwards
Assuming Companies Act auditor appointment rules apply - LLPs follow LLP Act rules

Bare-Act text Audit Rules under LLP Act, 2008 · LLP Act, 2008 read with LLP Rules · click to expand

Any LLP, whose turnover does not exceed, in any financial year, Rs 40,00,000, or whose contribution does not exceed Rs 25,00,000, is not required to get its accounts audited. However, if the partners of such LLP decide to get the accounts of such LLP audited, the accounts shall be audited only as per the prescribed rule.

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