Does your company need an audit, and must accounts be filed?
Start with two questions: whether the financial statements need an audit, and whether the company must send those statements to the Registrar. A single “small company” label does not answer both.
Apply the two published capital tests
For an ordinary standalone private company, the linked Act gives this baseline:
| Paid-up capital | Audit: section 223(5) | Accounts filing: section 233(3) |
|---|---|---|
| Up to Rs 1 million | Exemption in the cited provision | Exemption in the cited provision |
| Above Rs 1 million, up to Rs 10 million | Required under the baseline | Exemption in the cited provision |
| Above Rs 10 million | Required under the baseline | Required under the baseline |
Both provisions allow a higher threshold to be notified. Section 223(9) preserves the audit provision for SMCs. Treat public, regulated and group companies as separate reviews. Companies Act, sections 223 and 233
Prepare the evidence for the decision
- Incorporation record and current company type.
- Share register, allotment records and a reconciled paid-up-capital figure.
- The financial reporting period under review.
- Details of any holding/subsidiary relationship or regulated activity.
- Any notification or order being relied upon, including its effective date.
- Bank, investor or other agreements requiring audited information.
Write the conclusion separately for audit and filing. Where the answer depends on an exemption notification, attach that notification to the decision. Where no current confirmation has been obtained, keep the question open rather than describing the company as cleared.
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Illustrative application of the table: a standalone private company with Rs 2 million paid-up capital falls in the middle row. Its audit and section 233 filing answers differ. A large authorised-capital ceiling does not change the paid-up amount used in this example. The example assumes no later notification or special requirement changes the baseline.
If a new share allotment changes the relevant capital, revisit the assessment. Do not copy last year's conclusion into the current file without checking the records and the applicable law.
Arrange an eligible auditor where needed
Section 246 sets a 90-day first-auditor appointment period and a 14-day appointment-intimation period. Section 247 distinguishes eligible practising CAs from the CA/CMA route for other qualifying companies; public companies, their private subsidiaries and private companies with at least Rs 3 million paid-up capital fall in its CA category. Companies Act, sections 246–247
Ask the proposed auditor to confirm qualification, current practice status and independence for your company. Agree the reporting period, records needed, responsibilities and timetable in an engagement letter. Resolve missing opening balances or inventory records early; a rushed appointment does not create evidence that was never kept.
Build the year-end work plan
| Workstream | Practical output |
|---|---|
| Bookkeeping | Reconciled ledgers and supporting schedules |
| Financial statements | A complete draft checked against those records |
| Audit, where required | Resolved evidence requests and the final signed report |
| Approval and circulation | Required approvals, signatures and delivery evidence |
| Filing, where required | Accepted submission and retained acknowledgement |
Check the actual filing form and deadline against the current requirements once the company's position is established. Do not infer that a tax-return submission also submitted the company accounts to SECP.
Keep the finished accounts and the basis for any exemption together. If a reviewer later asks why no audit or filing was arranged, the file should answer with the company's facts and the applicable authority, not only “we were told we are small”.
Document the trigger conclusion each year
Do not decide audit status from company size in conversation. Record entity type, public-interest or regulated status, capital and other thresholds, group relationships, governing statute and the financial year being assessed. Requirements and exemptions can change, and a lender, donor or shareholder agreement may require an audit even where company law does not.
Keep the conclusion with the source provision and figures used. If an audit is required, appoint the eligible auditor through the correct corporate process early enough for inventory attendance, confirmations and opening-balance work. If it is not required, decide whether reviewed or compiled accounts meet stakeholder needs and label the engagement accurately; unaudited accounts should never be presented as audited.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
- Companies Act 2017 — Pakistan Code consolidation updated 7 October 2022
- SECP: Companies Regulations 2024 publication page
Questions people also ask
Which capital figure should I check?
Use the supported paid-up share-capital figure for the statutory test, not authorised capital, turnover or the bank balance. Reconcile any changes with the company records.
If accounts need not be filed under section 233, can I skip the audit?
Do not infer one exemption from the other. Use the separate tests and record the result for each obligation.
Does a bank’s audit request depend on the company-law exemption?
Read the lending terms separately. A statutory exemption does not establish that a bank, investor or another regulator has waived its own requirement.
Is this a complete current-law clearance for my company?
No. It identifies the provisions in the linked consolidation, labelled updated 7 October 2022. Later notifications, company-specific orders and regulated/group requirements were not exhaustively verified.
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