Statutory Audit in Pakistan: Process, Cost & Choosing an Auditor (2026 Guide)
Last updated: September 2026 | Reading time: 10 minutes | By: Arshad Associates – Audit & Compliance Experts
📊 Need a statutory audit for your company? Arshad Associates connects you with qualified auditors and ensures your financial statements are SECP-compliant.
Free initial consultation – get audit-ready with expert guidance.📌 What is a Statutory Audit?
A statutory audit is an independent examination of a company's financial statements and books of account, required by law under the Companies Act 2017. The auditor's role is to express an opinion on whether the financial statements present a true and fair view of the company's financial position and performance [citation:6].
🔑 Key Objectives of a Statutory Audit:
- Verify that proper books of account are maintained
- Confirm that financial statements conform to the Companies Act and applicable accounting standards
- Ensure that business is conducted in accordance with the company's objects
- Verify deduction and deposit of Zakat, where applicable [citation:6]
- Provide shareholders with independent assurance on management's financial reporting
👥 Who Needs a Statutory Audit in Pakistan?
Under the Companies Act 2017, every company registered in Pakistan must appoint an auditor and have its financial statements audited annually [citation:3]. However, the qualification requirements for the auditor vary based on company type.
| Company Type | Auditor Qualification Required |
|---|---|
| Public Company | Chartered Accountant with valid ICAP certificate [citation:3] |
| Private Company (Subsidiary of Public) | Chartered Accountant with valid ICAP certificate [citation:3] |
| Private Company (Paid-up Capital ≥ PKR 3 Million) | Chartered Accountant with valid ICAP certificate [citation:3] |
| Private Company (Paid-up Capital < PKR 3 Million) | Chartered Accountant OR Cost & Management Accountant [citation:3] |
| Section 42 Non-Profit Companies | Chartered Accountant with valid ICAP certificate [citation:3] |
⚖️ Auditor Qualifications & Disqualifications
The Companies Act 2017 and SECP guidelines specify who can and cannot serve as a company's statutory auditor.
✅ Who is Qualified?
- Chartered Accountant with a valid certificate of practice from ICAP [citation:3]
- Cost & Management Accountant with a valid certificate of practice (for private companies with paid-up capital below PKR 3 million) [citation:3]
- A firm of Chartered Accountants or Cost & Management Accountants [citation:3]
❌ Who is Disqualified?
- A present or past director, officer, or employee of the company during the preceding three years [citation:3]
- A partner or person in the employment of a director, officer, or employee of the company [citation:3]
- The spouse of a director [citation:3]
- A person indebted to the company (other than in the ordinary course of business) [citation:3]
- A person who has given a guarantee or security for a third person's indebtedness to the company [citation:3]
- A person convicted of fraud within the last ten years [citation:3]
- A body corporate [citation:3]
- A person or firm holding shares in the audit client or its associated companies [citation:3]
⚠️ Additional Requirements for Listed Companies:
- Audit firm must have a satisfactory rating under ICAP's Quality Control Review program [citation:3]
- Must comply with IFAC Guidelines on Code of Ethics [citation:3]
- Financial sector companies must rotate auditors every five years [citation:3]
- Other listed companies must rotate the engagement partner every five years [citation:3]
🔄 Step-by-Step Statutory Audit Process
The statutory audit process in Pakistan typically follows these stages:
Step 1: Appointment of Auditor
The board appoints the first auditor within 90 days of incorporation [citation:8]. Subsequent auditors are appointed at the Annual General Meeting (AGM) on the board's recommendation. The company must intimate the registrar within 14 days of appointment [citation:17].
Step 2: Engagement Planning
The auditor conducts a planning meeting to understand the business, assess risks, and develop an audit strategy. This includes determining materiality thresholds and identifying key audit areas.
Step 3: Internal Control Assessment
The auditor evaluates the company's internal controls to determine the nature, timing, and extent of audit procedures. Weaknesses are documented for management attention.
Step 4: Substantive Testing & Fieldwork
The auditor performs detailed testing of transactions, account balances, and disclosures. This includes verifying assets, confirming receivables, examining invoices, and testing journal entries. For an SME, this phase typically takes 10-15 working days [citation:18].
Step 5: Completion & Review
The audit team completes final analytical procedures, reviews subsequent events, and obtains management representations. The engagement partner reviews the working papers and draft report.
Step 6: Issuance of Audit Report
The auditor issues the audit report in the prescribed format (Form 35A for non-banking companies, Form 35B for banking companies) [citation:6]. The report is signed by the practicing partner and dated.
Step 7: Presentation at AGM & Filing
The audited financial statements are presented at the AGM. For listed companies, the auditor or authorized representative must attend the AGM to answer shareholder questions [citation:6]. The audited accounts must be filed with SECP within 15 days of the AGM (for non-listed companies) or 30 days (for listed companies) [citation:7].
💰 Statutory Audit Cost in Pakistan
Audit fees vary widely based on company size, complexity, turnover, number of transactions, and the audit firm's reputation. Below are indicative ranges for 2026.
| Company Category | Estimated Audit Fee (PKR) | Timeline |
|---|---|---|
| Small Private Company (capital < PKR 3M) | PKR 50,000 – 150,000 | 7-10 working days |
| Medium Private Company (capital PKR 3M – 50M) | PKR 150,000 – 400,000 | 15-21 working days [citation:18] |
| Large Private Company (capital > PKR 50M) | PKR 400,000 – 1,000,000+ | 20-30 working days |
| Listed Company | PKR 1,000,000 – 5,000,000+ | 30-45 working days |
💡 Note on Audit Fees: Publicly listed companies disclose audit fees in their financial statements. For example, BECO Steel's 2025 AGM approved PKR 1,200,000 for the annual audit and PKR 250,000 for the limited scope review of half-year accounts [citation:20]. These figures provide a useful benchmark for mid-sized listed companies.
📋 Factors That Affect Audit Cost
- Company size and turnover: Larger companies with more transactions require more audit hours
- Complexity of operations: Multi-branch, foreign subsidiaries, or specialized industries cost more
- Quality of internal records: Poorly maintained books require more audit effort
- Audit firm reputation: Big Four firms charge significantly more than local firms
- Regulatory requirements: Listed companies and financial institutions require more extensive procedures
- Interim reviews: Half-yearly limited scope reviews add to the cost [citation:20]
🎯 How to Choose the Right Auditor
Selecting the right statutory auditor is critical for compliance and credibility. Consider these factors:
✅ Key Selection Criteria
- Qualification and licensing: Ensure the auditor holds a valid ICAP or ICMAP certificate of practice [citation:3]
- Industry experience: Choose a firm with experience in your sector (manufacturing, IT, trading, etc.)
- QCR Rating: For listed companies, the firm must have a satisfactory Quality Control Review rating from ICAP [citation:3]
- Independence: Verify the auditor is not disqualified under the Companies Act [citation:3]
- Resource capacity: Ensure the firm has sufficient staff to complete the audit within your timeline
- Fee structure: Compare fees but prioritize quality and reliability over lowest cost
- Reputation and references: Ask for client references in similar industries
💡 Pro Tip: For IT companies, specialized audit services are available in Islamabad and Rawalpindi with typical completion in 15-21 working days, covering SECP filing, Chamber of Commerce renewals, and bank loan applications [citation:18].
📅 Filing Deadlines & Penalties
| Requirement | Deadline | Penalty for Non-Compliance |
|---|---|---|
| First Auditor Appointment | Within 90 days of incorporation [citation:8] | Company and officers liable to penalties |
| Intimation to Registrar | Within 14 days of auditor appointment [citation:17] | Penalties under Companies Act |
| First Financial Statements at AGM | Within 16 months of incorporation [citation:8] | Penalties for late filing |
| Subsequent Financial Statements at AGM | Within 120 days of financial year-end | Penalties for late filing |
| Filing with SECP (Non-Listed) | Within 15 days of AGM [citation:7] | Penalties for late filing |
| Filing with SECP (Listed) | Within 30 days of AGM [citation:7] | Penalties for late filing |
❓ Frequently Asked Questions (FAQs)
📞 Let Arshad Associates Guide Your Statutory Audit
Arshad Associates helps companies prepare for statutory audits and connects you with qualified auditors who understand your industry. Our services include:
- Audit preparation and readiness assessment
- Document collection and organization
- Liaison with qualified audit firms
- Financial statement preparation
- SECP filing support
- Post-audit compliance advisory
📚 Further reading:
✅ Get audit-ready with expert guidance. Contact Arshad Associates for statutory audit preparation and compliance support.
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