Chartered Accountant for Private Limited Company Audit in Pakistan

Founders frequently assume that being a private limited company, as opposed to a public one, automatically means lighter compliance obligations, including exemption from audit. This assumption is inaccurate. Whether a private limited company must be audited depends on its size classification under the Companies Act 2017, not on its private status alone.

What defines a private limited company for audit purposes

A private limited company is a distinct legal category under the Companies Act 2017, separate from single member companies, public unlisted companies and listed companies. Its compliance obligations, including whether a statutory audit applies, are determined by size criteria relating to paid up capital, turnover and borrowing, rather than by the private classification itself.

The size based exemption

SECP permits certain smaller private companies meeting defined thresholds to forgo a mandatory statutory audit, allowing reliance on board approved financial statements accompanied by a directors' affidavit instead. Published figures for these thresholds vary across sources and appear to have changed over time through SECP notification. A company should confirm the applicable thresholds directly with SECP or a Chartered Accountant before assuming exempt status, as an incorrect assumption creates compliance risk for both the company and its officers.

Companies that do not qualify for the exemption

Private companies exceeding the small company thresholds must have their financial statements audited annually by a Chartered Accountant in practice, prepared in accordance with the applicable financial reporting framework under the Third Schedule to the Companies Act. The resulting audit report accompanies the financial statements when presented for board approval.

Steps for a private limited company assessing its obligations

The first step is determining the company's size classification, which requires reviewing incorporation documents, capital structure and financial figures against current SECP criteria. This step is frequently overlooked, with companies proceeding directly to hiring a Chartered Accountant without first establishing whether a full audit is required.

If an audit is required, the next step is appointing a Chartered Accountant in practice through a formal resolution and engagement letter. If the company qualifies for exemption, it should instead prepare board approved financial statements together with the required affidavit.

Regardless of exemption status, supporting documentation should be retained, since both SECP and FBR retain the ability to request records. Filing obligations with SECP should then be addressed according to the company's specific classification.

For related matters, you may also want to read our guides on corporate law in Pakistan, company registration, and company audit requirements.