Audits built around how software companies actually earn revenue
In short: A. George & Associates audits IT and software companies in Kochi, Ernakulam and across Kerala, including SEZ and STPI units at Infopark, SmartCity, Infopark Koratty and Technopark, development centres of foreign groups, product companies and startups. Our audits cover revenue recognition on software contracts, capitalisation of development costs, foreign exchange, ESOPs, transfer pricing and the SEZ certifications these companies need.
Software businesses do not look like traders or manufacturers. Revenue comes from time-and-material, fixed-price, milestone and subscription contracts; much of it is billed in foreign currency; development costs may or may not be capitalised; and a large share of transactions are with group companies abroad. A generic audit misses where the real risks are.
IT companies are the largest part of our practice. We know the reporting expected by SEZ authorities, banks, investors and overseas parents, and plan the audit so it meets all of them at once.
Sound familiar?
"Our revenue on fixed-price projects never matches what the auditor expects at year end."
"The SEZ office questioned our APR figures because they did not tie to the audited accounts."
"Head office auditors in the US need our numbers weeks before the Indian audit is done."
"We are not sure whether our product development costs should be capitalised."
We audit IT and software companies every year, and plan for these issues from day one.
What an IT company audit covers
Statutory audit
Audit of financial statements under the Companies Act, 2013, under Indian Accounting Standards or Ind AS as applicable, including CARO reporting and internal financial controls.
Revenue recognition
Testing of time-and-material, fixed-price, milestone and subscription contracts, unbilled revenue and unearned income, and the cut-off at year end.
Software development costs
Review of what is capitalised as intangible assets or software under development, and what must be expensed, with amortisation and impairment.
Foreign currency and receivables
Translation of export receivables, realisation within permitted time, and reconciliation of export invoices with remittances and EDFs.
Group transactions and transfer pricing
Inter-company billing, cost recharges and the accountant's report on transfer pricing. See audit of foreign subsidiaries.
SEZ and STPI units
Audit figures that support the Annual Performance Report, net foreign exchange and the unit's LoA conditions. See SEZ and STPI services.
What you get
An audit that understands software
Contracts, billing models and development costs tested properly.
One timetable
Audit, tax audit, transfer pricing and SEZ certifications aligned.
Numbers that tie
Audited figures that match your APR, group reporting and tax returns.
Partner access
A partner who knows IT companies, available through the year.
How we run an IT company audit
- Planning: We review contracts, billing models, group structure and reporting deadlines for SEZ, parent and investors.
- Interim work: Revenue, payroll and inter-company testing during the year, so year-end is quick.
- Year-end: Cut-off, unbilled revenue, capitalisation, foreign exchange and provisions.
- Reporting: Audit report, tax audit, transfer pricing report and SEZ certifications, on one timetable.
Related: services for IT companies and startups, audit and assurance.
IT company audits across Kochi, Ernakulam and Kerala
We audit IT and software companies at Infopark (Phase 1 and 2) and SmartCity in Kakkanad, the Kerala Startup Mission and Technology Innovation Zone in Kalamassery, IT buildings in Edappally, Palarivattom, Kaloor and Vyttila, Infopark Koratty (Thrissur), Technopark in Thiruvananthapuram and Cyberpark in Kozhikode.
Frequently asked questions
Do you audit SEZ units at Infopark and SmartCity?
Yes. We audit IT and software companies operating as SEZ and STPI units, and align the audited figures with the Annual Performance Report and other SEZ reporting.
How is revenue recognised in a software company?
It depends on the contract. Time-and-material work is usually recognised as services are delivered, fixed-price contracts by progress or milestones, and subscriptions over the subscription period, under the applicable accounting standard. We test that the method matches the contract terms.
Can software development costs be capitalised?
Only when specific conditions in the accounting standards are met, typically in the development phase of a product the company will use or sell. Research costs and routine maintenance are expensed.
We are a subsidiary of a foreign company. Can you coordinate with the group auditors?
Yes. We complete the Indian statutory audit and component reporting for the group auditors, and reconcile Indian figures to the group's accounting framework.
Do you audit IT companies outside Kochi?
Yes. We audit IT companies across Kerala, including Infopark Koratty in Thrissur, Technopark in Thiruvananthapuram and Cyberpark in Kozhikode.