Statutory Audit

Statutory Audit

 A statutory audit is a legally required review of the accuracy of a company's or government's financial statements and records. An audit is an examination of records held by an organization, business, government entity, or individual, which involves the analysis of financial records or other areas.

What is a Statutory Audit?

A statutory audit is a mandatory audit of a company’s financial records by an external entity. This audit is mandated by statute or law that governs an organization’s principles and ethics.

In general, a statutory audit is conducted by examining bank accounts, financial statements, transactions, bookkeeping records, ledgers, and other critical documents that are submitted for tax purposes and Govt requirements.

But it can also include business operations-related documents such as invoices, purchase orders, bills, challans, and more.

Applicability of Statutory Audit:

As per Companies Act 2013 and Companies (Audit and Auditors) Rules, 2014, all public and private limited companies are mandated by law (or stature) to conduct a statutory audit of the financial documents and filings. In fact, the business turnover and the nature of the business of public and private limited companies don’t matter in the case of the statutory audit.

In the case of LLP (Limited Liability Partnership) firms, only these companies are mandated to perform the statutory audit:

Annual turnover crosses Rs 40 lakhs or

Capital contribution is more than Rs 25 lakhs

Given below are the important areas of consideration one has to look into while conducting the statutory audit of a company:

  • Research the control environment of the organisation.
  • Testing of Internal Controls.
  • Audit of Balance Sheet.
  • Audit of Profit & Loss Account.
  • Audit of GST.
  • Audit of TDS.


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A: The requirement for a statutory audit varies depending on the country, size, and type of company. Generally, large and publicly listed companies are required to have a statutory audit, while smaller companies may be exempted. Regulatory bodies, such as the Securities and Exchange Commission, may also require certain companies to have a statutory audit.

A: A statutory audit must be performed by an independent and qualified auditor or accountant who is licensed to perform such audits in the relevant jurisdiction. The auditor must be impartial and objective, and must not have any financial or other interest in the company being audited.

A: A statutory audit can provide several benefits to a company, including:

  • Increased credibility and trust among stakeholders,
  • Improved financial management and control,
  • Early detection and prevention of fraud and errors,
  • Compliance with legal and regulatory requirements,
  • Identification of areas for improvement in financial and operational processes.

A: The length of a statutory audit depends on the size and complexity of the company being audited, as well as the scope of the audit. Generally, a statutory audit can take anywhere from a few weeks to several months to complete.

A: A statutory audit is required by law or regulation, while a non-statutory audit is conducted voluntarily by a company to gain insight into its financial position and performance. Non-statutory audits may be performed for a variety of reasons, such as due diligence for a merger or acquisition, or to provide assurance to investors or lenders.

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