What is the purpose of statutory audit?

The purpose of a statutory audit is to determine whether an organization provides a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records, and financial transactions.

What are the advantages of statutory audit?

Advantages of Statutory Audit:

• It increases the authenticity of the financial reports as the statements are properly verified by the auditor.
• Improves the credibility of the organization because when the audits have been conducted the financial reports are free from error, fraud and misrepresentation, and inaccuracies.

What is the purpose of an audit to a company?

The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organisation at a given date, for example: Are details of what is owned and what the organisation owes properly recorded in the balance sheet?

What happens in a statutory audit?

The features of the statutory audit are the submission of legal documents on financial statements. They are the audit balance sheet, notes on accounts including 3CA/3CB, 3CD, purchase bill file, sales bill file, bank reconciliation statement, electricity bill, telephone bill, rent bill, etc.

Is statutory audit same as financial audit?

Statutory Audit (also known as financial audit or external audit) is an audit required under by the statute governing the entity, performed by an independent person with the end objective to provide opinion whether the financial statements give a true & fair view of the company & whether the same are free from material …

What is the purpose of an audit of a company’s financial statements?

The purpose of a financial statement audit is to add credibility to the reported financial position and performance of a business. The Securities and Exchange Commission requires that all entities that are publicly held must file annual reports with it that are audited.

What are the advantages and disadvantages of auditing?

Let us now take a look at the advantages of auditing and the disadvantages of auditing in some detail.

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What is the value of statutory audit?

The purpose of the statutory audit is to provide an independent opinion to the shareholders on the truth and fairness of the financial statements, whether they have been properly prepared in accordance with the Companies Act and to report by exception to the shareholders on the other requirements of company law such as …

Do you need a statutory audit for your company?

Internationally active companies likely have subsidiaries that undergo annual statutory audits. What many companies don’t understand is what that statutory audit really is. Unlike the United States where audits are only required for public companies and certain other regulated entities…

What does the term statutory mean in auditing?

The term statutory is used to denote the audit is required by statute. A statute is a law or regulation enacted by the legislative branch of the organization’s associated government.

What are the limitations of substantive audit?

Statutory auditor cannot verify the 100\% records of an entity given the time, money & resource constraints at his end. He cannot give assurance that the financial statements are true & correct in all respects. The audit is done on a materiality basis, which means 99\% of things are checked through substantive audit procedures.

What happens if an entity does not engage an external auditor?

If the entity doesn’t engage with the external auditor to review its financial statements, then the entity may face legal enforcement from the authority. The non-statutory audit is the audit of financial statements that are not required by law.