Statutory Audit Service
Starting from ₹15,000 + GST
Table Of Content
Statutory Audit
As a business owner, it’s essential to understand the importance of a statutory audit. It is legally mandated to assess a company’s financial statements, ensuring they present a true and fair view of its financial position.
Statutory audits play a key role in promoting transparency and ensuring compliance with legal requirements. They build trust among investors, regulators, and stakeholders while maintaining the integrity of the company’s financial system.
When conducting a statutory audit, important elements like independence, impartiality, and compliance with IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles) must be considered. The requirement for a statutory audit depends on various factors such as business type, turnover, revenue, and employee size.
Benefits of Statutory Audit
Eligibility for Statutory Audit
Process of Statutory Audit
Step 1
An independent auditor is appointed, usually approved by shareholders at the AGM, ensuring no conflict of interest.
Step 2
The auditor creates an audit plan after reviewing financial reports, past audits, and interviewing key personnel.
Step 3
The auditor examines financial records, including balance sheets, income statements, and transactions, ensuring accuracy.
Step 4
The auditor assesses the internal control systems to ensure accuracy in financial reporting.
Step 5
Auditors verify the accuracy of financial records by cross-referencing them with supporting documents like invoices and contracts.
Step 6
A final audit report summarizing findings is prepared, offering an opinion on the financial statements.
Step 7
The audit report is submitted to relevant authorities, such as the Registrar of Companies or government agencies.
Documents Required for Statutory Audit
FAQs
What is the importance of statutory audit?
A statutory audit ensures the accuracy of a company’s financial statements, as required by law. This independent verification strengthens trust in the company’s financial health.
Who should conduct a statutory audit?
Companies exceeding a certain turnover or profit threshold, and all public companies, are required to conduct a statutory audit. Specific details may vary by jurisdiction.
How is a statutory audit different from an internal audit?
A statutory audit is legally mandated to verify financial accuracy for external stakeholders. An internal audit is voluntary, focusing on improving internal processes and controls for management.
What kind of documents are required for a statutory audit?
Documents like financial statements, trial balances, contracts, and supporting documents related to the company’s finances are necessary for the audit process.
How frequently should a company conduct a statutory audit?
Statutory audits are typically conducted annually. However, the specific frequency may vary depending on regulations and company size.
What happens if a company fails to conduct a statutory audit?
Failure to conduct a statutory audit can lead to legal penalties, and in severe cases, imprisonment for responsible individuals.
Can a company’s internal auditor perform the statutory audit?
No, statutory audits must be conducted by an independent external auditor who is objective and free from conflicts of interest.
Can a company avoid a statutory audit?
No, companies meeting the statutory audit criteria cannot avoid the process. It is a legal requirement for transparency and accountability.
Can statutory auditors make any recommendations?
Yes, statutory auditors can suggest improvements to financial processes and internal controls to enhance accuracy and efficiency.
What are the consequences of an adverse audit opinion?
An adverse audit opinion suggests that the financial statements do not accurately reflect the company’s financial health. This can damage the company’s reputation, lead to difficulty securing funding, and trigger regulatory actions.