The government will check the importance of information like reserve requirements and tax liability. Though there is an accountant in all organizations to record the financial transactions and for general book keeping, companies have to pass through an audit that is a sort of scrutiny of the financial statements of the company prepared by the accountant. The key difference between internal and external audit is that internal audit is a function that provides independent and objective … External Auditor may use the work that is conducted in the internal audit if he thinks fit. How to Calculate Accumulated Depreciation? 5        What sort of report will they receive? The purpose of an external audit is to provide an objective independent examination and to verify that the financial statements provide a true and fair reflection of where the company financially and have been appropriately prepared in accordance with accounting standards. As per SEBI guidelines public limited companies arerequired to have the companies accounts after every three months. In most of the countries or territories, the audit of financial statements is required by law or status. Though there is an accountant in all organizations to record the financial transactions and for general book keeping, companies have to pass through an audit that is a sort of scrutiny of the financial statements of the company prepared by the accountant. While, assurance is a set of the processes of analyzing and assessing process, operations, procedures, etc. External or Statutory audit is also a compulsory audit. Differences in a Nutshell Internal audit is carried out by the people working in the firm themselves, while external audit is conducted by people who are working for a private firm. Let us discuss some of the major differences between Audit vs Assurance: 1. The main objective of a statutory audit is not different from other financial statements auditing. Statutory Auditors are a part of the external audit process are focused on the various financial accounts or risks associated with the domain of finance and are appointed by the shareholders of the company. The role and value of internal audit should be better recognised within the UK Code of Corporate Governance and guidance issued under it by the Financial Reporting Council (FRC), with regard to publicly listed private sector organisations.Regulators rightly recognise that the An internal audit is conducted by the permanent staff of the same office to detect weakness in system, procedures and for the improvement. Statutory Audit is done by the Practicing Chartered Accountants having their operations external to the Company whose audit they are performing Whereas Internal Audit can be done by the employee of the Company. The aim of the audit is to presentthe financial information, reports, fairly, accurately and ethically accepting accou… An introduction to Internal and Statutory Audit, B. External audit is a regulated activity, it can be helpful both in terms of perception and to some extent as a quasi-health check on the key elements of an organisation’s accounting. Let us know if you liked the post. November 16, 2013 CMA Australia News. If the entity doesn’t engage with the external auditor to review their financial statements, then the entity may face legal enforcement from the authority. Statutory Audit is performed by external auditors whereas tax audit is conducted by a practising Chartered Accountant. Statutory audit is the engagement of an audit of financial statements by independent auditors to the entity’s financial statements as the compliance with the local law that the entity is operating. At REB we invest in understanding your business and the risks you face in achieving your objectives, goals and reporting obligations. Introduction to Uniform system of accounts, D. Contents of the Balance Sheet (under uniform system), F. Departmental Income Statements and Expense statements (Schedules 1 to 16), A. Legal Requirement. A. It is different from the statutory audit that the entity needs to engage with an audit firm to perform its review in financial statements. Statutory audits are important and essential for a number of reasons, first such kinds of audits are required by law and help to ensure that the management is not dysfunctional and has proper internal controls and helps to reduce the risk of fraud, misstatement of Financial Statements. This kind of engagement, the auditor will have to identify the scope, objectives, and responsibility with the entity. Internal Audit vs Statutory Audit. External Audit/Statutory Audit/Compulsory Audit:It is a compulsory audit done by outside agency at least once, at least once, atthe end of the financial year. Examples of statutory audits are the audits of companies, banks, insurance, charitable trusts, corporate bodies and co-operative societies. A "statutory audit" is a legally required review of the accuracy of a company's or government's financial records. External audit/ statutory audit is performed as pe Most of the time, governments or accounting bodies require companies to perform an external audit under their laws. And the entity that operated in those countries is required to submit the audited financial statements as per the law requires. Statutory audits are the opposite of voluntary audits. 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