Statutory Audit or External Audit is conducted annually to meet the set of legal requirements insisted by the government and controlling authority of each country. It relies on the internal audit reports, verification of financial information, documents, and related stock validations.
It is a legally delegated examination of a company’s financial statements, documents, and details for correctness. An external audit evaluates information such as balances with debtors/creditors’, banks, financial transactions, and accounting records to see if an organization provides an honest and accurate depiction of its financial status.
Advantages of Statutory Audit to an Entity
Statutory audit reports provide transparency of the affairs of the entity to investors,owners and all the parties dealing with the company. The reports are prepared and published in accordance with the norms and regulations of the country in question. This type of audit aids in meeting all of the company’s compliance standards. There are several other benefits to statutory auditing. The following are some of them:
- Audited financial statements ensure the accuracy of the company’s records and improve its legitimacy, which will raise the company’s reputation and net worth among investors and public.
- On account of close verification and coordination all company operations, management will be able to boost the efficiency and deliver better results its investors.
- It will also aid in a better understanding of corporate activities and increase the internal management system’s performance.
- It will also help to better understanding of corporate activities and increase the internal management system’s performance.
What are the basic procedures of Statutory Audit?
Understanding the organization’s operating environment and controls which are generalfollowed by the industry.
Understanding the internal controls and checks followed with evaluation of previous audit reports.
Verification and checking of financial transactions and documents relating to the company’s activities, banks, debtors, creditors, inventory etc. ensuring a true and fair view of the affairs of the company.