Audit is the systematic and independent examination of data, statements records, operations and performances of an enterprise for stated purpose.
The term statutory audit refers to a legal requirement to review the financial records of a company or of the government, in order to check its fairness and accuracy. Statutory audit is done to monitor the performance of the firm or the government organization. The purpose of a statutory audit is the same as the purpose of any other type of audit. Like other audits, the main purpose of the statutory audit’s is to determine whether the representation of the financial position of the organization is fair and accurate by examining information such as the financial transactions, bank balances and book keeping records of the organization. This examination contributes in making the final report by the statutory auditing information. Generally these are prepared for the general public. They show how the tax collection is spent and on what things they have invested along with the amount of the investment done on each project or program.
In most of the countries, statutory auditors are referred to as the external auditors or the external public accountants who are certified. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his opinion which is communicated through his audit report.
Statutory auditors, in most of the countries are referred to the external auditors or the external public accountants who are certified. A statutory auditor is an external or outside service supplier who has the responsibility to certify the financial statements in accordance to specific professional auditing standards such as the ACA or ACCA.
The most common and widely used external audit standards are the International Standards on Auditing (ISA) of the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants and the US GAAP which is developed by the American Institute of Certified Public Accountants.