{"id":130,"date":"2025-09-28T15:39:36","date_gmt":"2025-09-28T10:09:36","guid":{"rendered":"https:\/\/amfos.in\/taxupdates\/?p=130"},"modified":"2025-09-28T15:39:36","modified_gmt":"2025-09-28T10:09:36","slug":"all-about-statutory-audit","status":"publish","type":"post","link":"https:\/\/amfos.in\/taxupdates\/2025\/09\/28\/all-about-statutory-audit\/","title":{"rendered":"All About Statutory Audit"},"content":{"rendered":"
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A\u00a0<\/span>statutory\u00a0<\/span>audit<\/span><\/strong>\u00a0<\/span>is\u00a0<\/span>an\u00a0<\/span>audit\u00a0<\/span>required\u00a0<\/span>by\u00a0<\/span>law\u00a0<\/span>to\u00a0<\/span>verify\u00a0<\/span>the\u00a0<\/span>accuracy\u00a0<\/span>of\u00a0<\/span>a\u00a0<\/span>company’s\u00a0<\/span>financial\u00a0<\/span>statements\u00a0<\/span>and\u00a0<\/span>ensure\u00a0<\/span>compliance\u00a0<\/span>with\u00a0<\/span>applicable\u00a0<\/span>regulations.\u00a0<\/span>It\u00a0<\/span>aims\u00a0<\/span>to\u00a0<\/span>provide\u00a0<\/span>stakeholders,\u00a0<\/span>including\u00a0<\/span>shareholders,\u00a0<\/span>regulators,\u00a0<\/span>and\u00a0<\/span>the\u00a0<\/span>public,\u00a0<\/span>with\u00a0<\/span>a\u00a0<\/span>true\u00a0<\/span>and\u00a0<\/span>fair\u00a0<\/span>view\u00a0<\/span>of\u00a0<\/span>the\u00a0<\/span>company’s\u00a0<\/span>financial\u00a0<\/span>position.\u00a0<\/span>Statutory\u00a0<\/span>audits\u00a0<\/span>help\u00a0<\/span>prevent\u00a0<\/span>fraud,\u00a0<\/span>ensure\u00a0<\/span>legal\u00a0<\/span>compliance,\u00a0<\/span>and\u00a0<\/span>build\u00a0<\/span>trust\u00a0<\/span>among\u00a0<\/span>stakeholders.\u00a0<\/span><\/span><\/p>\n
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Legal\u00a0<\/span>Framework:<\/span><\/span><\/strong><\/h2>\n
In\u00a0<\/span>many\u00a0<\/span>jurisdictions,\u00a0<\/span>including\u00a0<\/span>India,\u00a0<\/span>statutory\u00a0<\/span>audits\u00a0<\/span>are\u00a0<\/span>governed\u00a0<\/span>by\u00a0<\/span>specific\u00a0<\/span>laws\u00a0<\/span>such\u00a0<\/span>as\u00a0<\/span>the\u00a0<\/span>Companies\u00a0<\/span>Act,\u00a0<\/span>2013<\/span><\/strong>,\u00a0<\/span>and\u00a0<\/span>the\u00a0<\/span>Income\u00a0<\/span>Tax\u00a0<\/span>Act,\u00a0<\/span>1961<\/span><\/strong>.\u00a0<\/span>These\u00a0<\/span>laws\u00a0<\/span>outline\u00a0<\/span>the\u00a0<\/span>requirements\u00a0<\/span>for\u00a0<\/span>conducting\u00a0<\/span>audits,\u00a0<\/span>including\u00a0<\/span>who\u00a0<\/span>must\u00a0<\/span>undergo\u00a0<\/span>them\u00a0<\/span>and\u00a0<\/span>the\u00a0<\/span>qualifications\u00a0<\/span>of\u00a0<\/span>auditors.\u00a0<\/span>For\u00a0<\/span>instance,\u00a0<\/span>companies\u00a0<\/span>with\u00a0<\/span>a\u00a0<\/span>certain\u00a0<\/span>turnover\u00a0<\/span>or\u00a0<\/span>those\u00a0<\/span>that\u00a0<\/span>are\u00a0<\/span>publicly\u00a0<\/span>listed\u00a0<\/span>are\u00a0<\/span>typically\u00a0<\/span>required\u00a0<\/span>to\u00a0<\/span>have\u00a0<\/span>a\u00a0<\/span>statutory\u00a0<\/span>audit.<\/span><\/span><\/p>\n
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Audit\u00a0<\/span>Process:<\/span><\/strong><\/span><\/h2>\n
The\u00a0<\/span>statutory\u00a0<\/span>audit\u00a0<\/span>process\u00a0<\/span>generally\u00a0<\/span>involves\u00a0<\/span>the\u00a0<\/span>following\u00a0<\/span>steps:<\/span><\/div>\n
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  1. \n
    Appointment\u00a0<\/span>of\u00a0<\/span>Auditor<\/span><\/strong>:\u00a0<\/span>Companies\u00a0<\/span>must\u00a0<\/span>appoint\u00a0<\/span>a\u00a0<\/span>qualified\u00a0<\/span>auditor\u00a0<\/span>(usually\u00a0<\/span>a\u00a0<\/span>Chartered\u00a0<\/span>Accountant)\u00a0<\/span>within\u00a0<\/span>30\u00a0<\/span>days\u00a0<\/span>of\u00a0<\/span>incorporation.\u00a0<\/span><\/span><\/p>\n
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    Planning\u00a0<\/span>and\u00a0<\/span>Preparation<\/span><\/strong>:\u00a0<\/span>The\u00a0<\/span>auditor\u00a0<\/span>reviews\u00a0<\/span>the\u00a0<\/span>company’s\u00a0<\/span>financial\u00a0<\/span>records,\u00a0<\/span>internal\u00a0<\/span>controls,\u00a0<\/span>and\u00a0<\/span>compliance\u00a0<\/span>with\u00a0<\/span>laws\u00a0<\/span>to\u00a0<\/span>plan\u00a0<\/span>the\u00a0<\/span>audit\u00a0<\/span>effectively.\u00a0<\/span><\/span><\/p>\n
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    Fieldwork<\/span><\/strong>:\u00a0<\/span>The\u00a0<\/span>auditor\u00a0<\/span>conducts\u00a0<\/span>on-site\u00a0<\/span>examinations,\u00a0<\/span>tests\u00a0<\/span>transactions,\u00a0<\/span>and\u00a0<\/span>verifies\u00a0<\/span>account\u00a0<\/span>balances\u00a0<\/span>to\u00a0<\/span>assess\u00a0<\/span>the\u00a0<\/span>accuracy\u00a0<\/span>of\u00a0<\/span>financial\u00a0<\/span>statements.\u00a0<\/span><\/span><\/p>\n
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    Reporting<\/span><\/strong>:\u00a0<\/span>After\u00a0<\/span>completing\u00a0<\/span>the\u00a0<\/span>audit,\u00a0<\/span>the\u00a0<\/span>auditor\u00a0<\/span>prepares\u00a0<\/span>an\u00a0<\/span>audit\u00a0<\/span>report\u00a0<\/span>detailing\u00a0<\/span>findings,\u00a0<\/span>including\u00a0<\/span>any\u00a0<\/span>discrepancies\u00a0<\/span>or\u00a0<\/span>areas\u00a0<\/span>of\u00a0<\/span>concern.\u00a0<\/span>This\u00a0<\/span>report\u00a0<\/span>is\u00a0<\/span>submitted\u00a0<\/span>to\u00a0<\/span>the\u00a0<\/span>company’s\u00a0<\/span>management\u00a0<\/span>and\u00a0<\/span>shareholders.<\/span><\/span><\/p>\n
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    ROC Compliances:<\/strong><\/span><\/h2>\n

    ROC compliances are necessary to know the default status of the company.<\/p>\n