Differences between statutory audit and internal audit

Statutory Audit is compulsury as per statute.(Companies Act,1956),

Internal Audit is not..

internal audit mean audit work carrying on without waiting to completion of year . it carry on throught the year without any interval, it is not compulsory,rather it helpful in statutory audit for subtencive procedure.

where as statutory audit is requirement of status, it is carrying after completion of accounting year.

Well written Ritika...

Statutory auditor of the company is appointed by Shareholder in AGM of the company...in every AGM auditor is reappointed.

Internal Auditor of the company is Appointed by management of the company.

Statutory Auditor must be CA.within the CA ACT1949 OF THE CA ACT.

But internal Auditor must not be ca,but generally ca is appointed.

The major difference can be: -

1. Task being handled by the auditor: -

Internal audit will mainly concentrate on strenthening the internal controls and avoiding all sort of loopholes from the mechanism adopted by the company for smooth functioning (also called as internal controls).

Statutory audit will be governed by any statute say companies act, income tax act and so on... Further statutory audit will concentrate more on compliance matter with companies act or income tax act.

2. Reporting authority: -

Internal auditor will report to the company's management all the flaws(if any) of the company and helps in decision making to improve the same.

Statutory auditor will report to the owner's of the company i.e., the shareholders of the company.

3. Need; -

Internal auditor will be needed when the company is having large scale operations or complexities in functioning or might be in the interest of the company.

Statutory audit will be mandatory after fulfilling certain conditions mentioned in the companies act and income tax act from time to time.

and So on........

Agree with above...

MAIN FOCOUS OF INTERNAL AUDITOR,IS ON INTERNAL CONTROL,IN AREA OF ACCOUNTING.AND REPORT THEREIN...

SCOPE OF STATUTORY AUDIT.& THER AUDIT PROGRAMME IS DEPEND ON,TYPE OF AUDIT REPORT 

PRESENTED BY INTERNAL AUDITOR,CLEAN,QUALIFIED,ADVERSE,NEGATIVE,

INTERNAL AUDITOR PRESENT THEIR REPORT TO THE COMPANY'S MANAGEMENT.

STATUTORY AUDITOR PRESENT THEIR REPORT TO THE OWNER (SHAREHOLDER) OF THE CO.

thanks for the help the language was really lucid n easy to understand.          thanks once again

MY VIEWPOINT:

STATUTORY AUDIT

1.STATUTORY AUDIT IS  FOR STAKEHOLDERS (Including shareholders) OF THE COMPANY  TOPLACE RELIANCE ON THE FINANCIAL

POSITION OF THE COMPANY.

2.THE AUDITORS ARE REPORTABLE TO SHAREHOLDERS WHO APPOINT THEM IN THE AGM.

INTERNAL AUDIT

a. INTERNAL AUDIT IS PERFORMED FOR THE INTERNAL MANAGEMENT TO PLACE RELIANCE ON THE CONTROL SYSTEMS IN

OPERATION AND TO MAKE SURE ABOUT COMPLIANCE WITH APPLICABLE LAWS.

b. THE AUDITORS ARE REPORTABLE TO THE MANAGEMENT WHICH APPOINTS THEM.

Which form of audit is better-internal audit or statutory audit? why?

Dear Hema,

It depends upon the nature of business, its peculiarities, turnover, affordability and governing statute.

Both plays vital role in the matter of assurance and controls and has different grounds of importance.

For further queries do write.

Regards.,

Errors and frauds as in what all areas we have to cover for manufacturing clients ??

Errors and frauds as in what all areas we have to cover for manufacturing clients ??