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Difference Between Internal Audit and Statutory Audit

There are key differences between internal and statutory audits. Statutory auditors are appointed by shareholders and have qualifications prescribed by law, while internal auditors are appointed by management. The main objective of statutory audits is to provide an opinion on financial statements, whereas internal audits aim to detect and prevent errors and fraud. Statutory audits have a scope defined by law that cannot be changed, and statutory auditors report to shareholders, while internal audits have a flexible scope set by management and report internally.

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Pooja Ujjwal Jain
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619 views1 page

Difference Between Internal Audit and Statutory Audit

There are key differences between internal and statutory audits. Statutory auditors are appointed by shareholders and have qualifications prescribed by law, while internal auditors are appointed by management. The main objective of statutory audits is to provide an opinion on financial statements, whereas internal audits aim to detect and prevent errors and fraud. Statutory audits have a scope defined by law that cannot be changed, and statutory auditors report to shareholders, while internal audits have a flexible scope set by management and report internally.

Uploaded by

Pooja Ujjwal Jain
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Difference between Internal Audit and Statutory Audit

Following are the main points of difference between internal audit and statutory audit: 1. Appointment The management of the organization makes the appointment of an internal auditor. The statutory auditor is appointed by different authorities. First statutory auditors are appointed by the shareholders in the annual general meeting. 2. Qualification Qualifications of the statutory auditor are prescribed in the companies act, 1956. Essentially a person should be a practicing chartered accountant to be appointed as a statutory auditor. There are no fixed qualification for the position of an internal auditor. 3. Objects The main object of the statutory audit is to form an opinion on the financial statement of the organization auditor has to state that whether the financial statements are showing the true and fair view of the affairs of the organization or not. The main object of the internal audit is to detect and prevent the errors and frauds. 4. Scope The scope of the statutory audit is fixed by the companys act 1956. it can not be changed by mutual consent between the auditor and the management of the audited business unit. The scope of the internal audit is fixed by the mutual consent of the auditor and the management of the unit under audit. 5. Remuneration Remuneration of the statutory auditor is fixed by the appinting authority, I e in case of first auditors, the auditors the directors fix the Remuneration in case of the subsequent auditors the company in its general meeting fixes the remunration. In case of internal auditor the management who appoints him fixes his Remuneration. 6. Report The statutory auditor submits his report to the shareholder of the company in its general meeting. The internal auditor submits his report to the management of the company who is also his appointing authority. 7. Removal The procedure of removal of the statutory auditor is very complex. Only the company in the general meeting can remove the auditor. It also has to take the permission of the central government. The management of the entity can remove internal auditor.

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