A statutory audit is a legally required external review of the accuracy of a company's financial statements and statutory records. An audit is an examination of an organization's records and operations held by a government entity, business, organization or individual by conducting the analysis on financial records such as bank statements, ledgers etc., or other statutory areas.
As per the Companies Act, 2013 all public and private limited companies in India should perform a statutory audit. Whereas Limited Liability Partnerships (LLPs) in India according to the LLP Act, 2008 those LLPs with a turnover of over Rs.40 lakh or with a contribution of over Rs.25 lakh are required to undergo a statutory audit.
Statutory audits help organizations ensure that they are in compliance with relevant laws, regulations, and accounting standards. This is particularly important for publicly traded companies, which are subject to strict financial reporting requirements.
Statutory audits provide stakeholders with an independent and objective assessment of an organization's financial position and performance. This helps to increase transparency, build trust and confidence in the company and its financial statements by providing assurance that the financial statements accurately reflect the company's financial position.
Statutory audits can help organizations identify and address potential risks that may affect their financial position or reputation. The audit process can also help organizations improve their internal controls and financial reporting processes, which can help to reduce the risk of errors or fraud.
Statutory audits provide valuable information to stakeholders, such as shareholders and creditors, that can be used to make informed decisions about the organization. This can include decisions about investments, lending, and other financial transactions.
The main objective of a statutory audit is to provide assurance that a company's financial statements are accurate and reliable to help the company comply with relevant laws and regulations.
The audit is typically conducted by an independent auditor, who is a professional accountant or a firm of accountants. We Diamond Lead Associates provide best statutory audit services in Chennai. And here is a general outline of the procedure for the statutory audit that we perform on our clients.
We will plan the audit, which involves reviewing your organization's financial statements, assessing the risks of material misstatement, and determining the audit procedures to be followed.
We evaluate your organization's internal control systems to determine their effectiveness in preventing and detecting errors and fraud.
We then test your organization's financial transactions and balances to verify that you are accurately recorded and presented in the financial statements. This may involve reviewing documents, observing processes, and analyzing data.
We will perform substantive procedures to determine whether the financial statements are presented fairly and in accordance with relevant accounting standards. This may involve comparing your organization's financial information with industry benchmarks or analyzing trends and ratios.
Based on the results of the audit, we will either issue an unmodified opinion (indicating that the financial statements are fairly presented), or a modified opinion (indicating that there are material misstatements or issues that need to be addressed).
We prepare a report summarizing the results of the audit, which is presented to your organization's board of directors and shareholders. The audit report must be filed with the Ministry of Corporate Affairs and should be publicly available.
