Statutory audit how to apply registration services 2020
A statutory audit is legally required to check the accuracy of a company's or government's financial statements and records. The main purpose of the audit is to determine whether an organization provides a fair and accurate representation of its financial position by examining` information such as bank balances, bookkeeping records, and financial transactions.
The term statutory denotes that the audit is required by the law. A statute is a law or regulation enacted by the legislative branch of the organizationâ€™s associated government. Statutes can be enacted at multiple levels including federal, state, or municipal. In India audit are prescribed by different government statues like Reserve Bank of India, Income Tax Department, under the Companies Act 2013. All the companies and CAs are required to conduct many audits as per the different statue requirements. Banks are also required for statutory auditing.
Why is the statutory audit required?
- The statutory audit gives you the legal certificate from government authorities about the accuracy of your business.
- An audit of your company gives a clear picture of your accounts and overall financial statement of your company. Doing an audit can help you spot fraud, employee theft, and other inefficiencies. So, the main function of it is to check for accuracy.
- An audit can help you find errors. Consequently, through an audit, you might be able to spot a small mistake before it becomes a big one. Which can help you in improving your accounts and generate more profit and revenue?
- There are certain business certifications that require a mandatory audit of your business like ISO 9001 certification. Further audits are very important for quality control mechanisms and improve your businessâ€™s efficiency.
- Audit can motivate you to implement new accounting processes if your auditor is not able to get a clear view of your records then you can improve your records next time.
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Following are the steps for statutory audit.
- Appointment Letter & Board Resolution Copy
- Getting NOC from Previous Auditor
- Filing of Form 23B to ROC
- Getting a Letter of Engagement
- Assessment of Internal Control
- Formulation of Internal Audit Program Action Plan and Calendar
- Conducting Audit as per IGAAP Companies Act ICAI Accounting Standards and Auditing Standards
- Forming an opinion on the financial statement prepared by the company
- Reporting to Shareholders
- Attending AGM