Financial Audit vs Statutory Audit

Financial Audits and Statutory Audits look into the books of accounts, but they have some differences as well. The knowledge of their difference is essential for businesses to select which one is right for them. It would assist in having proper accounting. This article talks about what each involves.

What is a Financial Audit?

Financial Audit Meaning

The meaning of a financial audit is a thorough investigation of the accounts and financial statements of a company. This is done in order to determine whether the provided financial information is correct and presented correctly. The purpose of financial audit is mainly to increase trust in the financial information.

Types of Financial Audit

• Internal Audit
• External Audit
• Independent Audit
• Forensic Audit
• Compliance Audit
• Tax Audit
• Management Audit
• Government Audit

What is a Statutory Audit?

Statutory Audit Meaning

The meaning of statutory audit includes an audit that is mandatory by virtue of a particular statute. An example would be statutory audits for firms under the Companies Act, 2013. This type of audit involves the analysis of the financial statements and concludes in the preparation of an audit report.

Types of statutory audit

• Company Statutory Audit
• Tax Audit
• Bank Statutory Audit
• Insurance Company Audit
• Government Statutory Audit
• Cooperative Society Audit
• Cost Audit
• Secretarial Audit

Financial Audit vs Statutory Audit: Key Differences

Financial Audit vs Statutory Audit Scope

The financial audit vs statutory audit scope depends on the purpose of the audit. The financial audit is based on the particular needs of the enterprise, while the statutory audit is conducted according to the rules set forth by the appropriate legislation.

Financial Audit vs Statutory Audit Objectives

Financial audit vs statutory audit objectives have some related things, but they are not identical. However, there are also some differences between the two objectives. A financial audit is primarily concerned with the financial information and accounting of the organization. A statutory audit, on the other hand, also considers legal reporting of the entity.

Financial Audit vs Statutory Audit Procedures

Financial Audit Procedures vs Statutory Audit Procedures may involve review of books of account, bills, bank statements, balances, entries, and vouchers. The difference is that statutory audits must comply with the laws and auditing standards, hence being more specific.

Financial Audit vs Statutory Audit Applicability in India

Financial audit versus statutory audit applicability is determined by the type of entity and the law applicable to it. Statutory audits may be required for companies as per the Companies Act. There are also different tax audits that could be required for eligible taxpayers as per the income-tax law.

Financial Audit vs Statutory Audit Cost

Financial audit vs statutory audit cost varies depending on various parameters including company size, volume of transactions, accounting process complexity, record-keeping, locations and audit scope. The cost is not fixed for every business. My Startup Solution can be used by businesses to determine the cost of an audit before it starts.

Financial Audit vs Statutory Audit Timeline

 The financial audit vs statutory audit timeline will largely depend on the quality of the documentation, the number of transactions, the complexity of the business, and the reporting requirements. Statutory audits also have to be completed within the required timeframe as per the laws. Therefore, it is advisable to get the financial documents ready in advance.

Financial Audit vs Statutory Audit Reporting

The financial audit vs statutory audit reporting will largely depend on the intention and framework involved. In the case of a financial audit, the report is made depending on the agreed-upon arrangement while a statutory audit leads to a report as per the law.

Financial Audit vs Statutory Audit Compliance

For financial audits, companies may discover gaps in accounting or reporting issues, but for statutory audits, companies will be able to adhere to their statutory obligations according to the law. In case of a tax audit, there are some prescribed formats such as Form 3CA-3CD or 3CB-3CD.

Financial Audit vs Statutory Audit Responsibility

Financial audit versus statutory audit responsibility includes both the business and the auditor. Management is responsible for keeping proper accounting records and preparing financial statements. The auditor is responsible for examining the relevant data independently and giving an opinion as per the audit.

Financial Audit Process vs Statutory Audit Process

Financial Audit Requirements vs Statutory Audit Requirements in India

For instance, there are stipulations for company audits under the Companies Act 2013. There are different provisions for the preparation of a tax audit report under Income Tax law. One has to find out what the exact requirement is.

Statutory Auditor vs Financial Auditor

Financial Audit vs Statutory Audit: Which One Does Your Business Need?

Choosing the appropriate audit to be carried out depends on the type of business, its objective, and any existing rules and regulations that apply to the particular organization. It could either be a statutory audit or a financial audit depending on the business. My Startup Solution is a professional accounting firm that can help you know the requirements and process of an audit. Contact us at +91-7081220800.