There are mostly three types of Audit that are available to a business. Statutory Audit is one of them and a kind of Audit that is mandated by the law of the jurisdiction of the statutes of the place. This Audit will help the government ensure that all the information about the financial status of the company are correct or not.
Here are some of the questions explained as to what statutory Audit is and how it can help in increasing the profitability of a business.
Contents
In the article below, we have tried to answer some of the questions which are asked frequently by businesses about Statutory audit, its advantages to a business, its requirements and other important questions..
What is a Statutory Audit?
It is not an easy matter for any business to conduct any kind of Audit. There are many steps and prerequisites which the management should keep in mind before conducting the audits. Also, there are many different types of Audit to choose from, and statutory Audit is one of them. It is an audit in which is legally required to be conducted by a business. This type of Audit is enforced by the statutes of law or is mandated by the law.
This type of Audit is usually done to help the public and all the findings are made public in the end. This helps the general public and the other investor of the company to make informed decisions regarding investments in the company. A Statutory audit can be most frequently seen in the public sector of a business. The Statutory Auditors are selected by the shareholders in a general meeting for a duration ranging from 3 years to 5 years.
What are the Advantages of Statutory Audit to a Business?
Statutory Audit is very important for a business as these audits have to be conducted by complying with the rules and regulations of the particular jurisdiction. This kind of audit helps in maintaining all the compliance requirements of the business. Apart from this, there are various other benefits of statutory Audit. These are as follows:
- As all the financial reports are examined by an auditor, they provide authenticity to the records of the business. This will also mean that it will better the credibility of the organization which will, in turn, increase the goodwill of the business.
- As all the reports of the business will be inspected, it will help the management to increase the productivity of the organization and provide a greater benefit to its investors.
- It will also help in a better understanding of the business activities and also improves the efficacy of the internal management system.
- It will lessen the fraud in the business and will increase the confidence of the investors and the government in the organization.
This is not an exhaustive list of all the advantages of statutory Audit and can be even expanded more. There can be many different ways by which a statutory auditor in the emirate can assist the businesses. To know more, you can refer to our blog titled "How do Emirate Auditors help in Statutory Audit?"
What is the Statutory Audit Procedure?
The statutory audit procedure includes an understanding of the organization’s operating environment and controls. A statutory auditor needs to test internal mechanisms as well as details of accounts. Thus, the statutory audit procedure comprises the following steps which have been shown in an infographic for easy understanding:
What is the Difference between a Regulatory Audit, Statutory Audit and Performance Audit?
We all know that there are different types of Audits, and each of these provides a different result. Here we will talk about the difference between Regulatory Audit, Statutory Audit and Performance Audit.
A Regulatory Audit is the Audit of a particular product to find out if the regulations of the particular sector are followed or not.
A Performance audit comprises of examining the various methods to increase the efficiency and efficacy of the particular business and deciding which method will be more effective.
A Statutory audit is the review of the financial statements of the business which have been mandated by the law or the statute of a jurisdiction.
We can see that all three different types of audits are aimed to provide assistance to the management by examining the process or procedures. But a major difference is that out of the three, only a Statutory Audit can be said as a comprehensive and complete audit. A regulatory audit will tell us about the product, whereas a performance audit will tell us about a process, but the statutory Audit will allow us to understand the entire organization.
Who can perform a Statutory Audit?
A statutory audit can be conducted by any business which fulfils particular prerequisites mentioned by the auditing authority. The management can also conduct a statutory Audit if it has been deemed mandatory by any authority or is mandated by a statute.
The primary purpose of a statutory audit is to examine if the particular organization provides a piece of complete and fair information about its finances. A statutory audit determines what the financial position of the business is and that there is no illegal or wrong activity being conducted in the business. It can be performed by any company which fulfils the required statutes or fulfils a condition.
What are the Statutory Audit Requirements?
A statutory Audit is a legal, independent examination of the financial records of a company or institution. The role of a statutory auditor is to find out and report whether or not the company’s financial statements are factual and fair.
The new UAE Commercial Companies Law requires every company to appoint licensed auditors who will assess their books of accounts. These auditors should be registered under the UAE Ministry of Economy.
JAXA Statutory Audit Services in Dubai, UAE
Jaxa Auditors perform statutory Audit, which is essentially a review of the final statements of the company, including the Profit and Loss Statement and the Balance Sheet. We assist our clients in keeping accurate financial records in doing statutory Audits. Our auditors are licensed and registered with the proper authorities to perform statutory audits.
If you haven’t appointed a Statutory Auditor and currently searching the market, you can call Jaxa Auditors at 971 4 220 7355 or email us at jaxa@jaxaauditors.com. . We will be delighted to be of service to you.
Why JAXA?
JAXA is a Dubai based financial consultancy firm offering a wide range of services including auditing, accounting, VAT, tax consulting, software consultancy, and management. We have been providing the best audit services in and around Dubai. Our audit team works with you for the well-being of your firm. We adopt up-to-date audit software to analyze and identify any problems and provide the best solutions.
For any statutory audit services, do contact us – we’d be happy to assist!
FAQs
Which Type of Audit is Statutory Audit?
Statutory Audit is a part of the external Audit. A practising Chartered Accountant performs it without a relationship with the company being audited.
What is the Difference Between a Statutory Audit and a non-Statutory Audit?
A statutory Audit is governed by law or a regulatory body; a non-statutory audit is not required by law and is done voluntarily.
What is the Difference Between Statutory Audit and Tax Audit?
Statutory Audit is made by order of the law; a tax audit is a conditional audit under the regulations of the Income Tax Act.
What is the Purpose of Statutory Audit?
Statutory audit is done to determine whether an organisation presents a fair and accurate record of their financial position to the general population.
Who Needs Statutory Audit?
All companies in the UAE, irrespective of their nature of business and sales, should assign Statutory Auditors.