A statutory audit is a legal procedure to be done to review the accuracy of an organization’s financial statement and records. It is mandatory to conduct a statutory audit for government organizations to monitor and evaluate their performance.

Generally, the statutory report is prepared for the public. It helps to determine whether the company is providing a fair and accurate financial information to the public. The statutory audit examines information such as bookkeeping records, bank balances, and financial transactions. The statutory auditors are selected by the General Meeting of Shareholders for the period of 3 to 5 years.

Advantages of Statutory Audit

The advantages of conducting a statutory audit for one’s company are:

  • It improves the reputation of the company
  • The statutory audit report enhances the credibility and reliability of the firm
  • It helps the prospective clients in evaluating the company before doing any business

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:

Statutory Audit Procedure

What Are Statutory Audit Requirements?

A firm needs to have the following documents before getting a statutory audit started:

  • Details of fixed assets
  • Bank statements with details of transactions therein and the details of cash receipts & payments
  • Information on secured and unsecured loans and advances
  • Trade payables & receivables
  • Local purchases & import purchases
  • Local sales and export sales information
  • Details of inventory
  • Administration and selling expenses
  • Details of foreign exchange earnings & expenditures
  • Statutory dues & other levies

What is the Difference between Statutory Audit and Internal Audit?

Statutory Audit

Internal Audit

A statutory auditor is appointed by the shareholders of the company

An internal auditor is appointed by the management

The audit is conducted after preparing the final accounts

Internal audit is a continuous process

Statutory audit is a legal requirement

The scope of an internal audit is limited to the management

It is conducted by an external auditor or an audit firm

It is conducted by the employees of the organization or an audit firm

A statutory audit report must comply with certain standards

No such rules hold for internal audit

JAXA Statutory Audit Services in Dubai, UAE

  • We analyze your company to highlight any problems, and provide the suitable suggestions
  • We use up-to-date and innovative audit software to assist our client

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

Is statutory audit compulsory?

As per the Commercial Companies Law, audit is mandatory for all companies. But certain free zones have separate auditing requirements.

Is audit mandatory for branches of foreign companies?

It is mandatory for foreign companies to submit audited financial statements of the branch of foreign companies registered in UAE in every year.

Are there any requirements from any government departments other than the license issuing authority?

Other government authorities such as the Municipality, various Ministerial Departments, Insurance Authorities, etc. also demand companies to submit their audited financial statements as and when required by such authorities.