Internal Audit – The periodic checking of the accounts of an institution or a company from time to time by its internal auditors is called Internal Audit. This implies that the accounts are examined by a person who is on the staff of the company or the institution.
Statutory Audit – Certain organisations are established under specific legal enactments and their working is also governed by the provisions of the enactments. It is legally mandatory for such organisations established under various enactments to get their accounts audited. Hence, an audit of an organisation which is legally mandatory under any enactment is known as statutory audit.
Difference Between Internal Audit And Statutory Audit
|Sr. No.||Basis||Internal Audit||Statutory Audit|
|1||Nature||Internal audit is a part of the internal system present in the organisation.||Statutory audit is an independent examination.|
|2||Compulsion||Getting the internal audit done depends upon the wishes of the company, i.e. it is not compulsory.||Every company has to get a statutory audit done, i.e., it is compulsory|
|3||Appointment||The internal auditor is appointed by the management.||The statutory auditor is appointed by the company or the government.|
|4||Object||The main objective of internal audit is the detection of frauds and errors and making the internal control more effective.||The main objective of Statutory Audit is to give a report to the shareholders regarding the correctness, accuracy and regularity of the accounts.|
|5||Duration||Internal audit is a kind of continuous audit||Statutory audit is done only after the final accounts have been prepared.|
|6||Qualification||The internal auditor need not have any special qualification.||The statutory auditor should posses the qualifications specified in section 141 of the Companies Act.|
|7||Scope||The scope and responsibility of the internal auditor is determined by the management.||The scope and responsibility of the statutory auditor is determined by the concerned legal enactment.|
|8||Status||Internal auditor is an employee of the organisation.||The statutory auditor is an independent professional.|
|9||Suggestions||The internal auditor gives valuable suggestions to the management to make the business more efficient and to prevent it from dissolution.||The statutory auditor normally does not give any such suggestions.|
|10||Report||There is no question of the internal auditor submitting any report.||On completion of the statutory audit the auditor issues a report to the shareholders.|
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