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.
In such an audit, the scope of the audit, the qualifications and disqualifications of the auditor, the rights and duties of the auditor, the remuneration of the auditor and other audit-related matters are usually specified in the enactments under which the organisations are established.
In relation to a statutory audit, the related enactment cannot be altered by an agreement, nor can the rights and duties of the auditor be reduced in any manner even though the same may be enhanced by mutual agreement. Hence, such an audit is often also referred to as compulsory audit. It is mandatory for the following organisations to get their accounts audited:
Statutory Audit Mandatory for the following organisations
- Joint Stock Companies registered under the Companies Act, 2013 or any previous Act.
- Banking companies covered under the Banking Companies Act, 1949.
- Insurance companies governed by the Insurance Companies Act, 1938.
- Co-operative societies registered under the co-operative societies acts of various states.
- Public and Charitable trusts registered under various enactments related to religion.
- Local governments and local authorities.
- Public Trusts registered under the Public Trusts Act.