Statutory Audit
A statutory audit is a legally required review of the accuracy of a company’s or government’s financial statements and records. The purpose of a statutory audit is to determine whether an organization provides a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records, and financial transactions.
What Companies Undergo Statutory Audits?
Those generally exempted include nonpublic companies and small businesses below a certain size
How Statutory Audits Are Used
Many government agencies participate in regular audits. This helps ensure any funds disbursed by the larger governmental entity, such as at the federal or state level, have been used appropriately and according to any associated laws or requirements for their use.
It is also common for international companies to have some foreign governments that require access to the results of a statutory audit. For example, assume that XYZ Corp is based in the United States but operates branches in Europe and regularly does business there. It may be required by law in a European country to have a statutory audit performed on those business units.
What Is the Difference Between a Statutory Audit and a Regular Audit?
Audits are intended to provide an independent review of a company’s financial statements. The goal is to ensure that the financial statements are being created correctly, present the right information, and are overall a fair and accurate representation of a business’s transactions. A statutory audit is one that must be conducted in regard to legislation, such as a nation’s accounting standards, whereas regular audits primarily check for the accuracy of transactions and help management gain operational efficiency.
