A statutory audit is a comprehensive examination of a company's financial records, transactions, and statements to ensure compliance with statutory and regulatory requirements. It is typically conducted by an independent external auditor, who assesses the accuracy, completeness, and fairness of the financial information presented by the company.
The primary objective of a statutory audit is to provide assurance to stakeholders, such as shareholders, investors, creditors, and regulators, regarding the reliability and integrity of the company's financial reporting. During the audit process, the auditor examines the company's accounting policies, internal controls, and financial transactions to identify any material misstatements, errors, or irregularities. The auditor also evaluates the company's compliance with relevant accounting standards, laws, and regulations applicable to its industry and jurisdiction. At the conclusion of the audit, the auditor issues an audit report, which provides an opinion on the fairness of the financial statements and highlights any significant findings or areas of concern.
A statutory audit plays a crucial role in enhancing transparency, accountability, and confidence in the financial markets by providing stakeholders with independent assurance on the accuracy and reliability of the financial information disclosed by the company.