Audit of Accounts refers to an objective examination, scrutinization, and evaluation of the financial statements of a particular organization. The process aims to ensure that an organization is maintaining accurate and fair records of the transactions. The Indian Revenue Service is authorized to perform audits in order to verify the accuracy of a taxpayer’s returns or transactions.
Statutory Audit is the mandatory legal obligation, used to examine whether or not a company is providing an accurate and fair presentation of its financial position. The process involves examining information such as bookkeeping records, financial transactions, and bank balances. Tax Audit and Company Audit are the two most common types of statutory audits in India. The process of a statutory audit is carried out or conducted for each fiscal year.
Statutory Audit: Points of Importance/ Features
- Statutory Audit is the legal requirement and it must per performed.
- Statutory Audit is conducted after the preparation of final account.
- Appointed by the shareholders, a statutory auditor is an independent person.
- Statutory auditor’s remuneration is fixed by the shareholders.
- After the execution of work, statutory auditor needs to prepare report based on the facts found during the course of audit. He/she needs to present the report to the appointing authority.
As an examination of an organization’s tax return carries a great significance, Tax Audit is the best way to examine the tax return in an intricate manner. The process also verifies that income and deductions of an organization are accurate. Office Audit, mail audit, and field audit are the three most common types of Indian Revenue Service Audits. Tax Audit ensures that books of Accounts have been maintained according to the provisions of the Income Tax.
Effective Internal Audit involves working in accordance with the Code of Ethics and International Standards with an objective and professional view. Internal Audit adds value to an organization by improving the operations within. The role of internal auditors includes assessing, monitoring and examining organizational risk along by making sure that the provided information complies with the laws and policies.