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Audit of financial statements, mandated by a statue, is commonly referred to as a Statutory Audit. In India, the provisions of statutory audit are governed by The Companies Act and allied orders/ provisions. Various pronouncements of the ICAI like Auditing standards, Guidance Notes, etc., lay down the framework for auditors to discharge an audit assignment.
What Is Statutory Audit?
Statutory audit is an independent examination of the financial statements of a company undertaken with a view to establish whether they represent a true and fair view of the affairs of the company. For example
- For Balance sheet - whether the Assets and Liabilities of the company are correctly stated and actually exist as on the date of the Balance sheet.
- For Profit and Loss Account - whether it represents a correct picture of the operations of the company, revenue earned, and profitability declared by the company for the period.