Statutory Audit & Reporting: Definition and Example

Tally Solutions |Updated on: December 30, 2021

Statutory audit is nothing but a financial audit which is to be performed by every functioning company irrespective of the size of the business. The statutory audit will help the stakeholders to rely on financial statements. Stakeholders other than shareholders also get benefited from the statutory audit as they can take their call based on the accounts as they are audited and authentic. From the accuracy to the authenticity of the company’s spends, an auditor is responsible to check all the information and share his impartial views.

The purpose of a statutory audit is to ensure that these accounts of the company represent a fair and accurate picture of the company’s current financial position on the date of the balance sheet.

Process to Conduct a Statutory Report

Nowadays, all statutory auditors are given a time frame in which they have to undertake the audit of the branches that are allotted to them. An auditor should immediately accept the appointment send a formal communication to the branch management and all other information that he would require in his audit.

The auditor will have to ensure that their report should include the quantification of advances, deposits, interest income and interest expenses. The important elements to check in the statutory audit of banks are:

• After conducting the through audit, an auditor has to give an audit report for the same. An auditor is required to make a report as mentioned in the engagement letter in which he has to state the following:
• Whether the balance sheet is showing true and fair view containing all the necessary particulars to exhibit a true and fair view of the affairs of the banks
• Whether the profit and loss account shows a true balance for the period covered by such account
• Whether any transaction has been carried by the branch which was not within the powers of the branch
• Any other matter which the auditor considers to be brought to the notice of the Statutory Central Auditor

Contents of an Audit Report

The basic structure of an audit report as prescribed by the Standards on Auditing is as follows:

Examples of Statutory Reports

The following are the examples of the statutory report

• Statutory Report submitted at the statutory meeting of the company
• Directors’ Report to the Annual General Meeting
• Annual Return
• Auditors’ Report
• Reports by Inspectors appointed to investigate the affairs of the company

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