Statutory audit is an audit prescribed and governed by a statute or law. Hence it is a compulsory audit. This audit depends on the constitution of an entity. Every enterprise which is registered under the specific governing body has to follow the regulations as set by the law regarding the audit.
Thus one can say that statutory audit is a compulsory audit if the governing law states the same. E.g. Companies Act, 2013 requires every company to carry out the statutory audit. Whereas, Limited Liability Partnership Act required audit of an LLP only if turnover of the LLP exceeds INR 40 lacs during a Financial year.
Phrases such as “Statutory Audit” and “tax audit” are not formally used in any statute rather for the purpose of ease of understanding these terms are used. In common parlence, statutory audit is governed by the specific law or statute that governs the entity while tax audit is governed by the Income tax Act. Statutory audit is to be done as and when the relevant law states while tax audit is to be done if the turnover or gross receipts of an entity during the year crosses a specified limit.
Statutory audit is carried out as required by law while the non-statutory audit is carried to determine efficiency of the entity either by the management or any independent party. The focus of the statutory audit is majorly on financial activities while the non-statutory audit may focus on financial aspect or may consider any other aspect such as expenditure audit, Debtors audit, stock audit etc.
The due date for the statutory audit is decided by the Governing body which prescribes the audit.
For example, as per Companies Act, 2013, every company is required to hold Annual General Meeting within 6 months from close of the Financial year and Company is required to present its audited financial statement in such AGM for adoption.
21 days clear notice is required to hold AGM. Accordingly, statutory audit under Companies Act should be carried out to ensure this compliance. Due date for the Tax audit for corporate is 30th September of the following Financial year. However, for FY 2019-20, it is extended to 31st October 2020.
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