Statutory Audit & Reporting: Definition and Example

Tally Solutions |Updated on: August 24, 2022

Process to Conduct a Statutory Report
Contents of an Audit Report
Examples of Statutory Reports

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:

Process to Conduct a Statutory Report

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:

Heading	Brief of contents
Title	Title should mention that it is an ‘Independent Auditor’s Report’.
Addressee	Should mention clearly as to whom the report is being given to.
Management’s Responsibility for Financial Statements
Auditor’s Responsibility	Mention that responsibility of the Auditor is to express an unbiased opinion on the financial statements and issue an audit report.
Opinion	Should mention the overall impression obtained from the audit of financial statements. For example Modified Opinion, Unmodified Opinion
Basis of the Opinion	State the basis on which the opinion as reported has been achieved. Facts of the basis should be mentioned.
Other Reporting Responsibility	If any other reporting responsibility exists, the same should be mentioned. For example Report on Legal or Regulatory requirements
Signature of the Auditor	The engagement partner (auditor) shall sign the audit report.
Place of Signature	The city in which audit report is signed.
Date of Audit Report	Date on which the audit report is signed.

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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