Difference between Internal Audit and Statutory Audit

Following are the main points of difference between internal audit and statutory audit:

1. Appointment – The management of the organization makes the appointment of an internal auditor. The statutory auditor is appointed by different authorities. First statutory auditors are appointed by the shareholders in the annual general meeting.

2. Qualification – Qualifications of the statutory auditor are prescribed in the companies act, 1956. Essentially a person should be a practicing chartered accountant to be appointed as a statutory auditor. There are no fixed qualification for the position of an internal auditor.

3. Objects – The main object of the statutory audit is to form an opinion on the financial statement of the organization auditor has to state that whether the financial statements are showing the true and fair view of the affairs of the organization or not. The main object of the internal audit is to detect and prevent the errors and frauds.

4. Scope – The scope of the statutory audit is fixed by the company’s act 1956. it can not be changed by mutual consent between the auditor and the management of the audited business unit. The scope of the internal audit is fixed by the mutual consent of the auditor and the management of the unit under audit.

5. Remuneration – Remuneration of the statutory auditor is fixed by the appinting authority, I e in case of first auditors, the auditors the directors fix the Remuneration in case of the subsequent auditors the company in its general meeting fixes the remunration. In case of internal auditor the management who appoints him fixes his Remuneration.

6. Report – The statutory auditor submits his report to the shareholder of the company in its general meeting. The internal auditor submits his report to the management of the company who is also his appointing authority.

7. Removal – The procedure of removal of the statutory auditor is very complex. Only the company in the general meeting can remove the auditor. It also has to take the permission of the central government. The management of the entity can remove internal auditor.

Author: TeamKpoweb

22 Responses to “Difference between Internal Audit and Statutory Audit”

  1. sanju k.r says:

    Dear Sir,

    Is internal auditing is compulsory under any laws in India for a private limited company.

  2. this info is very use full to the students that in primary stage so i request the experts of this website to continue keeping uo the updated, FAQs and such basics info in ur site. i requst to give updated info to the mail given to u

    ——–sreekanth.v

  3. himanshu says:

    This kind notes r very easy to understand the basic information.

    thanx

  4. akash shah says:

    The information is very usefull for preparing myself for the seminar

  5. Sonu Bhojwani says:

    This information is too useful for me,
    But i m looking for something else.i.e
    1.Difference between tax Auditor & Statutory Auditor.
    2.Can both of them are different ?
    3.Can Statutory auditor is able to replace tax Auditor.?
    4.How many types of auditors is required to appoint incase of Manufacturing Company.?

  6. kris says:

    can internal auditor of holding company be appointed as statutory auditor of subsidiary company?

  7. Nihal says:

    @kris :
    An internal auditor of the company does not qualify to be appointed as a statutory auditor of th comapy’s subsidiary as:
    1. Is an employee of the Company.
    2. Is not therefore idependent from the company entity.
    3. Major requirement for apponitment of a Statutory auditor is the requirement of independence from the Entity of the Company in all matters.Else his judgement could be influenced…

  8. Madhu says:

    1. Will internal auditor’s fees be charged to Employee salaries or Auditor remuneration?

    2. Among the two, who will charge more fees?

  9. kalpesh tailor says:

    internal audit is entrusted to the employees of the organisation.

  10. abdulrazaq auwal muazu says:

    i real appriciated how you help us (student) in posting an important matters related to our course of study. Abdulrazaq auwal muazu (NIGERIA)

  11. shivam jain says:

    sir,i would like at what extent an internal can work & how?

  12. suyash says:

    on which area we should focus during statutory audit?

  13. Vishwaprasad says:

    this information helps me to know the basics of audit work………

  14. Vishwaprasad says:

    This information helps me in understanding of auditing…………

  15. Aditya Raut says:

    This information is very usefull for preparing myself for the future referance.

  16. DEL-PERES says:

    the information above has help me to understand principles of AUDITING

  17. Prakash Patel says:

    Sirs, whoever has done this statements ,please carry on updating and i request you to prescribe it with an example . It is very Useful for the students like us.

  18. prabhurajanvinayak says:

    this site is very much useful for me especially, things relates to difference between internal and external audit . keep on updating information that increase number of visitor or searcher

  19. pataparla says:

    Dear Sir,

    Is it mandatory that an internal auditor should be a qualified Chartered Accountant?

    Also can a company or a trust appoint a organization to take up Internal audit of a particular process and point out the deviations in the process? (the organization does not have qualified CAs)

  20. Prashant says:

    Dear Team,
    Tish info is very useful to all and im very thankful to you. Kindy update more info regarding audits. Its my humble request to you please share with me new update of audit and tax.

    Kindest Regards,
    Prashant kumar

  21. naveen says:

    This info is very use full to the students……….

  22. Jainam Shah says:

    Thanks for providing such wonderful information.

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