Differences Between Internal Audit And Statutory Audit
An internal audit is conducted by the permanent staff of the same office to detect weakness in system, procedures and for the improvement. But statutory audit is the act of checking books of accounts as per the provision of company act. Both of them check books of account, detect errors and frauds even though they have certain differences which are as follows:
An internal auditor is generally appointed by the management but statutory auditor is appointed by the shareholders or Annual General Meeting.
2. Legal Requirement
Internal audit is the need of management but it is not legal obligation but statutory audit is the legal requirement.
An internal auditor does not required specific qualification as per the provision of law but qualification of statutory auditor is specified.
4. Conducting Of Audit
Internal audit is of regular nature but final audit is conducted after the preparation of final account.
An internal auditor is a staff who is appointed by the management but statutory auditor is an independent [person appointed by the shareholders.
6. Scope Of Work
Internal audit is related to the examination of books of accounts and other activities of an organization but statutory audit checks the books of accounts and related evidential documents. So, scope of internal audit is vague but scope of statutory audit is limited.
Internal auditor can be removed by the management but statutory auditor can be removed by the annual general meeting only.
Internal auditor is appointed by the management; so remuneration is fixed by the management but remuneration of statutory auditor is fixed by the shareholders.
Internal auditor needs to give suggestions to improve weakness but no need to present report but statutory auditor requires to prepare report after the completion of work on the basis of facts found during the course of audit and present such report to the appointing authority.