Statutory audit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 December 2015 Dear Experts,
Statutory audit is required for all company, can anyone let me know the object to conduct this audit...

Thanx in Advance

Ankur Garg

Ankur Garg (Expert)
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31 December 2015 The main necessity for conducting the audit of financial statements stems from the fact that the persons responsible for the preparation of financial statements are often different from the owners of large corporations.

Whereas in small owner managed companies, the owners have first hand knowledge of the affairs of their business, management and ownership is normally separate in the case of large companies that often have thousands of shareholders. In large corporations, shareholders appoint directors to run the enterprise on their behalf. This separation of ownership and control creates the need for external audit.

Financial statements are the main source of accountability of management performance by the shareholders. However, as the management is responsible for the preparation of financial statements, shareholders have to rely on external verification by auditors in order to gain reasonable assurance that the accounts are free from material misstatements and can therefore be relied upon to be presenting true and fair view of the affairs of the company.

For more detail check the link below:

http://accounting-simplified.com/audit/introduction/purpose-of-audit.html#sthash.Gjlq4R7T.dpuf