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Difference Between Internal Auditor & Statutory Auditor

vishal somani (Student) (50 Points)

09 August 2010

Happy Morning..

Whai is the "Difference Between Internal Auditor & Statutory Auditor"

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CA Pratik Dharod (Bussiness) (178 Points)
Replied 09 August 2010

Internal Auditor is considered as employee of the co. He need not be Chartered Accountant. He does auditing of books on regular intervals like weekly, monthly or quarterly etc.

Statutory Auditor is considered as outsider. He should be a qualified practicing Chartered Accountant. He does auditing once in a year.

An Internal Auditor can not be a Statutory Auditor Of the Co.

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CA Ravi Sisodia (CA,CS,CMA) (32226 Points)
Replied 09 August 2010

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 companyâ€™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.

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CA Ravi Sisodia (CA,CS,CMA) (32226 Points)
Replied 09 August 2010

Originally posted by : CA Ravindra sisodia
	What Are The Fundamental Differences Between The Statutory Auditor And Internal Auditor Of A Company? The scope of the work under taken by the internal auditors is determined by the management while the extent of the work undertaken by statutory auditor arises from the responsibilities placed upon him by status. The approach of internal auditor is to satisfy that accounting information presented to management throughout the period is accurate and discloses material facts. On the other hand the approach of statutory auditor is governed by his duty to satisfy himself that the accounts to be presented to the shareholders give a true and correct view. Internal auditors after completion of audit report to the management while statutory auditor reports to the shareholders. Internal auditor is directly responsible to the management but statutory auditor's responsibility is towards the shareholders. Internal auditor is an employee of the company and does not possess the independent of status while statutory auditor is not the employee of the company and has independent status. There is no prescribe qualification for the appointment of internal auditor but statutory auditor of a public limited company must be chartered accountant. The appointment of an internal auditor is made by management while statutory auditor id appointed by the shareholders.

(Guest)

Originally posted by : CA Ravindra sisodia
	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 companyâ€™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.