Before you know the meaning of the statutory auditor, it is essential to understand the purpose of the audit. Some people think that it is only about checking. However, the term is comprehensive and encompasses a lot more than just ‘checking’. Moreover, to become the statutory auditor in India, you have to be a qualified Chartered Accountant. No other person has the authority to conduct a statutory audit for any organization. Deviation of such rules can lead to adverse legal consequences.

Definition of Statutory Audit

A statutory audit is a legally required check of the accuracy of the financial statements and records of a company or government. A statutory audit is intended to determine if an organization delivers an honest and accurate representation of its financial position by evaluating information, such as bank balances, financial transactions, and accounting records.

An audit is an examination of records held by an agency, company, government department, or individual. This usually involves analyzing different financial records or other areas.

Role of Statutory Auditor

To operate the business smoothly and without any complications, a statutory audit is significant. Moreover, it is mandatory for certain companies as per the relevant laws. The term statutory signifies that statutory audit is necessary.

The objective of a financial audit is often to assess whether funds have been properly handled and that all records and filings required are accurate. Undergoing a statutory audit is not an implicit indication of misconduct. Instead, it is also a formality intended to help discourage crimes, such as misappropriating funds by ensuring a professional third party routinely scrutinizes various documents. The same applies to other audit forms too.

A statutory auditor applies various rules to conduct the audit as the respective statute requires. These are the Auditing and Accounting Standards. Also, the person must have sufficient knowledge and skills to identify the errors, misrepresentations, or frauds, if any. Moreover, the most significant duty of the statutory auditor is to express a reasonable opinion in the Final Audit Report.

Chartered Accountant must adhere to all the procedures and standards of the Institute.

Skills of the Statutory Auditor

The primary skills of the statutory auditor are as follows;-

• Self-motivation and determination concerning the discharge of duties
• Expressing an opinion in the independent manner
• Excellent skills to meticulously solve the problems
• Accounting knowledge and ability to deal with statistical issues
• Ability to work in a diverse environment
• Competence to identify the risks or fraud or errors and other vulnerabilities present
• Ability to check the internal control system
• Possesses a team-oriented mentality
• Can communicate effectively and efficiently
• Innovative and confident at the same time
• Fabulous at handling the latest technological advancements
• Promoters of Risk Management and Appropriate Corporate Governance

A person must acquire all these skills after qualifying for the final examination of the Chartered Accountancy course. Only then can he become an excellent statutory auditor in India.

Written by
gkkedia