Question
Download Solution PDFThe Audit that is compulsory as per the Law is termed as a ..............
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is - Statutory Audit
Key Points
- Statutory Audit
- A Statutory Audit is an audit that is mandated by law for certain types of organizations or entities.
- The purpose is to ensure that the financial statements of the organization comply with applicable laws and regulations.
- It is typically conducted by an independent auditor to ensure objectivity and unbiased reporting.
- Examples of entities that require statutory audits include:
- Companies registered under the Companies Act.
- Banks, insurance companies, and other financial institutions.
Additional Information
- Other Types of Audits
- Management Audit
- Focuses on evaluating the efficiency and effectiveness of the management processes and practices in an organization.
- It is not compulsory and is usually conducted internally for decision-making purposes.
- Internal Audit
- Conducted by the organization's internal team to ensure compliance with internal policies and controls.
- Not mandated by law but helps in risk management and internal control improvement.
- Balance Sheet Audit
- Focuses specifically on verifying the accuracy of items reported in the balance sheet.
- It is narrower in scope compared to statutory or internal audits.
- Management Audit
- Legal Framework
- Statutory audits are governed by laws such as:
- The Companies Act, 2013, in India for company audits.
- Sector-specific laws like the Banking Regulation Act for banks.
- Failure to conduct a statutory audit may lead to legal penalties, fines, or disqualification of directors.
- Statutory audits are governed by laws such as:
Last updated on Jun 26, 2025
-> Maharashtra SET 2025 Answer Key has been released. Objections will be accepted online by 2nd July 2025.
-> Savitribai Phule Pune University, the State Agency will conduct ed the 40th SET examination on Sunday, 15th June, 2025.
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