Statutory audits are required legally to review the accuracy of a company’s financial statements or records. The main aim of a statutory audit is to determine whether an organization provides a true and fair representation of its financial position by examining financial transactions.

How statutory audits work?

The word statutory denotes that the audit is required by statute. A statute refers to a law or regulation enacted by the legislative branch of the organizations associated government. In business, a statute also refers to any rule set by the organization’s leaders or board of directors.

An audit is an examination of records done by an organization, business, government entity, or individual. This involves analysis of various financial records or other areas. Financial audit records an organizations income or profit, investment returns, expenses, and other items

The main purpose of statutory audit is to determine if the funds were handled properly and that all records and filings are accurate. At the start of an audit, the auditing entity makes known what record will be required as part of the examination. The records are gathered and supplied as requested so the auditors can perform their analysis. If there are any inaccuracies, then an appropriate consequence may apply.

Statutory audit is not an inherent sign of wrongdoing. Instead, it is a formality designed to help prevent activities such as the misappropriation of funds by ensuring regular examination of various records by a competent auditor.

Advantages of Statutory Audit:

• ●
• Increases the legitimacy of the financial reports as the statements are accurately verified by the auditor.

• ●
• Improves the credibility of the organization because when the audits have been conducted the financial reports are free from error, fraud and misrepresentation, and inaccuracies.

• ●
• It helps to improve the management to perform their job competently.

• ●
• Improves the efficacy of the internal system because the auditors analyse, study, and interpret business function and compare with policies and come up with suggestions and recommendations to improve the business.

• ●
• Lessens the risk of fraud in an organization

• ●
• Helps to gain the trust of shareholders, banks, and government.

Conclusion

Statutory audits are important for several reasons, first they are required by law and help to ensure that the management is not dysfunctional and has proper internal controls and helps to reduce the risk of fraud, misstatement of financial statements. It also helps in increasing the credibility of the business and improves the business process.

Statutory Auditors in Dubai, UAE

Premier Brains Accounting & Auditing are registered Statutory audit firm in Dubai. With its highly qualified and experienced professionals, provides high quality and reliable audit services.

Please note that this memo is for information purposes only and should not be construed as an advice. It does not necessarily cover every aspect of the
topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.

If you would like to discuss Accounting & Audit services, please drop us an email at info@premier-brains.com or call us at + 971 4 3542959.

“ALWAYS DOING THE RIGHT THING”