81.Internal audit v/s statutory audit
Internal audit helps the statutory audit to a large extent. Both the
internal auditor and the statutory auditor have a common interest as far as
authenticity of the accounts are concerned. However soundness of
internal audit relieves the statutory auditor from detailed checking.
The internal auditor reviews the operations and performs such
functions as evaluation, compliance, verification and ensures that policies,
procedures, rules and other type of controls of the business are carried
out efficiently.
He is helpful to statutory auditor in the matter of examination of
books of accounts. Generally, the statutory auditor accepts some of the
detailed checking made by the internal auditor. However, the area of cooperation
between internal auditor and statutory auditor is somewhat
limited as the statutory auditor has a responsibility under law to various
authorities, while the internal auditor is responsible only to the
management. The statutory auditor has to carry out his duties in
accordance with standard accounting and auditing practices and
provisions of law which govern the organisation. Before accepting the
checking of accounts and other documents carried out by internal auditor,
the statutory auditor must undertake such test checks necessary to find
out the effectiveness of internal audit.
Both internal auditor and statutory auditor carry out examination of
records and documents and make physical and other verifications.
Despite these similarities there are differences in the status,
responsibilities, approach and scope of work of internal auditor and
statutory auditor.
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Auditing Broad Questions