UGC NET COMMERCE June 2019 Q42
- Option : C
- Explanation : Statutory Audit: An audit which is undertaken under any specific statute or Act is called ‘statutory audit’. The term ‘statutory’ signifies anything regulated by laws of the state. Accordingly, a statutory audit is the official inspection of an organisation’s books accounts by an independent body as per the requirements of a statute. The objective of this audit is to ensure fair and accurate representations of the financial statements of an entity. The forms of organisations for which audit is mandatory in India under any statute are as follows:
Statutory Audit is Applicable for Relevant Statute Joint Stock Companies Companies Act, 2013 Banking Companies Banking Regulations Act, 1949 Electricity Companies Electric Supply Act, 1948 Co-operative Societies Co-operative Societies Act, 1912 Trusts Respective State Acts
Non-statutory Audit: A non-statutory audit is such an audit which is neither required by the law nor by any regulatory authority. They are usually carried out at the will of an organisation or in some cases to adhere to the internal policies of the organisation. This audit is often used by sole proprietors, limited and unlimited liability partnership s, associations, clubs, charitable trusts etc. in order to enhance their reliability.
