Statutory Audit and Tax Audit
Tax audit and Statutory audit are two distinct types of audits conducted for different purposes.
Statutory audit
Statutory audit aims to verify a company’s financial statements to ensure they present a true and fair view of its financial position. It is a legal requirement under the Companies Act, 2013, and an independent auditor appointed by the shareholders conducts it.
The auditor examines financial statements, including the balance sheet, profit and loss statement, cash flow statement, and notes to accounts, and provides an audit report.
Tax audit
Tax audit is perform to validate the accuracy of a company’s or taxpayer’s tax returns. It is mandated by the Income Tax Act, 1961, and conducted by a chartered accountant authorized by the government. Tax audit applies to taxpayers who surpass a specified income threshold or engage in specific business activities. The tax auditor scrutinizes the books of accounts and relevant documents to ensure the tax return filed is precise and complies with the provisions of the Income Tax Act.
To summarize, the key differences between statutory audits and tax audits are as follows:
1. Statutory audit verifies financial statements for the benefit of shareholders, while tax audits validates tax returns for the government’s benefit.
2. Statutoryaudit is obligatory under the Companies Act, while taxes audit is mandatory under the Income Tax Act for certain taxpayers.
3. Statutory audit is conduct by an independent auditor appointed by shareholders, whereas taxaudit is perform by a chartered accountant authorized by the government.
To visit:https://www.incometax.gov.in
