Statutory audit is an independent examination of the books and accounts of an organization by a duly qualified person with the objective to give an opinion as to whether the account show a true and fair view of the financial position, and comply with relevant statutes e.g Companies and Allied Matters Acts 1990, the various laws, accounting standards, guidelines, rules and regulations affecting the organization.
Statutory audit is compulsory for all limited liability companies both public and private. This is because the Audited Report is needed by all companies to file their annual returns to the Corporate Affairs Commission, to Federal Inland Revenue Service for the purpose of taxation and other agencies of government as it may affect the organization.
Responsibility of the Directors of Companies
The directors are responsible for the preparation of financial statements which give a true and fair view of the state of the company at the end of each financial year and of the profit and loss for that period and comply with Companies and Allied Matters Acts 1990. In doing so, the directors ensure:
Proper accounting records are maintained
Applicable accounting standards are followed
Suitable accounting policies are adopted and consistently followed
Judgment and estimates made are reasonable and prudent
Internal control procedures are instituted as far as is reasonably possible, safeguard the assets and prevent and detect fraud and other irregularities
Benefits of Statutory Audit to Limited Liability Companies
It confers credibility on the financial statements
It identifies weaknesses in the internal control system