Financial Statement Audit
- Examination of financial statements to provide an opinion on
their accuracy and compliance with accounting standards. - Financial Statement Audits in India are subject to various laws and regulations, which ensure the accuracy and reliability of financial reporting. Here’s a brief note on the requirements under these laws and the advantages of Financial Statement Audits:
Requirements Under Indian Laws:
- Companies Act, 2013: Mandates annual audits for all companies by an
independent chartered accountant. - Income Tax Act, 1961: Requires tax audits for certain businesses to verify
expenses and deductions. - Comptroller and Auditor General of India (CAG): Conducts audits of government
accounts to ensure efficient use of public funds.
Advantages of Financial Statement Audits:
- Ensures Account Correctness: Audits verify the accuracy of financial records and
compliance with statutory requirements. - Detects and Prevents Errors: Helps in identifying errors and preventing fraud.
- Maintains Regular Accounts: Encourages regular maintenance of accounts.
- Facilitates Loan Procurement: Audited reports aid in acquiring loans from financial institutions.
- Boosts Morale: Monitors financial dealings, reducing the likelihood of errors and fraud.
- Assists in Decision Making: Provides valuable information for managerial
decisions. - Enhances Stakeholder Confidence: Increases trust among stakeholders such as
creditors, shareholders, and investors.