What is the difference between statutory audit and tax audit?

Statutory audit is the audit of financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity etc.). Statutory audit is a legal requirement done annually by external auditors. Tax audit is the audit of docs/information relevant to taxation. It can be done by external auditors or taxation authorities.

A tax audit will become statutory audit, if it is required by the law.

Statutory audit is audit done as per requirement of law for fairness of the statements whereas tax audit is done as per taxation authorites requirement if needed.

Statutory audit is the audit conducted under the regulations of IFAC or local authorities, it is the requirement under company law in most of all jurisdictions to ensure that financial statement give true and fair view and prepared with applicable laws and regulations. While tax audit conducted by the tax authorities in order to put tax calculations.

AUDIT UNDER ANY STATUTE IN A STATE OR COUNTRY IS CALLED STATUTE AUDIT AND AUDIT UNDER ANY TAXATION LAW IS CALLED TAX AUDIT.

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'Statutory Audit'A legally required review of the accuracy of a company's or government's financial records. The purpose of a statutory audit is the same as the purpose of any other audit - to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.

 

tax audit

Type of forensic audit, performed by the government appointed auditors, to determine if the appropriate taxes were paid in full by the entity being audited.

STATUTORY AUDIT IS THE AUDIT PRACTICE FOR THE OPERATIONS OF REGISTERED COMPANIES FOR THE MAJOR INTEREST OF THE COMPANY AND ITS CUSTOMERS/CLIENTS. WHILE TAX AUDIT IS A TYPE OF AUDIT THAT IS BASICALLY FOR THE INTEREST OF THE GOVERNMENT/GOVERNMENT AGENCIES (E.G TAX BOARDS,INLAND REVENUES ETC.)OR SIMPLY PUT IT IS AN AUDIT PRACTICE FOR TAX PURPOSES IN  MOST COUNTRIES, A TAX AUDIT IS UNDERTAKEN BY A PROFESSIONAL ACCOUNTANT WHO HAS ACQUIRED AT LEAST ONE PROFESSIONAL CERTIFICATION/AWARD.

Statutory Audit : An audit conducted to express the opinion on financial statement.

 

Tax Audit : To check the tax compliance in the financial statements with the applicable tax laws.

Statutory audit is performed to express opinion on reliability, fairness, correctness and etc of Financial statements. While tax audit is performed to check correctness of calculation of tax (including of proper definition of object of taxation, base of taxation, tax rate and payment terms).

 

A statutory audit is like any regular annual audit, where the organisation's financial records are scrutinized to determine that the Annual Financial Statements are in fact a true representation of the company's financial position.

 

Whereas a tax audit is specifically aimed at the auditing of all or most transactions tax related to determine that the amount paid or claimed from the tax authority is in fact correct.