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Internal Audit vs Statutory
Though there is an accountant
in all organizations to record
the financial transactions and
for general book keeping,
companies have to pass
through an audit that is a sort
of scrutiny of the financial
statements of the company
prepared by the accountant.
This statutory audit is carried
out under the provisions of the
Companies Act 1956 (to give
opinions under section 227 of
the Act). This statutory audit is
a tool to safeguard the
interests of the shareholders of
the company to ensure that that
the organization is performing
However, there are companies
that get performed an internal
audit also to ensure they are
following the rules and
regulations of accounting and
to verify the statements
prepared by accountants. There
are many differences in an
internal audit and statutory
audit and these will be
highlighted in this article.
Internal audit is not mandatory
and it is the choice of the
management of the company to
get it done by its internal
auditors. Management does not
want to be red faced in case of
any irregularities when
statutory audit is conducted
which is why, to keep a check on
the operations of the company,
internal audit is done. Whether
an internal audit has been
carried out or not, statutory
audit is done that comments on
the effectiveness of the
financial statements of the
company. It is necessary to
ensure that the company is
following the rules and
regulations in maintaining its
books and there is no
compromise with the financial
interests of the shareholders.
The most obvious difference
lies in the appointment of the
auditor. While internal auditors
are appointed by the
management of the company,
statutory auditors are
appointed by the shareholders
of the company. Another
difference lies in the
qualifications of the auditors.
While it is mandatory for
statutory auditors to be
certified chartered accountants,
it is not necessary for internal
audit and the management may
appoint persons it deems fit.
The main objective of statutory
audit is to give a fair and
impartial assessment of the
financial performance of the
organization while at the same
time try to spot any
discrepancies and frauds.
Internal audit also tries to
detect any anomalies and errors
that may have crept in the
financial statements. There is no
way internal management can
change the scope of statutory
audit as is the case with internal
audit where the mutual consent
of the management and the
auditors is enough to decide
the scope of the audit exercise.
While the auditors of a
statutory audit submit their
final report to the shareholders
in their general meeting, the
report of the internal audit is
handed over to the
management by the auditors.
Once appointed, statutory
auditor is extremely hard to get
removed and the management
has to take permission of the
central government after its
board of directors recommends
a proposal to this effect. On the
other hand, management can at
any time remove internal
Tips & Suggestions for CA Final Both Groups ( Only important topics which help you to get pass ) :
AS – 30, 31, 28,26,22, 17, 16, 7, 5,4 ,19 Valuation of Goodwill, EVA, Brand Valuation, Value Added Statement, Mutual Fund, Share based Payment, Bonus share and in last do amalgamtion and CFS.
In starting do Derivatives, Foex and Portfolio marks cover around 40-50.After that do Merger & Acquistion surely 8 marks question will be asked. Now do valuation of business and security marks covered 16-20. Mutual fund will surely asked minimum of 5 marks so prepare it well. For theroy do Practice Manual as many times it will be repeated. And its better if you solve practice manual of SFM its will be great to do so.
Advanced Auditing & Professional Ethics :
1. Do professional ethics Ques. 2 will of this topic of 16 marks.
2. Prepare CARO, Form 3 CD very well surely question will be asked of this topics and of around 16 marks.
3. Prepare AS & SA. As time we can’t remember all content of SA so just remember title of SA. Important AS -4,5,10.
4. Question from Due delligence, Audit of PSU and Management & Operational Audit.
5. Question from GIC & Banking will be in this attempt and Audit in CIS.
1. Start with Chapter Directors. Around 30 marks questions asked out of it.
2. Now do small topics like Accounts & Audit, Dividend, Inspection and Investigation marks covered 12-20.
3. Now do Prevention of opperssion and mismangement and winding up marks covered 10-12.
4. Now do Companies incorporated outside India & Compromise, Arragements and reconstruction marks covered 8-12.
5. Now do allied law – Important are SEBI, FEMA, SRFAESI Act, Competetion Act & Insurance.
Group 2 ( Only important topics which help you to get pass ) :
Advanced Management Accounting :-
1. Friends start with OR part ( Important topics are LPP ( Simplex ), PERTS, Learing Curve & Transportation . Marks covered minimum 30.
2. Now do theory part. Theory will be asked for 30 marks and even more. ( Important theory – Steps in simulation, ABC Costing, Backflushing, JIT, Pricing Decison – Pareto, Costing of service sector, Uniform Costing )
3. Now do tranfer pricing and standard costing. Marks covered around 20 questions will be surely asked out of both topics. Standard costing will be easy in comparison to transfer pricing.
4. Now do Decision Making & CVP. In compulsory question you will surely find 5 marks out of it. And later on one 8 marks ques. at least.
5. Now do remaining topics.
1. Start with chapter 5,6 & 7 most easiest chapter n cover 30-32 marks. ( Important Topics – Threats, Risk Assessment, Techniques for risk mitigation and delphi technique, Disaster and procedure, Types of system backup, BIA, software backup techniques, ERP & its characterstics, Challenges in implementation, Kinds of business risks ).
2. Now do chapter 10 surely 10 marks question will be asked out of it. So make sure u do it properly.
3. Now do chapter 1,2 & 3. Around 40 marks question will be asked out of this chapters they are long chapters just make lil analize and don’t read those topics which were in last attempt.
4. Now do remaining topics which are easy ones.
Direct Tax :
1. Staright forward do case laws and amendments which are issues by ICAI. Marks covered 30-32 miminum even more.
2. Now do Capital Gain & Gift. Marks covered by this topics 15.
3. Now do Assessment procedure marks covered by this topic 10-15. And question on due dates of ITR will be surely asked.
4. Now do Assessement of Trust and Companies. 8-10 marks question will be asked in exam.
5. Now do small topics like Assessment of NR, DTAA, TDS etc. marks covered by this topics 10-12.
6. Now time to do 4 heads of Income. I know you all thinking 5 heads in last to friends just once check previous paper not much questions asked out of it. Ques.2 of paper will be of PGBP but it contains all amendments so you can do PGBP from summary module.
Indirect Tax :
1. Again in IDT you should start with Case laws and amendments. Marks covered 40. Question no. 4 & 5 will be of case laws only. And Ques.2 is full of amendments.
2. Now do Valuation of Customs, Valuation of Excise in Ques. 1 both will be asked for 5 marks each and even 15 marks topics this is.
3. Now do service tax and VAT. Theory and practical both will be asked out of this topics. In Ques.1 2 parts will be of VAT & Service Tax.
4. Now do CENVAT Credit and Export Procedures under Central Excise Act.
5. Now do Refund and Remisson and destruction of goods.
6. Now do remaining topics as around 20-25 marks will be out of remaining syllabus.
* Do refer Practice Manual in ISCA & IDT ( Latest edition )
** For case laws and amendments buy supplementary book issued by ICAI & Amenements are provided in RTP.
Wish you all the best
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