What is a Statutory Audit?

A statutory audit is an examination of an entity's financial records in accordance with the requirements of a government agency. A number of organizations must undergo statutory audits, including banks, brokerage firms, insurance companies, and municipalities. These entities must undergo statutory audits because they are subject to a certain amount of governmental oversight. The scope of each of these audits is set by the government agency that is requiring it, so the outcome may not necessarily conform to the requirements of generally accepted auditing standards. The intent of these audits is to find out if a targeted business is producing fair and accurate financial statements; this is done through a detailed review of their bookkeeping records and supporting source documents.

What is the Frequency of a Statutory Audit?

The frequency with which statutory audits must be conducted is set by the government agency that requires the audit. The normal interval for this audit is once a year.

Are there Exemptions from Statutory Audits?

Smaller organizations that fall below a minimum threshold are generally exempt from statutory audit requirements, on the grounds that they cannot afford the cost of the audit.