Difference Between Statutory Audit And Tax Audit

Difference Between Statutory Audit And Tax Audit

The major dissimilarities between statutory audit and tax audit can be pointed out as follows:

1. Introduction

Statutory Audit: Examination of financial records or books of account to ensure the accuracy and validity of business transactions of the company.

Tax Audit: Examination of tax related matters of the company to ensure the correctness of financial information and accurate tax returns

2. Compulsory Or Not

Statutory Audit: It is compulsory for all organizations

Tax Audit: It is conditional and not compulsory for all types of organizations

3. Governed By

Statutory Audit: It is governed by the Company Act of the country

Tax Audit: It is governed by Income Tax Act.

4. Conducted By

Statutory Audit: It is conducted by professional auditor

Tax Audit: It is conducted by the tax authorities or chartered accountants

5. Objective

Statutory Audit: It is conducted to ensure the accuracy and validity of books of accounts of the firm.

Tax Audit: It is conducted to ensure that tax are paid on time without concealing income.

   Also Read: 

Difference Between Internal And External Audit

6. Useful For

Statutory Audit: It is useful for shareholders and others users of financial information.

Tax Audit: It is useful for government agencies

7. Checking Of 

Statutory Audit: It checks entire accounting activities of the firm

Tax Audit: It checks income related matters only.

Statutory Audit Vs Tax Audit (Comparison Chart)

Basis For Difference	Statutory Audit	Tax Audit
Introduction	In-depth checking or examination of financial records in order to ensure accuracy and validity of books of account	Checking of tax related activities to ensure accuracy of financial information
Compulsory ?	Yes	No
Governed By	Company Act	Income Tax Act
Conducted By	Professional auditor	Tax authorities
Purpose/Objective	Ensures accuracy of financial recordings	Ensures taxes are paid on time or not
Useful For	Shareholders and management	Government authorities
Checking Of	All financial activities	Tax related matters

I hope this post is helpful to understand the difference between statutory audit and tax audit and to make comparison between them.