Internal audit is the arrangement within the organization to verify on continuous basis the correctness and truthfulness of the transactions by the salaried staff/outsourced.
Statutory audit is the examination of the books of accounts of the business by an external auditor and to report that the profit and loss account and balance sheet are drawn according to provisions of law and the financial statements reveal the true and fair view of the results of operations and financial state of affairs of the business.
Internal audit is not compulsory.
Statutory audit is compulsory as per applicable law.
Internal audit is carried out by the person appointed by the business enterprises. It is not necessary that the internal auditor should possess the qualification prescribed for professional auditor. Statutory audit can be carried out only by those who are qualified for appointment as per the provision of the Companies Act 2063 and other Acts.
Internal auditor is answerable to the management. His duties, responsibilities etc. regarding audit work are determined by the management. The management can increase the powers and authority of the internal auditor. Similarly, it can also curtail his powers.
The rights, duties, responsibilities and liabilities of statutory auditors are governed by the provisions of law. The auditor is independent of management.
The internal auditor points out irregularities in the procedural aspects and suggests ways and means to rectify the same. He assures that the financial operations and other types of control in force are carried out in conformity with the accounting systems.
The statutory auditor is concerned with the legality and validity of the transactions of business. His audit work is based on the financial statement prepared by the business.