Audit and Assurance Practice Exam 2025 – Complete Prep Resource

The distinction between statutory audits and non-statutory audits lies in the legal requirements governing them. Statutory audits are legally mandated, meaning that certain entities, such as public companies and specific private organizations, are required by law to undergo an audit of their financial statements. This requirement ensures a level of accountability and transparency, primarily aimed at protecting stakeholders, including investors, creditors, and the public.

In contrast, non-statutory audits are conducted on a voluntary basis. Organizations may choose to engage in non-statutory audits for various reasons, such as internal control assessments, improving governance, or enhancing credibility with stakeholders, but there is no legal compulsion to do so.

This framework sets the two types of audits apart, as statutory audits are integral to compliance with financial regulations and legislative standards, while non-statutory audits serve more at the discretion of the organization for internal or reputational enhancement. Understanding this fundamental difference is essential for grasping the regulatory landscape in which different organizations operate regarding their financial reporting and audit requirements.