Both statutory (independent) and internal auditors play a significant role in the audit process on a different level. There are certain distinctions in Internal and Statutory Audit mentioned below.
BASIS OF DISTINCTION
STATUTORY AUDIT
INTERNAL AUDIT
Applicable Section and rules
Provision of Section 139 to 147 deals with the statutory audit and auditor.
Section 138 read with Rule 13 of The Companies (Accounts) Rules, 2014, provides the details in regards to internal audit and auditor.
Applicability on Companies
Every company must appoint a statutory auditor as per Section 139 of the Companies Act 2013.
The Appointment of Internal Auditor shall be done by every listed Company, unlisted public company, and private company fulfilling the conditions provided in Rule 13 of the Companies (Accounts) Rules.
Appointing authority
The statutory auditor is appointed at Annual General Meeting by the shareholders
An internal auditor can be appointed by the board.
Qualification
As per Section 141 of the Act, only a Chartered Accountant (CA) is eligible to be appointed as an auditor.
As per Section 138 of the Act, a CA, or Cost Accountant, or other professional as decided by the Board can act as an internal auditor.
Nature of Audit
Statutory Audit is done on annual basis.
Internal Audit is regular in nature.
Status
A statutory auditor is an independent professional.
An internal auditor may or may not be a company’s staff.
Removal
The statutory auditor can be removed from his office before the expiry of his term by passing a special resolution in a general meeting.
The internal auditor can be removed by the Board.
Both internal and statutory audit processes help the management examine the company's overall functioning, for example, evaluating the performance of employees, timely fulfillment of statutory laws, allocation of resources, etc.