The audit is an art of systematic and independent review and investigation on certain subject mater including financial statements, management accounts, management reports, accounting records, operational reports, revenues reports, and expenses reports, etc.

The result of reviewing and investigation will be reported to shareholders and other key internal stakeholders of the entity for their decision making or others purpose as they needed.

Audit reports sometime submit to other stakeholders like government, banks, creditors or public.

1. Internal Audit-

Internal Auditing is an independence and objectivity consulting service that is designed to add value to the business and improve the entity’s operation.

It provides a systematic and disciplined approach to evaluating and assessing the entity’s risk management, internal control, and corporate governance.

Scope of internal audit is generally determined by the audit committee, the board of directors or directors that have equivalence authorization. And if there is no audit committee and board of directors, internal audit normally reports to the owner of the entity.

Internal audit activities are normally covered internal control reviewing, operational reviewing, fraud investigation, compliant reviewing, and other special tasks assigned from the audit committee or BOD.

2. Statutory Audit-

Statutory audit is referring to an audit of financial statements for the specific type of entities required by law or local authority.

For example, all banking sectors required their financial statements to be audited by qualified audit firms authorized by their central bank.

The statutory audit might be the difference from financial statements auditing as the financial audit is referring to the audit of all types of entity’s financial statements including both meet or not meet the government’s requirement.

However, statutory audit refers to only auditing of the entity’s financial statements that required by local law.

The statutory audit is normally performed by external audit firms and the audit report will be issued by the auditor and submit to the government body by the entity.

3. Tax Audit

Tax audit is a type of audit that performing by the government’s tax department or tax authority.

A tax audit could be performed as the result of in-compliant found by a government agency or the schedule set by the government tax department.

An entity needs not to invite or engage with the tax authority to come to perform a tax audit. They will come by themselves. Entity just needs to file its tax obligation properly and timely based on the tax law of the country.

To minimize the penalty as the result of the tax audit, the entity is recommended to follow all the requirements set by tax law and for those areas that they are not sure, the entity should engagement with tax consulting firm for advising. As said above, the big four firms are also offering such a service.

4. Compliance Audit-

A compliance audit is a type of audit that checks against internal policies and procedures of the entity as well as law and regulation where the entity operating in. Law and regulation here is referring to the government’s law where the business is operating.

For example, in the banking sector, there are many kinds of regulation required bankers to follow and comply with.

Most of the central banks required commercial banks to set up the complaint review (assessment) or compliance audit to make sure that they are complying with those laws and regulations set.

The entity may also assign its internal audit function to review whether the entity’s internal policies and procedures are complying and effectively follow.

A compliance audit is part of the system that use by the entity’s management to enforce the effectiveness of the implementation of the government’s law and regulation, and the entity’s internal policies and procedures. 

5. Secretarial Audit-


  1. Secretarial Audit is a compliance audit
  2. A part of total compliance management in an organization.
  3. An effective tool for corporate compliance management.
  4. Helps to detect noncompliance and to take corrective measures.

Secretarial Audit is a process

  1. To check compliance with the provisions of various laws and rules/ regulations/procedures, maintenance of books, records etc.,
  2. By an independent professional
  3. To make sure that the legal and procedural requirements are complied with
  4. Also followed the due process.
  5. It is essentially a mechanism to monitor compliance with the requirements of stated laws.

If anyone of the criteria meets then also secretarial audit is mandatory.

A practicing Company Secretary has been recognized to conduct a secretarial audit.