statutory audit
Statutory Audit is the yearly check by an outside auditor that the law says certain companies must have, to confirm the accounts tell the truth.
In plain English
There is a certain kind of relief that comes when someone you trust checks your own workings and says yes, this adds up. Now scale that feeling up to company size, add a lawyer somewhere in the background, and you have the statutory audit.
A statutory audit is not the company marking its own homework. It is an independent, registered auditor coming in, usually once a year, to look at the financial statements and confirm whether they give a true and fair view of the company. In Nigeria, the Companies and Allied Matters Act requires most registered companies to have their accounts audited, and banks, insurance companies and other regulated businesses face even stricter rules from the Central Bank of Nigeria or NAICOM. It is called statutory because the law demands it, and not since the managing director woke up feeling transparent.
Think about a Lagos based fintech that just crossed the threshold to become a public interest entity. Suddenly, the tidy internal spreadsheet the finance team has been glad of is not enough. A firm of external auditors has to come in, examine the ledgers, test the numbers, question the assumptions, and sign an opinion that goes into the annual report shareholders and regulators will read.
In the United Kingdom, the same logic runs through the Companies Act, where most limited companies above a certain size must be audited by a registered auditor, and the audit opinion sits calmly at the front of the annual accounts, almost unread by most, yet load bearing for everyone who lends money or buys shares.
For someone abroad sending money home into a family business or a cooperative investment, the statutory audit is the document that turns trust into evidence. It is the difference between believing the business is doing well and having a signed, dated confirmation from someone with no stake in the outcome.
A Nigerian manufacturing company with ₦900,000,000 in annual turnover is legally required to have a statutory audit. The auditor reviews invoices, bank statements, stock records and payroll, then issues a report stating whether the ₦900,000,000 figure and everything around it fairly represents the company's financial position for that year.
Questions people ask
Which companies in Nigeria must have a statutory audit?
Under the Companies and Allied Matters Act, most limited liability companies must have their accounts audited annually, though small companies below certain turnover and asset thresholds may qualify for exemption. Banks, insurance firms and other regulated entities always require one, regardless of size, because their regulators demand it directly.
Who is allowed to carry out a statutory audit?
Only auditors registered with the relevant professional and regulatory bodies, such as those licensed under the Institute of Chartered Accountants of Nigeria and approved by the Corporate Affairs Commission, can sign a statutory audit report. They must also be independent, meaning they cannot audit a company they have a financial stake or close relationship with.
What is the difference between a statutory audit and an internal audit?
A statutory audit is done by an outside, independent firm because the law requires it, and the result is shared with shareholders and regulators. An internal audit is done by staff or a hired team inside the company, mainly to check controls and processes, and its findings usually stay within the business unless management chooses to share them.
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