Introduction
Running a business in Nigeria comes with legal, financial, and regulatory responsibilities. One of the most important of these is the statutory audit.
Yet many business owners still ask:
What exactly is a statutory audit?
Who is required to do it?
Is it just a legal formality or does it actually add value?
This guide answers those questions clearly and practically.
What Is a Statutory Audit?
A statutory audit is an independent examination of a company’s financial statements, carried out because the law requires it.
The purpose is to confirm that the company’s financial records:
Are accurate and complete
Present a true and fair view of its financial position
Comply with applicable laws and accounting standards
In Nigeria, statutory audits are governed primarily by the Companies and Allied Matters Act (CAMA) and enforced by regulators such as the Corporate Affairs Commission (CAC), Federal Inland Revenue Service (FIRS), and other sector regulators.
Who Needs a Statutory Audit in Nigeria?
A statutory audit is required for many organizations, including:
Limited Liability Companies
Most registered limited liability companies must have their financial statements audited annually.
Public Companies
All public companies are legally required to undergo statutory audits due to shareholder and public interest considerations.
Government Ministries, Departments, and Agencies (MDAs)
Public sector entities often require audited accounts for accountability and compliance.
NGOs and Donor-Funded Organizations
Many donors and regulators require audited financial statements as a condition for funding and reporting.
Regulated Businesses
Companies under regulators such as the SEC, CBN, or industry-specific agencies often require statutory audits.
If your organization prepares annual financial statements for submission to regulators, investors, or tax authorities, a statutory audit is very likely required.
Why Statutory Audit Matters Beyond Compliance
While statutory audits are legally required, their value goes far beyond compliance.
Builds Trust and Credibility
Audited financial statements increase confidence among:
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Investors
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Shareholders
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Banks and lenders
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Regulators
Strengthens Internal Controls
Audits often reveal weaknesses in internal processes, controls, and record-keeping, allowing management to improve systems.
Reduces Risk of Fraud and Errors
Independent review helps detect material misstatements, fraud risks, and revenue leakages early.
Supports Business Growth
Audited accounts are often required for:
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Loan applications
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Investment discussions
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Mergers and acquisitions
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Expansion into regulated markets
What to Expect During a Statutory Audit
Understanding the audit process helps businesses prepare and avoid disruptions.
1. Audit Planning
The audit firm gains an understanding of your business, industry, risks, and internal controls.
2. Documentation Review
Auditors examine:
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Financial statements
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Accounting records
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Supporting documents
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Policies and procedures
3. Testing and Verification
Key transactions and balances are tested to confirm accuracy and compliance.
4. Management Discussions
Findings are discussed with management, including areas for improvement.
5. Audit Report Issuance
An independent audit opinion is issued on the financial statements.
How to Prepare for a Statutory Audit
Businesses that prepare properly experience smoother audits.
Best practices include:
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Maintaining up-to-date accounting records
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Reconciling bank and ledger balances regularly
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Documenting internal controls
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Addressing previous audit findings
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Engaging qualified professionals early
Common Mistakes Businesses Make
Some common statutory audit challenges include:
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Poor documentation
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Weak internal controls
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Late preparation of accounts
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Treating audits as a one-time annual event
Avoiding these issues saves time, cost, and reputational risk.
Choosing the Right Audit Firm in Nigeria
A statutory audit should be handled by a firm that offers:
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Independence and integrity
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Strong technical competence
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Sector experience
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Partner-led engagements
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Compliance with professional standards
At Novara Professional Services, our audits are designed not only to meet statutory requirements but to deliver insights that strengthen governance and performance.
Final Thoughts
A statutory audit is not just a legal obligation. When done properly, it is a powerful tool for transparency, risk management, and business growth.
If your organization is required to undergo a statutory audit or wants to improve its audit experience, engaging the right professionals makes all the difference.
Speak with Novara Professional Services today for trusted audit and assurance solutions.
