Difference between the audit of the accounts of a partnership and a company
(i) Company Audit:
The audit of the accounts of joint-stock companies in India is compulsory under the Companies Act. For the first time, the Indian Companies Act, 1913 made it legally compulsory for joint-stock companies in India to get their accounts audited by an independent professional accountant, but now, the Companies Act, 1956 and subsequent amendments have made tremendous changes in the rights, duties, powers, etc. of an auditor. He should be a qualified auditor as laid down under section 226 of the said Act.
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(ii) Audit of the Accounts of Partnership Firms:
A firm is a partnership run by several partners. An audit of the accounts of such a firm is always in the interests of the partners, although it is done by the auditor appointed by the partners under mutual agreement.
As such, in the case of a partnership firm, the auditor is not appointed under statute, but by agreement between the partners. His rights, duties and liabilities are also defined by mutual agreement and can be subjected to modification.
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On the contrary, the audit of joint-stock companies is legally compulsory and the rights, duties, powers, etc., are also defined by statute and in their case, the auditor should also possess the qualifications as laid down by the Companies Act.
These are the distinctions between the audit of a company and the audit of a partnership firm. The partners of a firm recognise the advantages of scientific audit which is of much help in solving their mutual differences.