Q.XYZ Cooperative Bank Ltd. wants to know whether it is legally required to get its annual accounts audited, and if so, by what kind of audit. Advise, with reference to the concept of Statutory Audit. (Supplementary practice content — the real Semester II paper for this unit is SAQ + Descriptive only; Case Problems build the deeper apply-the-rule reasoning those formats cannot fully test on their own.)

A cooperative bank does not get to choose whether it wants an audit — its own governing law already decides that for it.

As a cooperative bank, XYZ is a body created and governed by a specific statute, and such statutes typically make an annual audit compulsory — exactly the defining feature of a Statutory Audit, regardless of whether XYZ's own management would otherwise choose to be audited.

XYZ Cooperative Bank Ltd. is legally required to have its annual accounts audited, and the audit it must undergo is a Statutory Audit.

As explained in Section a, a Statutory Audit is one made compulsory by a specific governing law, with the law itself fixing the scope and requirements of the audit. A cooperative bank is constituted and regulated under the relevant Cooperative Societies law (and, for banking-related matters, is also subject to banking-regulation requirements), and such statutes routinely make an annual, independent audit of the society's/bank's accounts a legal condition of its very existence and continued registration — this is not something XYZ's management can choose to opt out of, unlike a Non-statutory (Voluntary) Audit, which only applies to an entity that has no such governing statute.

Because this is a Statutory Audit, its scope must be a Complete Audit — covering the entirety of XYZ's books and transactions for the year — since, as Section b explains, the law never accepts a Partial Audit as satisfying a statutory audit obligation. The auditor's appointment, powers, duties, and reporting requirements will all be governed by the applicable statute, not left to private agreement between XYZ and the auditor.

Students sometimes answer only 'yes, it needs an audit' without naming WHICH type and WHY. A complete Case Problem answer should explicitly identify the audit as Statutory (because a governing law compels it) and note that its scope must be Complete, not Partial, since only a Complete Audit satisfies a statutory requirement.