Discuss the advantage of an Audit
An audit is a systematic process connotes a logical, structured, and organized series of steps or procedures. It is compulsory for all the organizations registered under the companies act must be audited. It is an official examination and verification of accounts and records, especially of financial accounts. There are advantages in auditing the accounts even when there are no legal obligations for doing so. Some of the advantages are listed below-
- Frauds are located at an early date ion future no attempt is made to commit such frauds or one is rather careful not to commit an error.
- The accounts clerks regular and vigilant as they know that the auditor would complain about them if the accounts are not prepared up to date or if there is any irregularity.
- In case of fire insurance company, many settle the claim on the basis of the audited accounts of the preview years.
- Money can be borrowed easily on the basis of preview audited balance sheet.
- Existing audit the valuation of assets liabilities will be easy.
- Income tax authority accepts audited balance sheet and profit and loss account.
- The auditor advice some technical point to prepare profit and account and balance sheet.
- An auditor may advise prepared profit and loss account and balance sheet on a uniform basis so that the balance sheet can be compared with one year to another.
- Audited accounts are accepted by sales tax authority.
It is the process of reviewing and investigating any aspect of a business, whether financial or nonfinancial. It can apply to an entire organization or might be specific to a function, process, or production step.