Limitation or Disadvantage of Financial Audit
Auditing is a systematic examination of books and records of a business or other organization, in order to the assertion or verifies and to report upon the facts regarding its financial operations and the results thereof.
A financial statement audit is the examination of an entity’s financial statements and accompanying disclosures by an independent auditor, with the result being a report by the auditor, attesting to the fairness of presentation of the financial statements. Financial statements can be limited by intentional manipulation, differences in accounting methods, and also focus on economic measures. Some disadvantages of a financial audit are given below:
- The uncertainty of select errors.
- Weak resistance power.
- Exact audit not possible.
- Capricious report.
- Unreality principles.
- Managerial inefficiency.
- Lack of expert auditor.
- May not fulfill the objectives.