Advantages of Auditing audit

Advantages of Auditing

It is compulsory for all the organizations registered under the companies act must be audited.  There are advantages in auditing the accounts even when there is no legal obligation for doing so.  Some of the advantages are listed below:

1.  Audited accounts are readily accepted in Government authorities like income Tax Dept., Sales Tax dept., Land Revenue departments, banks etc.

2.  By auditing the accounts Errors and frauds can be detected and rectified in time.

3.  Audited accounts carry greater authority than the accounts which have not been audited.

4.  For obtaining loan from financial institutions like Banks, LIC, HUDCO, HDFC, IFCI etc., previous years audited accounts evaluated for determining the capability of returning the loan.

5.  Regular audit of account create fear among the employees in the accounts department and exercise a great moral influence on clients staff thereby restraining them from commit frauds and errors.

6.  Audited accounts facilitate settlement of claims on the retirement/death of a partner.

7.  In the event of loss of property by fire or on happening of the event insured against, Audited accounts help in the early settlement of claims from the insurance company.

8.  In case of joint Stock Company  where ownership is separated from management, audit of accounts ensure the shareholders that accounts have been properly maintained, funds are utilized for the right purpose and the  management have not taken any undue advantage of their position.

9.  To determine the value of the business in the event of purchase or sales of the business, audited account will be the treated as the base for the evaluation.

10.  The audit of accounts by a qualified auditor also help the management to understand the financial position of the business and also it will help the management to take decision on various matters  like  report in internal control system of the organization or setting up of an internal audit department etc.

11.  If the accounts have been audited by an independent person, disputes between the management and labor unions on payment of bonus and higher wages can be settled  amicably.

12. In the event of admission of a new partner,  audited accounts will facilitate  the  formation of terms and conditions for joining the new partner.  Last 3 years audited accounts and balance sheet will give a general idea about the growth and financial position of the business to the new partner.

More by this Author


Comments 35 comments

Gentlemaan profile image

Gentlemaan 6 years ago

All good tips, thank you for sharing


Sage Williams profile image

Sage Williams 6 years ago

Great tips, very informative and well written.

Sage


IlearnedToday profile image

IlearnedToday 6 years ago from Montreal

Interesting hub

pertinent information

Abdel


EDSON JOHANNES OWUSU 6 years ago

WOW A GREAT PIECE OF INFORMATION


Iamsam profile image

Iamsam 6 years ago Author

Thanks all

Thanks for your visit and comments


ALI 6 years ago

AUDITING IS THE EXAMINATION OF AN ACCOUNTS


mcbrick 6 years ago

You are a good looking "finance" girl. I graduated with a finance degree and there weren't many "lookers" that studied it.


Shayan 5 years ago

hi i am thankful for your explanation. i am a man from iran. i am M.A of accounting. i like to have a relationship for you. this is my email:asheghe_eshgh201084@yahoo.com) please email me and send me your email address. i am waiting for your email.


viswanath sarma 5 years ago

Really useful. Thank you.


zaheer7744@yahoo.com 5 years ago

hi

its very usefull for me

its very clear and easy to understand i hope i get more benefit from this

i request u to give more theorys to learn


eugen 5 years ago

Hi Lamsam,

Thank you very much for the good materials as tools to build up financial skill

I will be grateful if you send more at my e-mail address eugenekare@yahoo.fr

Thank you


sathya 5 years ago

thank u very much for ur very useful points


marzipurian 5 years ago

very good information about headings but please it should be in the form of heading thanks very much thanks\


Nzenwa kelvin 5 years ago

Tanks for your help


Arfa munir 4 years ago

Wow......!! XoOo easy to understand...!


Jenishla 4 years ago

nice explanation thank u


rachel Makhurupetsi 4 years ago

Great points, easy to anderstand. Thank you.


suneer manu 4 years ago

more n more useful points. Thanks 4 ur help


vfvfv 4 years ago

vfxvxvf


Vinjeru kamoza chirambo 4 years ago

My auditing problems now getin simplifyd coz of this page


rajib 4 years ago

FOR THE ADVANCEMENT OF CIVILIZATION PERFORMING AUDIT ETHICALLY IS VERY IMPORTANT.


lucas mzuri 4 years ago

make them clear, bigup guys.


IT Infrastructure Audit 4 years ago

It audits are an excellent way for you to get closely involved with a business’ systems. It enable to prove your value to a client.


AMRIN 4 years ago

useful information thanks a lot :)


IIUC king 4 years ago

helpful for the student


abid ali 4 years ago

i cant this plz tell me about this i have no id in this ? i am the student of finance so if u help me so plz plz plz


diana 3 years ago

thx a lot,it was h helpful


judy gacheri 3 years ago

wow! very easy to understand,,,,thanks


mahed faryad 2 years ago

this is very usful for me and my studies please add more related topics thanks


eso kay II 2 years ago

Thanks!


Meghna 16 months ago

Thank you :)


ROOH ULLAH 13 months ago

audit is the combination of 5 w's . what , when, where ,who .why


mubarak 10 months ago

thank you


Zeeya 6 months ago

Thanks


AMMAD 8 weeks ago

Much Easy to Understand.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working