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Advantages of Auditing audit

Updated on May 24, 2012

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.

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    • Gentlemaan profile image

      Gentlemaan 7 years ago

      All good tips, thank you for sharing

    • Sage Williams profile image

      Sage Williams 7 years ago

      Great tips, very informative and well written.

      Sage

    • IlearnedToday profile image

      IlearnedToday 7 years ago from Montreal

      Interesting hub

      pertinent information

      Abdel

    • profile image

      EDSON JOHANNES OWUSU 7 years ago

      WOW A GREAT PIECE OF INFORMATION

    • Iamsam profile image
      Author

      Iamsam 6 years ago

      Thanks all

      Thanks for your visit and comments

    • profile image

      ALI 6 years ago

      AUDITING IS THE EXAMINATION OF AN ACCOUNTS

    • profile image

      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.

    • profile image

      Shayan 6 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.

    • profile image

      viswanath sarma 5 years ago

      Really useful. Thank you.

    • profile image

      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

    • profile image

      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

    • profile image

      sathya 5 years ago

      thank u very much for ur very useful points

    • profile image

      marzipurian 5 years ago

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

    • profile image

      Nzenwa kelvin 5 years ago

      Tanks for your help

    • profile image

      Arfa munir 5 years ago

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

    • profile image

      Jenishla 5 years ago

      nice explanation thank u

    • profile image

      rachel Makhurupetsi 5 years ago

      Great points, easy to anderstand. Thank you.

    • profile image

      suneer manu 5 years ago

      more n more useful points. Thanks 4 ur help

    • profile image

      vfvfv 5 years ago

      vfxvxvf

    • profile image

      Vinjeru kamoza chirambo 5 years ago

      My auditing problems now getin simplifyd coz of this page

    • profile image

      rajib 4 years ago

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

    • profile image

      lucas mzuri 4 years ago

      make them clear, bigup guys.

    • profile image

      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.

    • profile image

      AMRIN 4 years ago

      useful information thanks a lot :)

    • profile image

      IIUC king 4 years ago

      helpful for the student

    • profile image

      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

    • profile image

      diana 4 years ago

      thx a lot,it was h helpful

    • profile image

      judy gacheri 3 years ago

      wow! very easy to understand,,,,thanks

    • profile image

      mahed faryad 3 years ago

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

    • profile image

      eso kay II 3 years ago

      Thanks!

    • profile image

      Meghna 21 months ago

      Thank you :)

    • profile image

      ROOH ULLAH 18 months ago

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

    • profile image

      mubarak 14 months ago

      thank you

    • profile image

      Zeeya 11 months ago

      Thanks

    • profile image

      AMMAD 6 months ago

      Much Easy to Understand.

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