Advantages and disadvantages of external audit,


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Advantages and disadvantages of external audit,

  1. 1. Advantages and Disadvantages of external audit, Summary: The auditor is in control of full facts relating to the accounts for the year under assessment and he can check the books and accounts for year under review and he can check the books and accounts duly finished in respect of that scrupulous year. There is less danger that figures may be altered, either unintentionally or dishonestly, after the examination has been done by the auditor. Both external and internal auditors recognize the benefits of a supportive relationship. These benefits can include joint audit planning, the mutual exchange of audit reports, and the use of opposite methodologies and software tools. Introduction: Accounting system is a chain of activities in an entity by which transactions are processed for maintaining financial record. An assessment of ledgers, journals, bank accounts, sales invoices, purchase vouchers, and expense accounts." Auditor goes on to point out that the audit process and seeking information and assistance from organization workers. Also an auditing procedure that inspects accounting observes constantly during the year. Incessant audits are usually skill driven and intended to automate error checking and data proof in real time. An audit is essential because for public listed companies it is important that an audit is approved out to guarantee that the companies are using fair policies prescribed by law and the public’s money is in safe hands. Below is articulated the advantage and disadvantage of external audit, 01. Advantages: The vital advantage of an audit is that it makes it easier to compare diverse companies as the auditors articulate their judgments about the equality of measures. Of a company is given a good judgment then it means that it is follow the law. It also assists in following positive values. An audit will remain the managers from frustrating to pamper in deceptive performs as it is a resources of responsibility. It confirm to dependability and honesty of the consequences. 01. Disadvantages: The only disadvantage of an audit can be the expenses concerned because you have to pay the auditors and also guarantee that you preserve comprehensive records of all the interactions which engage a lot of expenses. 02. Advantages: the external audit is essential if the internal auditor is unfaithful to the organization then the external auditor can verify the accounts of the company to identify whether the company has fair and true accounts or there are some unfair and false accounts are there so this is the grounds the company assigns the external for the company. 02. Disadvantages: External examines contributors may be secluded from the relaxed networks of the organization, putting them at a weakness when navigate the surroundings. External service providers do not offer a systematic internal recruiting ground for future senior managers. 03. Advantages: Audit that the owner will be contented about the business operations and working of its various subdivisions 03. Disadvantages: The education curve for external examine providers can be steep. An insufficient considerate of the organization may gravely obstruct the service provider’s helpfulness. 04. Advantages: The errors whether committed unknowingly or consciously are exposed by the process of audit and its attendance prevents their occurrence in the future. No one will try
  2. 2. to commit an error or fraud as the accounts are subject to audit and hence they will have a fear of being detected. 04. Disadvantages: Discretion might be violated if external individuals have access to susceptible in rank. 05. Advantages: Auditing is very practical in attaining the sovereign opinion of the auditor about business condition. If the accounts are audited by a sovereign auditor, the report of the auditor will be true and fair in all respects and it will be of tremendous importance for the management of the company. 05. Disadvantages: A significant potential disadvantage of the private audit firms is the fact that an Auditor General may have more experience in auditing public sector organizations and may therefore have an audit approach that is more in line with the different objectives and values that govern these. The operations of the organizations continue to be more similar to those of national public 06. Advantages: The procedure of audit will institute a check on the minds of the staff working in the business and they will not be able to commit any abnormality, as they will have a fear and will also be aware that the accounts will be examined in the near future and that action would be taken against them if any wrongdoing is exposed. Thus the audit prevents the happening of any wrongdoing before it starts and the staff hence becomes more active and accountable. The fear of their getting jammed act as a moral check on the staff of the company. 06. Disadvantages: As appealing also private sector auditors to bid would likely augment the number of bids received and the diversity between these, the evaluation and selection process would become longer and possibly more complex both for the secretariat and for the Finance Committee, which may be considered a disadvantage. Conclusion: Various actions of external auditor’s some cases mutual support can be more proficient. When an organization has subsidiaries around the world, the two sets of auditors could institute a shared program of visits to the operating units to ease the burden of visiting all the entities. Internal auditors could perform intermittent or annual register reviews that external auditors could also use, thereby saving an organization external audit fees. Of course, the internal auditing contribution to the partnership must be credible for the external auditor to rely on this work.