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
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
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
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
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.