Advantages of Auditing.Through, auditing, detection and prevention of errors becomes possible. Auditing is an important tool that organizations need to use to ensure that their operations are running as efficiently and effectively as possible.It Provides assurance that the organization’s objectives are being achieved and that internal controls are adequate and functioning properly.
You Must Know; Advantages of Auditing For Organization And Business.
1.DETECTION AND PREVENTION OF FRAUD
i Audit is also helpful to discover and to prevent the fraud. The guilty persons can be held responsible.! The audited accounts show the true and fair view of the business.
2.BUSINESS PURCHASE PRICE
| If a running business is to be sold, purchase considerations can easily be determined on the basis of audited accounts.j After audit, real value of assets and liabilities comes before us.
3.LOAN
Business can easily obtain the loan with the help of audited accounts because audited accounts arc easily accepted by the lenders for granting loan.
4.TAX PAYMENTS
If accounts arc audited then these arc easily accepted by the tax department for the assessment of taxe and there is no need of further inquiry.
- VALUABLE SUGGESTIONS
Businessmen can get advice from the auditor about the weaknesses of their business or accounts. Auditor is a professional and expert, so his professionalism is complete guideline for management.
- RELIABILITY
Suppliers, customers and creditors are ready to deal only with those companies which present the audited accounts. Accounts without auditor’s approval are useless for decision makers.
- GOODWILL
Audit is one of the chief elements due to which company enjoys goodwill. It is easy to sell business at handsome price as purchaser feels minimum needs of investigation in case of audited accounts.
- SETTLEMENT OF DISPUTES
If any dispute is arised among directors, partners or shareholders that can be solved by auditor. Auditor is a neutral person, so his decision is acceptable for all parties.^ ADVANTAGES OF AUDIT FOR OWNERS
10.OWNER’S SATISFACTION
- In the presence of audit, the owners feel satisfaction about business operation and working.
11. WEAK POINTS
Audit is the way of finding the weak points of internal control. In this way efficiency of management can be increased.
- NO EXPLOITATION OF SHAREHOLDERS
Audit is the way to avoid exploitation of shareholders. Shareholders who have no hand in running the business can watch business through auditor. So directors can not take undue advantage of their positions.
- EFFICIENCY
Audit determines the efficiency of employees. The efficient management is an asset for business. We can change duties of employees according to their abilities.
14.PARTNER’S TRUST
If accounts are audited then the partners easily trust on these accounts for knowing the value of goodwill and assets at the time of retirement, death or admission of new partner. •
15 DECEASED ESTATE
If the accounts are audited then the family of deceased person can rely on these accounts for distributing i he estate.
. FLUCTUATION IN PROFIT/
If accounts are audited then owners can easily know that what are the reasons for fluctuation of profit.
- MAKING OF BUDGET
If accounts are audited then owners can easily know ihe true and fair view about their business activities and i hey can make the budget for next year.
- SETTLEMENT OF DISPUTESS.
If any dispute is arised among directors, partners or shareholders that can be solved by auditor. Auditor is a neutral person, so his decision is acceptable’for all parties.
ADVANTAGES TO GENERAL PUBLIC AND TO OTHERS
- PUBLIC’S SATISFACTION
If accounts arc audited then general public easily satisfy about the business operation.
- SETTLEMENT OF INSURANCE CLAIMS
If accounts arc audited then insurance claims are easily settled because insurance companies can easily know the actual loss through audited accounts.
- NO LENDER’S LOSS
There may be no loss to lenders because banks and other financial institutions get the audited accounts before granting loan and with the help of audited accounts they < an check the trust worthiness of customers.
- BETTER PAY Tax
Audited accounts provide the true and fair view of profit. So employees can demand higher pay.
- INVESTOR’S SATISFACTION
fhe investors can easily judge the position ol company and thus make the decision to invest in one* company and not in others.
- PURCHASE PRICE
Audited accounts provide information about net worth of any business, fhe people interested in purchasing ihe business can determine the reasonable purchase price.
24. TRAINING FACILITY
Many audit firms are working in Pakistan where i ommerce graduates get training and become human capital for industry.
25.EMPLOYMENT OPPORTUNITIES
As organization and businesses are expanding; the need of audit is increasing. So this field is providing more and more job opportunities to the thousands of people.
