What are the Advantages of Audit? ( Tanvir Academy )
Advantages of an audit
Audit has given many advantages to different classes of society.some of these are listed below:
ADVANTAGES TO BUSINESS
1 . Business Acquisition :
In case of mergers or both company the accounts are of extreme value to the concerned parties to have correct estimate of the worth of the business.
2 . Claims for Compensations :
In the presence or audited accounts various claims like fire insurance can easily be settled down.
3 . Check on Directors :
Audit acts as a check upon the directors and a precaution against fraud on the part of the management.
4 . Correct information About Business :
Due ti the fear of audit, the work of accounting always remains up to date and correct information given to the members in time .
5 . Detection and Prevention of Error :
The error whether committed innocently or deliberately are discovered by audit and its presence prevents their occurrence in future. Thus hey can be rectified and prevented.
6 . Detection and Prevention of Frauds :
Just like errors, the frauds are discovered by audit and its presence provides a moral check on the staff and thus their future possibility is minimized if not eliminated.
ADVANTAGES TO PUBLIC
1 . Satisfaction about business operation:
The public in general , in the presence of audit , receives reliable statements of accounts indicating the true financial picture of the concern and they can fetch results from it and feel satisfaction about it.
2 . Safety from Exploitation :
The interest of the public and shareholders is safeguarded in the presence of audit otherwise the management may have exploited them. Actually this is the main reason for which the audit has been made compulsory in the public limited companies .
3 . Facility for Prospective investor :
The prospective investor can easily judge the position of the company and thus make the decision to invest in one company and not in the others, similarly the outsiders like bank and tax authorities etc. Will rely upon the business accounts if these are audited, otherwise not.
ADVANTAGES TO GOVERNMENT
1 . Checking Excise Duty Evasion :
The audit accounts will.help in checking the evasion of excise duty etc.
2 . Checking Economic Progress :
The Government van check the economic progress of various companies by going through thw audited accounts and thus can know the overall economic position of a particular kind of business in the country and can take proper action for that .
3 . Easy Assessment and Recovery of Taxes :
In the presence of Audited accounts the tax authorities can easily assess and recover the income tax.
4 . Foreign Aid :
Foreign agencies prefer to those businesses whose accounts are audited .
5 . Leading to Economic Progress :
The Joint Stock companies have played a major role in boosting up the economics progress of a country in the modern age . The successful operation of the companies would have not been possible without the presence of audit, thus audit leads to Economic Progress.