Benefits of Auditing
Auditing may provide different benefits to its companies in different perspective of view. Following are important benefits.
Auditing Provide True and Fair View
Auditing provides fair and true view of financial statements of business organization. It examines the authenticity of profit and loss account and balance sheet of business concern and identifies any discrepancies in it. This way the audited book of accounts exhibits correct picture of business conditions.
Auditing Detect Errors And Frauds
Auditor verifies all books of accounts maintained by business for detecting any errors and frauds. Errors are innocent mistake that occurs without any intention whereas frauds are deliberate mistakes. These both have adverse effects on organizational performance and need to be timely monitored. Process of auditing enables in overcoming these mistakes by timely detecting them and taking corrective actions accordingly.
Assist In Accounts Consistency
Audit has an efficient role in maintaining the regularity of accounts in every organization. An auditor raises questions in case if accounts are not maintained consistently by business. He may give unclear auditing opinion if he found any irregularities in book of accounts. Therefore, auditing puts pressure on maintaining a consistency in book of accounts.
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Auditing provide an independent viewpoint about company’s financial statements when performed by external auditors. He inspects all accounts honestly without any hidden agenda thereby giving a fair and correct view of business position. If he declares the authenticity of book of accounts as true, it has a lot of weightage with both company and investors.
Enable In Obtaining Loans
Auditing ease the overall process of obtaining loans by companies. Banks and financial institutions rely on audited book of accounts for determining the true financial position of business organization. Businesses easily get approval for the loans on the basis of their audited statements of last 5 years.
Check On Employees
Another important advantage provided by auditing is that it keeps a moral check on employees and other staffs working within the organization. It avoids any instance of dishonesty, irregularity and defraud on the part of employees. They all are under constant scrutiny as they are aware that all accounts will be evaluated. It eventually leads to staff being honest and responsible at all point of times.
Auditing plays an efficient role in improving the goodwill of the organization. It reveals real profitability and financial position of business to public that creates their faith over enterprise. All stakeholders are fully assured of all audited book of accounts which results in raising the overall goodwill of organization.
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