Is Auditing Of An Entity is Good or Bad
- February 13, 2019
- By, CA.Vishranth.B.L
Some of the basic reasons why it is necessary for the Companies to get their accounts audited;
- Auditors are like the care-takers of the Company. They evaluate the potential losses and systemic weaknesses of the accounting system and provide a direction to the organization on how to improve in the future. In the case of external audits, auditors may present their independent viewpoint, that can help investors make wise decisions.
- Auditing helps in detecting fraudulent activities and poor accounting processes. Therefore, helps to minimize the risks of errors that may otherwise take place in the books of accounts.
- Auditing offers assurances to the owners, investors, and shareholders of the Company about the fairness of their books of accounts. A regular audit is necessary to reflect the credibility of the business for all stakeholders – clients, shareholders, creditors and employees. Healthy functioning of the company paves the way for new and prospective business opportunities.
- Conducting an audit helps to take corrective measures by the company to take necessary steps that can be beneficial for the long-term. Important decisions like the status quo of the current business, profit margin expectation and profit maximization can be tackled. Moreover, the auditor can advise on tax planning for the company on a long-term basis and reduction of unscrupulous activities.
Internal Audit, External Audit, Financial Audit, Forensic Audit, Tax Audit, and Information System Audit are different categories of audit that can be conducted depending upon the size and need of the organization.
To sum up auditing helps in;
- Helps add real value to their businesses
- Helps their business to bloom
- Helps businesses promote corporate governance
- Helps in managing complex compliance requirements
- Ensures better decision making
- Standards on Auditing issued by Institute of Chartered Accountants of India