DISADVANTAGES OF AUDIT
1. FRAUDS BY MANAGEMENT OR PLANNED:
Some time the management commits a planned fraud. And for the auditor it is not possible to find out that fraud. In this case the audited account cannot describe the true and fair view of the business.
2. WRONG CERTIFICATES:
Auditing is based on many certificates taken from management and other persons. These certificates may not disclose true information. Auditing may to fail to provide desired results. When certificates provide wrong information, the financial statement cannot show correct position.
3. MISLEADING CLARIFICATION:
Auditing fails to disclose correct information. The background of entries may not be clear to the audit staff. The management may not provide correct clarification is not true. The auditing fails to help many persons who rely on audit report.
4. NO TRUE PICTURE:
The auditing does not cent percent true picture. The auditor is concerned with the facts figures shown in the books of accounts. When figures have been manipulated, the auditing fails to disclose true picture. The purpose of audit fails when it is unable to depict real scene of business affairs.
5. NO CORRECT VIEW:
The auditing fails to present correct view. There are limitations of accounting. So accounting figures are not facts. There are based on opinion. Moreover the auditor has to make judgment on various matters. The personal judgment may be wrong in certain cases. Thus auditing is unable to disclose correct view.
6. NO SUGGESTION:
The audit is conducted to show the fair view of financial statements. Auditing is not concerned with management policies. The auditor cannot guide the management for better use of capital. The auditor examines what has been done. He is unable to suggest how it should have been done.
7. ABSENCE OF HONESTY:
The auditing work depends upon various professional and personal qualities of an auditor. Honesty and independence are highly essential traits. The auditor must certify which is true. Management or other parties cannot influence him. The absence of honesty and independence means failure of audit purpose.
The auditing fails to present fair view due to bias of an auditor. It is quality of an auditor. It is the quality of an auditor that he should be independent when such trait is missing the opinion of the auditor is included in the audit work. The biased auditing fails to help many people.
9. HIGH COST:
The audit work is completed with high cost. The cost of audit should not exceed the cost of error and fraud. The small-scale business enterprise considers it as burden on their performance. Audit fails to save million of business entities.
10. PAST ACTIONS:
Auditing is nothing more than checking of past activities. It has no concern with present or future. The audit fee increases the cost of business concern. Such cost does not help to improve the market standing of enterprise. It fails to suggest improvement in qualities and reduction in cost.
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