Advantages And Disadvantage of Audit

Question 1

Meaning of Audit

Answer 1

An Audit is a systematic and independent examination of financial statements, records, transactions, operations, or processes to determine their accuracy, completeness, and compliance with established standards, laws, and regulations.

Question 2

Advantages of Audits

Answer 2

1. Compliance with Laws & Regulations
2. Risk Mitigation (Detect Errors & Fraud)
3. Enhances Trust & Credibility
4. Decision-Making Support
5. Improves Internal Controls
6. Taps Capital Access
7. Sustains Organizational Value

Question 3

Disadvantages of Audits(AUDITBUG)

Answer 3

1. Always Costly (and time-consuming)
2. Uncertain Effectiveness (not 100% foolproof)
3. Delimited Scope (limited coverage)
4. Infighting Potential (conflicts of interest)
5. Too Much Trust (over-reliance on audits)
6. Business Disruption (operational interruptions)
   7.Unwarranted Confidence (false sense of security)
7. Gaps Remain (hidden risks undetected)

Question 4

Qualities of Auditor

Answer 4

1. Professional Competence
2. Integrity
3. Independence and Objectivity
4. Attention to Detail
5. Analytical Skills
6. Communication Skills
7. Time Management
8. Professional Skepticism