MERIT AND DEMERITS
OF AUDITING
Merit
1. Auditing serves as a deterrent to fraudulent staff within an enterprise,
2. During amalgamation or acquisition, .audited financial statement serve
as a basis of determining the purchase consideration of about be acquired or
amalgamated business.
3. Audited financial statement can be used to negotiate bank loan.
4. A financial statement examined independently by an auditor will be
readily accepted by the tax authority for the purpose of taxation.
5. Audited financial statements serve as a basis for measuring performance
by the world to be (potential) investors.
6. Audited account is one of requirements of the Nigerian Stock Exchange
for a business that is willing to be listed in the Nigeria Stock Market.
Demerits
1. Auditing fee is seen as additional expenses to a business enterprise.
2. Audited financial, statements, if qualified, could lead to liquidation
of enterprise even when there is a - solution aside
3. Auditing with the enterprise will lead to management/shareholders
conflict.
4. Auditing could be time consuming as a time being used on productive
matters by members of the company.
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