Friday, June 2, 2017

MERIT AND DEMERITS OF AUDITING

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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  4. Unlike traditional financial reports like the balance sheet and income statement, management accounts are specifically designed for internal use by business owners and managers. They provide detailed, timely, and actionable insights into the financial health and performance of different aspects of the business.

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