What is Auditing?
Auditing refers to the examination and assessment of accounting records and other related statements by an independent examination auditor. This financial certainty would assist the stakeholders to know clearly about the assertion of financial statements that they are using.
Auditing will be carried out in both the public and corporate sectors. It acknowledges all the possible parts of evidence that formulates and evaluates the opinion on the basis of communication that is carried out.
There are many steps in the audit process and many procedures are carried out by auditors in order to assess the assertions.
Advantages of audit procedures:
Auditing is one of the best practices which ensures a public companies’ growth and development. Auditing is known to be the place of strict substantive testing. It is expected to adhere to certain rules and procedures.
It list out the maximum of every costs so that business people can achieve prior intimation about the audit. Below are some of the merits or advantages of an audit procedure or benefits of audit procedures.
- The main advantage of audit procedures is that they could be applied at every single stage of the audit to explore the absolute amounts which need to be reflected in the financial statements, as well as into the relationships existing between those amounts.
- These audit procedures are a very good test for the general reasonableness of any amount. They could be used on a universal basis, and they could also be broken down into their singular and individual elements.
- Audit procedures assist the auditor to carry out trustworthy comparisons on a day to day basis, taking into consideration of financial reports from other years, and giving the auditors a better and proper understanding of individual financial accounts area and the business as a whole.
- This contained reduced information which is associated with the company’s financial statements which have lower returns and interest rates on their investments. Most times this procedure provides facilitated claims and settlements related to a partner. By carrying out the auditing procedures, errors and frauds can be quickly rectified and taken care of.
- Audit procedures that have been conducted have to be within those claimed accounts department. In the case of a loss or losses, the property which will maintain a fund can be transferred. In a scenario where the public has separated ownership plan then these claims have to be settled from those insurance claims, using a good audit procedure.
Disadvantages of audit procedure:
- Since audit procedures normally have to be carried out on incomplete accounts or draft prior to when the final financial statements or records had been prepared, significant and relevant adjustments, which are normally made at a later stage, are usually not taken into consideration.
- Without a proper and good knowledge of the business or organization, the auditor might be tempted and may accept the results of an audit procedures which show no or little unusual variations, which might not have been the case if there have been relevant changes in the organization or company of which the auditor does not have any knowledge about and which the management may attempt to conceal from these auditors.