Advantages of an Audit

  1. Provides assurance and credibility to the accounts for the benefit of potential investors.
  2. Used for detection of errors and frauds which could lead to the failure of an organization.
  3. Audited accounts are used by the organization to raise finance from both public and other sources as they boost an organization’s credit rating.
  4. An audit is used to boost the morale of accounting staff who will keep the accounts to date and act as source of management information upon which decisions can be made.
  5. It is used by partnerships as a basis of sharing profits and therefore minimizing disputes between partners.
  6. They are used by income tax authorities to ascertain the tax liability and avoid any possible dispute between the company and income tax department.
  7. The audited accounts are used to admit partners in a partnership business in that these accounts will indicate not only the net assets but also the capital the new partner has to contribute.
  8.  Audited accounts are useful in case of a sale of business, a merger, an acquisition or takeover of a business as it indicates the fair value of assets to be acquired.
  9. They are used by insurance companies to settle insurance claims arising out of losses that
    may be insured in which case the client cannot have conflicting situations which the insurers would object.
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