Advantages of Auditing
1. Unbiased professional opinion
2. Acts as a moral check on employees
3. Highlighting of weakness in the internal control system
4. Enables timely tax assessments and quick disposal of tax returns.
5. Financial assistance made easier.
6. Solutions to trade disputes and labour disputes
7. Enables sanctioning of license by Govt.
8. Enables early settlement of Insurance claims
B. From the point of view of partnership Firms
1. Mutual settlement of Accounts among the partners
2. Protects the interest of minors and non-resident partners
3. Determination of goodwill at the time of admission, retirement and death.
4. Determination of purchase consideration at the time of Amalgamation,
Limitation of Audit
1) Excessive dependence in ICS which suffers from inherent weakness
2) Application of test check makes it less reliable
3) It only enables formation of overall opinion about state of health of entity and does not give assurance about the future viability of entity or the effectiveness of management by owners.
4) Audit evidence is more persuasive in nature rather than conclusive in nature