What Are The Limitations Of An Audit?

What are the advantages of continuous audit?

Advantages of Continuous AuditImmediate Detection of Errors and Frauds.

In-Depth Checking.

Proper Planning of Audit Work.

Quick Preparation of Interim Accounts.

Quick Finalization of Accounts.

Valuable Suggestions.

Up-to-date Accounts.

Keeps the Audit Staff Busy.More items….

Who is liable for statutory audit?

The Act states that if the turnover of any enterprise is more than 1 crore, and in case of professionals if the value of services is more than Rs. 50 lacs then they have to get their books of accounts audited by a Chartered Accountant.

Where is continuous audit applicable?

Business Where the Continuous Audit is Applicable Where it is desired to present the accounts just after the close of the financial year, as in case of banks. Where the volume of transaction is very large. Where the statement of accounts arerequired to be presented to the management after every month or quarter.

What are the limitations faced by the auditors while conducting an audit?

Limitation of auditing: Auditors may not be able to perform the correct risk assessment. … However, if management overrides the control, auditors may not be able to detect the fraud risks or errors. Materiality based is what auditor uses to perform its review and sampling.

What are the limitations of internal control in auditing?

Limitations of internal controlsCollusion. Two or more people who are intended by a system of control to keep watch over each other could instead collude to circumvent the system.Human error. … Management override. … Missing segregation of duties.

What are the disadvantages of audit Programme?

Disadvantages of Audit ProgrammeRigidity: There is no set standard audit program that can be applied in the case of every entity. … Reduces the Initiative of Efficient Staff: – A program reduces the initiatives of efficient and competent staff.More items…

What are the main limitations of an external financial statement audit?

Some of the important limitations of external audit are as follows: Use of estimation and judgement by the management of the entity in numerous values reported in the financial statements e.g. depreciation, provision for doubtful debt etc. This is one of major limitations of financial accounting.

What are the 3 types of audits?

What Is an Audit?There are three main types of audits: external audits, internal audits, and Internal Revenue Service (IRS) audits.External audits are commonly performed by Certified Public Accounting (CPA) firms and result in an auditor’s opinion which is included in the audit report.More items…•

What are the disadvantages of continuous audit?

Disadvantages of Continuous AuditAlteration of Figures. In case of continuous audit, the auditor checks the books of accounts in several visits. … Dislocation of Client’s Work. … Continuous Audit is Expensive. … Losing the Continuity of Work. … Unhealthy Relationship. … Monotony.

What are the advantages of audit of financial statements?

The process of auditing offers the opportunity to review your financial statements and highlights any problem areas, which in turn gives you a chance to correct those issues. From the perspective of shareholders or potential investors, an independent audit lends credibility to your business or organization.

What are the limitations of the audit report?

Time constraint is the first limitation of an audit report. Auditing of financial statements takes time and auditors are not having enough time to perform their testing. In order to run an audit firm, the person representing the firm should hold CPA qualification.

What is an audit scope limitation?

A scope limitation is a restriction on the applicability of an auditor’s report that may arise from the inability to obtain sufficient appropriate evidence about a component in the financial statements. … Some scope limitations arise for reasons that are beyond the control of the client, such as fire and flood.

Why is statutory audit required?

A statutory audit is intended to determine if an organisation delivers an honest and accurate representation of its financial position by evaluating information, such as bank balances, financial transactions, and accounting records.

Who is liable for audit?

Who is mandatorily subject to tax audit? A taxpayer is required to have a tax audit carried out if the sales, turnover or gross receipts of business exceed Rs 1 crore in the financial year. However, a taxpayer may be required to get their accounts audited in certain other circumstances.

What are the merits and demerits of continuous audit?

Meaning, Advantages And Disadvantages Of Continuous AuditEasy to quick discovery of errors. … Knowledge of technical details. … Quick presentation of accounts. … Keeps the client’s staff alert. … Moral check on the client’s staff. … Alteration of figures. … Disturbance of client’s work. … Expensive.More items…