NAME- AAWEZ SHAIKH YUNUS

STD- TYBCBI
DIV- B
ROLL NO- 125
PROFESSOR- SHWETA SINGH
TOPIC- OTHER ADVANTAGES OF AUDITING
 INTRODUCTION

“Auditing is a systematic and independent examination of

data, statements, records, operations and performances
(financial or otherwise) of an enterprise for a stated
purpose. In any auditing situation, the Auditor perceives
and recognizes the propositions before him for
examination, collects evidence, evaluates the same and on
this basis, formulates his judgment which is communicated
through his audit report.” - The Institute of Chartered
Accountant of India
OTHER ADVANTAGES OF AUDITING

• Helps in Insurance claim –

While claiming insurance, the insurance company will first
conduct an audit to determine the extent of damage done, and
accordingly, they decide the value of the amount to be given
by them. Thus an audit can help a company to come to valid
insurance compensation. It can also help the insurance
company to understand if the company is quoting the correct
amount in damages.
• Government assistance-
Before providing assistance or issuing a license for a certain
trade, the Government may need audited and approved
financial statements. Audited accounts are considered more
reliable by the Government. For example, the tax audit report
filed with taxation authorities.
• Helps during Winding Up-
One of the main jobs of an auditor is to value all the assets
and liabilities of the company. As a correct valuation would
be present, it would be easier for the management of the
company to find the right buyer for the company in case the
company decides to wind up the company.
• Assessment of controls-
Audit, as an evaluation function, examines the existence and
functioning of various internal controls operating in an
entity. It then reports weaknesses or inadequacies therein.
Such a review of the internal control system is an important
element of auditing and it helps to strengthen the internal
controls if any weaknesses are found.
• Compliance with legal requirements-
Audited financial statements help to ensure that the
company has complied with applicable accounting
standards and disclosure requirements. Moreover,
compliance with legal requirements of MCA, SEBI, RBI, etc
• Helps to get declared as insolvency -
The global economic recession of the past few years has
caused many companies to face insolvency, and in times of
crisis the directors of such companies may turn to their
auditor for information and advice. Therefore, auditors
must be in a position to determine the level of financial
difficulty being faced by a client, explain and recommend
the various options available to management, and explain
the consequences of liquidation or administration.
• Loans –
Audited financial statements are acceptable by bank and
financial institutions and helpful in getting loans and credit
facilities.
• For the Creditors-
Creditors of an organization also rely on audited financial
statements and accordingly grant credit limit to business
entities.
 CONCLUSION
Auditing offers credibility because it allows you to run your
business without fear of being discovered for some kind of
fraud. Prevent fraud – Auditing is the best way to reduce
fraud and corruption. Financial audits are undertaken to
monitor a company's financial health.
THANK YOU