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Saturday, February 4, 2012

Merits And Demerits Of Periodical Audit

Merits Of Periodical Audit

Periodical audit provides following advantages:

1. Less Expensive

Periodical audit is conducted once in a year. So, an auditor devotes less time and labor. So, the remuneration paid to him will be less.

2. No Disturbance In The Work Of Client

An auditor continuously checks the books of accounts until and unless the work of audit is over. So, the work of accountant of the client will not be disturbed for a long period of time.

3. Less Chance To Alter Figure

An auditor conducts audit regularly; so there is less chance to alter figure which minimizes the chances of frauds.

Demerits Of Periodical Audit

Followings are the disadvantages of periodical audit:

1. Unsuitable

Big organization has large number of transactions. So, audit of such organization requires more time. Thus periodical audit is unsuitable for big organizations.

2. Possibility Of Leaving Errors

Detail checking of books of accounts is not possible under this method. So, an applies test check. Thus there are chances of leaving errors and frauds.

3. Difficult To Detect Planned Frauds

Generally, the frauds are committed in the direction of top level management. So, such frauds are committed in planned way. Periodical audit does not check in detail. So, such planned frauds cannot be detected.

4. Impossible To Prepare Final Account In Time

Periodical audit begins after the completion of accounting year. It takes long time to complete the work of audit.