Importance of Auditing
‘The auditing is crucial for proper functioning of organisation’. This statement is enough to present the importance of Auditing. Following points presents the importance of Auditing in detail:
1. Financial Accuracy: Auditing is conducted with an objective to ensure the accuracy and reliability of accounts, financial statements and non-financial disclosure. Auditing detect that the information and data presented are true and fair.
2. Detecting Fraudulent Act: Auditing is a systematic process that detect the errors in the data presentations and also identity the frauds by carefully examining the books, transactions with vouchers and internal control.
3. Standards and Rules Compliance: Auditing ensures that organisation complies with relevant Laws, Rules, Regulations and Accounting Standards to avoid any penalties and legal actions against organisation.
4. Stakeholder’s Securities: Auditing enhance transparency in the data presentation and hence, present reliable and accurate view of the organisation’s financial health to stakeholders like investors, shareholders, creditors, and the public. This safeguards their investment interest and also boosts up their confidence on the organisation.
5. Ease the Availibility of Funds: Organisation that complies with all the auditing standards and regulations finds it easy to attract investors. Auditing and Approved Audit Report builds up confidence among investors and creditors and helps organisation to attract more funds.
6. Improves Internal Control: Auditing helps identifying error and weakness in internal control management and also recommend effective improvements and corrections to avoid risk and losses.
7. Promotes Operational Efficiency: Auditing highlights the weakness of the organisation along with the solution to strengthen the efficiency. Auditor’s reports help management to make prominent decisions and strategic planning that improves overall efficiency of an organisation.
8. Legal Protection: Auditing represents compliance to the relevant laws and standards that protects organisation and it’s management from legal disputes. Moreover, audited financial statements serves as an evidence in case of any legal disputes.