Auditing is a periodic examination of documents, accounts, and vouchers in the business world. All types of organizations such as social, corporate, industries make audits. Auditing helps to detect frauds. In short, auditing is an analysis of the current reports, system, and process of any business organization. It is classified into different categories such as construction audit, tax audit, investigative audit, financial audit, information system audit, compliance audit, and operational audit. Let’s take a closer look at the objectives and advantages of auditing respectively.
Objectives of an Audit
The main objective is to give a proper suggestion on financial statements and reports. For this, the auditor or tax consultant needs to analyze all kinds of financial statements for verifying the accounting position of any organization. The objectives of auditing are generally categorized into two different types. They are Primary objectives and Subsidiary objectives.
- Primary Objectives: The primary objective always helps to analyze the internal system and you can easily check the validity and authenticity of any kind of transaction. It also helps to determine the mathematical accuracy of accounting, balancing, casting, etc and inspect the basic difference between the revenue and capital type of all transactions.
- Subsidiary Objectives: Subsidiary or secondary objectives generally help to finish all primary objectives of auditing properly. With the help of secondary objectives, a tax advisor or an auditor can identify any kind of fraud and error.
Key Advantages of Auditing
Auditing is one of the best practices which always ensures the growth of any organization. There are so many advantages to auditing. They are:
- Detect Frauds and Errors: The main duty of an auditor is to identify frauds and errors and they also take special care to avoid such frauds.
- Helps to Manage Accounts: Managing and maintaining accounts in an organization is a necessary task. Auditing always helps to manage this task very easier.
- The Audit Assesses Tax: Another biggest advantage of auditing is that it helps to assess tax. Generally, tax authorities can calculate tax based on the audited statement.
- Amalgamating the People in the Organization: Auditing can help to amalgamate the people working in the organization. It helps to unite them and work together with their team members.
Auditing plays a vital role in every organization. It can always give the ultimate information about the profit and loss of the company. Thus, auditing increases the goodwill of the company.