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Sunday, 25 September 2011

Discuss the main advantages of verification or Discuss the role of verification to the business

ADVANTAGES OF VERIFICATION :-
Following are the important advantages of verification :

1. Check On Fraud :-
The chances of fraud reduces due to the verification. It saves the business from embezzlement. Due to this management is not allowed to misuse the assets foe their personal benefit.It is the also a moral pressure on employee.

2. Performance Evaluation :-
Verification is very useful in evaluation the performance of management. Auditor can give his remarks about the performance of management through verification and valuation. Keeping in view the remarks of the auditor management can improve its work.

3. Proper Use Of Assets :-
The assets are properly used for the business because due to the fear of verification,officer never misuse the assets. They know that verification will disclose the misuse.

4. Safety For Creditors :-
Verification is very useful for the creditors. The audited accounts provide satisfaction to the creditors and they supply the goods and services to the business on credit. In other words guidance and safety creditors.

5. Protection To The Lender :-
Proper verification removes the risk of loss. The lender can rely on the audit report of the auditor determines the ownership, value and possession.

6. Proper Valuation Of Assets :-
Verification is very useful for the assessment of assets value. There are two types of assets, fixed and floating. Both the assets are verified in different ways. The correct valuation is made by the auditor.

7. Proper Recording :-
Verification is very useful for the proper maintenance of record. Management knows that all the accounting information's will be verified by the auditor, so they keep the record properly.

8. Benefit For Public :-
The people can understand the exact financial position of business by the verification of the auditor. The auditor discloses the assets and liabilities in the general public which provides guidance to them.

9. Guidance For Management :-
Verification is very useful for the management. It provides guidance to the management for the improvement of the business. It also indicates the financial requirements of business. The timely arrangement of finance protects the business.

10. Safety Of Assets :-
The auditor can inspect the rite of assets verify that these are existing or not. Due to verification these can not be destroyed. Auditor verifies that these are in safe hands or not.

11. Verification Of Profit :-
It is very helpful determining the true profit on business resources. The reasonable profit attracts the investors.

12. Liabilities Verification :-
The auditor verification of liabilities is very useful for the business owners. They must know the real value of their liabilities. If these are small then it is a good indicator for the business.

13. Business Position :-
Verification of assets and liabilities disclose the real position of the business. If assets value is greater than the liabilities then business will be stable otherwise not.

14. True Picture :-
After verification auditor gives the true picture of the business condition through financial statement. It is not possible for the auditor to give his opinion about the assets without verification.

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