Monday, 19 September 2011

What is the role of audit in the economic development of the country

The importance of auditing in the economic development of the country ca be judged by the following facts :

1. Importance For Tax Department :-
Audit is very useful for the tax department. The tax department can accept the accounts audited by qualified auditor. It is also very useful for the settlement of tax cases.

2. Protection Of Shareholders :-
The auditing of business protects the right of the shareholders away from the business. In other words it is a accountability of the managers.

3. Effective Control On Business :-
In order to control business effectively the auditor can prepare information for various management levels. In decision making also auditor plays effective role.

4. Importance For Investors :-
Auditor prepares the feasibility report and tells that project is viable or not. He recommends the investor only profitable projects.

5. Business Liquidation :-
In case of liquidation audit of the business accounts is very useful. For the sale of assets and payment of liabilities audit report plays a final role.

6. Preparation of Budget :-
In the field of budgeting audit plays very important role. The audited accounts provide the base for the next year planning.

7. Solution Of Financial Problems :-
There are large number of financial matters which management faces in business. Through auditing these problems solution can be provided by the auditor, because auditor knows the accounting principles.

8. Detection Of Fraud :-
Fraud cannot be detected without auditing. The auditor can detect fraud relating to cash or stock of goods by examining the business record.

9. Co-ordination Between The Departments :-
There are various departments in each business. The managers of all the departments can setup a procedure of proper working. There is a need to connect the work of all departments. Such connection can be made with the help and advice of the auditor.

10. Importance For Secretarial Work :-
The above work requires legal formalities. An auditor is also expert of laws affecting the business. The secretary of the company can get help from the auditor to perform his duties.

11. Importance To Design System :-
To design the accounting system and procedure for business, the auditor can design a suitable accounting system to met the business needs.

12. Importance For Courts :-
While making various decisions, courts can obtain the audit reports about various cases. To know the facts auditor presents the record of audited accounts. The courts make the decision on the basis of audit reports.

13. Settlement Of Claims :-
In case of fire or accident the auditor can examine the document. Auditor calculates the exact amount of loss and claim amount can be easily decided.

14. Quality Standard :-
The auditors provide the auditing standard. These standard provide the guideline to the auditing firms for maintaining the quality of audit work.

15. Preparation Of Annual Return :-
Auditor prepares the annual return and submits to the govt. He fills the form and completes other required legal formalities.

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