Advantages of auditing for

Joint stock corporations &

LLCs.
1

Access to Capital Market:

Public limited companies must satisfy audit requirements under the Securities
and Exchange Commission in order to register securities and have them traded
in the securities markets. Without audits, companies would be denied access to
these capital markets.
Lower Cost of Capital:
Because of the reduced information risk associated with audited financial
statements, creditors may offer lower interest rates, and investors may be willing
to accept a lower rate of return on their investment.
Deterrent to Inefficiency and Fraud:
When employees know that an independent audit is to be made, they take care
to make fewer errors in performing the accounting function and are less likely to
misappropriate company assets.
4 Control and Operational Improvements:
The independent auditor can often make suggestions to improve controls and
achieve greater operating efficiencies within the clients organization.

General Advantages of Auditing

1. Audit Helps To Detect And Prevent Errors And Frauds
An auditor's main duty is to detect errors and frauds, preventing such errors
and frauds and taking care to avoid such frauds. Thus, even though all
organizations do not have compulsion to audit, they make audit of all the
books of accounts.
2. Audit Helps To Maintain Account Regularly
An auditor raises questions if accounts are not maintained properly. So,
audit gives moral pressure on maintaining accounts regularly.
3. Audit Helps To Get Compensation
If there is any loss in the property of business, insurance company provides
compensation on the basis of audited statement of valuation made my the
auditor. So, it helps to get compensation.
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4. Audit Helps To Obtain Loan

Specially financial institutions provide loan on the basis of audited
statements. A business organization may obtain loan considering the
audited statement of last five years. So, an organization should make audit
compulsory to obtain loan.
5. Audit Facilitates The Sale Of Business
Valuation of assets is made by the auditor. On the basis of valuation of
assets and liabilities, businessman can sell his business. It helps to
determine the price of business.
6. Audit Helps To Assess Tax
Tax authorities assess taxes on the basis of profit calculated by the auditor.
In the same way sales tax authority calculates sales tax on the basis of
sales shown in the audited statement.
7. Audit Facilitates To Compare
An auditor instructs an accountant in the same way which helps to compare
books of accounts of current year with the accounting of the previous year.
So, comparing the accounts of current with previous years helps to detect
errors and frauds.
8. Audit Helps To Adjust Account Of Deceased Partner
Valuation of all the assets and liabilities of the business is made by the
auditor while auditing books of account. Such valuation helps to clear the
amount of deceased partner.
9. Audit Helps To Present A Proof
If any case is filed against the auditor regarding negligence, auditor can
present audited report as a proof to settle such case. So, it helps to present
proof to settle such cases.
10. Audit Provides Information About Profit Or Loss
A businessman wants to know profit or loss of his business after a certain
period of time. So, the owner of the business can get information about
profit or loss after auditing the books of accounts.
11. Audit Helps To Prepare Future Plan
All the audited statements remain true and correct. Such true and correct

account helps to prepare for the future plans.

12. Audit Helps To Increase Goodwill
Auditing shows the profitability and financial position of an organization
which creates faith of public over the business. Thus, auditing helps to
increase goodwill of an organization.
13. Audit Helps To Amalgamate The Company
Sometimes, same nature of organization may be amalgamated. Auditing
makes valuation of assets and liabilities which helps to amalgamate the
company. Purchaser of the company can accept such business
organization on the basis of valuation made by the auditor.