BENEFITS OF AUDIT :
(i) Satisfaction of Owner: It is because of audit that the owner will be satisfied about the business operations and working of its various departments.
(ii) Detection and Prevention of Errors and Frauds: The errors whether committed innocently or deliberately are discovered by the process of audit and its presence prevents their occurrence in the future. No one will try to commit an error or fraud as the accounts are subject to audit and hence they will have a fear of being detected. Just like errors, frauds are discovered by audit and its presence minimizes future possibility if not eliminated totally.
(iii) Verification of Books: Another advantage of audit is the verification of the books of accounts, this helps in maintaining the records up to date at all times.
(iv) Independent Opinion: Auditing is very useful in obtaining the independent opinion of the auditor about business condition. If the accounts are audited by an independent auditor, the report of the auditor will be true and fair in all respects and it will be of extreme importance for the management of the company.
(v) Moral Check: The process of audit will establish a check on the minds of the staff working in the business and they will not be able to commit any irregularity, as they will have a fear and will also be aware that the accounts will be examined in the near future and that action would be taken against them if any irregularity is discovered. Thus the audit prevents the happening of any irregularity before it starts and the staff hence becomes more active and responsible. The fear of their getting caught act as a moral check on the staff of the company.
(vi) Protection of the Rights and Interests of Shareholders: Audit helps in protecting the interests of shareholders in case of joint stock company. Audit gives assurance to the shareholders that the accounts of the company are being maintained properly and their interest will not suffer under any circumstances.
(vii) Reliance by Outsiders: Outsiders like creditors, debenture holders and banks etc. will rely on the books of accounts and financial statements of the business if they are audited by an independent authority (external auditor).
(viii) Ensures Compliance with Legal Requirements: Audited statements are necessary to fulfill certain legal requirements e.g. listing requirements of stock exchange etc.
(ix) Reinforce and Strengthen Internal Control: Since auditing exercise involves the review of internal control system, an auditor will identify the gaps in internal control system and can suggest the necessary changes in the internal control system.
(x) Loan Facility: Money can be borrowed easily on the basis of audited balance sheet from financial institutions. If accounts are audited the true picture will be visible to banks and it will be easy for them to issue loans as early as possible.