LIMITATIONS OF INTERNAL AUDIT
(i) Staff Shortage: The limitation of internal audit is staff shortage. There may be need of reasonable audit staff to examine the record. The shortage of staff is a hurdle to get benefit of internal audit.
(ii) Time Lag: The limitation of internal audit is that it starts when accounting ends. Thus there is a time lag between recording and checking of entries.
(iii) Error: The limitation of internal audit is that there may remain undetected errors in the books of accounts as it depends upon the expertise of internal audit staff to detect such errors. If audit staff is competent there is less chance of error being undetected. In case of poor audit staff there is no guarantee that audited accounts are free from errors.
(iv) Responsibility: The limitation of internal audit is that management may not feel their responsibility in completing the audit formalities. The audit staff may give suggestion for proper working of business. The toplevel management may not pay attention to suggestions. In this way the audit work cannot help the business.
(v) Duties: If the duties of audit staff are not properly divided then the purpose of internal audit may be defeated.