Advantages And Disadvantages Of Partial Audit

What Is Partial Audit ? 

Partial audit refers to the examination of certain suspicious parts of accounting. It does not check the entire books of accounts. It is conducted to clear the doubt of the owner or management. Generally, auditor conducts this audit to ensure the accuracy of cash record, stock level, debtors etc. There are some benefits and limitations of partial audit which we are going to discuss in this post.

Benefits Or Advantages Of Partial Audit

The main advantages if partial audit can be pointed out as follows:

1. Consumes Less Time And Cost

In partial audit, auditor checks only suspicious areas of the books of accounts to clear the doubts of management. So, it can be performed in less time with less cost and effort.

2. Detection Of Errors 


Partial audit detects fraudulent activities and errors of selected area which helps the client to take appropriate measures to prevent such errors in the future.

3. Helpful For The Management


Auditor provides suggestion after conducting the audit of specific area of the books of account. It provides information regarding capital mobilization, inventory level, debtors, creditors etc. 

4. Helps In Final Audit


It makes easier to conduct final audit because some parts of the books of accounts are checked in partial audit. So, final audit can be performed with less cost in less time.

Drawbacks Or Disadvantages Of Partial Audit


The main disadvantages of partial audit can be pointed out as follows:


1. No Legal Evidence


It is conducted to examine specific area of accounting to clear the doubt of the management. It is not a legal document and cannot be presented as evidence.


2. No True Picture


Partial audit is performed for specific area only. It does not show the actual financial position of the firm.

3. For Internal Use Only


It is not statutory and conducted to help the management only. So, it is suitable for internal purpose only and not useful for external users such as investors, trading partners, tax authority etc. 

4. Waste Of Time And Cost

Final audit is mandatory and should be performed by all companies to show the true financial picture at the end of the accounting period. But partial audit is not statutory, so it is waste of time, cost and effort.
advantages disadvantages partial audit
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Pros And Cons Of Partial Audit In Short

Pros:

- It is a simple process and can be conducted by using less time and cost
- It helps the management to detect errors and loopholes 
- It provides information about the capital mobilization in the organization
- It saves time and effort to conduct final audit

Cons:

- It is not statutory, so it is waste of time and cost
- Its report cannot be presented as legal evidence
- It is for internal use only, therefore it is not useful for external users