1. Frauds by management:
Auditing fails to check planned frauds. The management can play ticks to control the accounts in order to hide their inefficiencies. The frauds committed in such conditions are not disclosed. The audited accounts could not show the true and fair view.
2. Wrong certificate:
Auditing is based on many certificates taken from management and other persons. The certificates may not provide the true information. Auditing may fail to provide the desired results. When certificates give incorrect information, the financial statements cannot show position.
3. Misleading clarification:
Auditing fails to disclose correct information. The previous entries may not be clear to audit staff. The management may not provide correct clarification. The auditor is enclose to present his report even of the clarification is not true. The auditing neglect to help many persons who trust on audit report.
4. No true picture:
The auditing does not present cent percent true picture. The auditor is concerned with figures shown in the books of accounts. Auditing fails to disclose true picture when figures have been manipulated. The purpose of audit fails when it is unable to depict real scene of business affairs.
5. No correct view:
Auditing fails to present correct view. There are restrictions of accounting so figures are not facts. These figures are based on opinion. Moreover the auditor has to make judgement on various matters. The personal judgement may be wrong in certain cases. Thus auditing is not able to expose correct view.
6. No suggestion:
The audit is conducted to show fair view of financial statements. Auditing is not related with management policies. The auditor cannot guide or direct management for good use of capital. The auditor test what has been done? He is unable to suggest what should have been done.
7. Absence of honesty:
The auditing work depends upon various professional and personal qualities of an auditor. The auditor must evidence which is true. Management and other parties should not influence him. The absence of honesty means failure of audit purpose.
8. Bias of auditor:
The auditing fails to present fair view due to bias of an auditor. It is the quality or character of an auditor that he should be not dependent to others. The views of auditor are included in audit work when such quality is missing. The biased auditing fails to help many people.
9. High cost:
The audit work is competed with cost. The cost of audit should not exceed the cost of errors and frauds. The small-scale business enterprises consider it as a burden on their performance. Auditing fails to serve millions of business entities.
10. Past action:
Auditing is nothing more than checking of past activities. It is not related with present or future. The audit fee raises the cost of business concern. Such cost does not help to improve market standing of enterprise. It fails to suggest enhance in quality and reduction in cost.
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