Auditing - Limitations

Following are a few limitations of auditing −

• Rely on Experts − An Auditor has to rely on experts like engineers, valuers and lawyers for estimation and valuation of fixed assets and estimation of contingent liabilities.

• Efficiency of Management − An Auditor does not comment on the efficiency of management working in client organization; no comments on future performance of an organization can be made through audited financial statements.

• Checking of All Transactions − It is not possible for an Auditor to check all business transactions especially in big organizations where the number of transactions is very high. An Auditor has to rely on sampling and test checking.

• Additional Financial burden − An organization has to bear additional financial burden on account of any fees and other such expenses for conducting an audit.

• Not Easy to Detect Some Frauds − It is not easy for an Auditor to detect deeply laid frauds like forgery, misstatements and non-recording of transactions.