Question

You are an intern at a Big 4 accounting firm and have just finished your internship training. You feel a little overwhelmed with all of the information from the training session, and you are wondering if you are qualified to perform work that is of high-enough quality to meet the firm’s and the profession’s standards. What if you miss something or forget to do something? What if it takes you too long to complete your tasks? What if you spend time on something that is trivial and miss something that is important? You decide to review your notes from the training session and from your undergraduate audit course. Discuss the limitations of an audit.

Answer 1

Limitations of audit are:

• Sometimes the judgement to choose the auditing standard and procedures becimes inevitable wherein a wrong judgement may be taken that would result in overlooking any point or statement that would have been crucial ro be viewed and results in misstatements.
• The sample ng techniques which are used to run various tests, select a portion of population that represents the whole population. But it may happen at times, that the selected samples are not the actual representative of the entire population.
• Risk is a factor that can be reduced but not eliminated in audits. And if one is not very experienced,then he or she may be prone to risk which would futher create misstatements and thus wrong financial reporting.
• Time is also a limitation. As these auditors are given a specified timing for an audit to be completed and presented to the clients. Before this tomez the audit just be completed. One auditor who is experienced enough can cope with this limitation properly.
• Independence threaten is also a big limitation. Many times, auditors are not made to work independently and are forced to do a particular task. This would lead to misconducts in the working because of which the auditors could not perform well.

These are the limitations of an audit.