Question

Discuss the advantages and disadvantages from a client’s perspective of engaging its auditor to perform non-audit services in addition to the audit. (NB. Do not discuss this from the auditor’s perspective, discuss this from the client’s perspective).

Answer 1

Advantages

1.Audit already knows the business environment, internal control and business functions. Auditor helps company to complete the work within time because if we appoint another person then he/she first understand business environment and it's it's functions then it may be time consuming as compared to others.

2 Appointment of auditor is cost effective for company. Due to comprehensive knowledge of company he agreed at less fees as compared to other persons.

3 Efficiency of business is increased due to knowledgable auditor helps the company in its weakness area and from where it reduces it's wastage/ time.

4 There is quick recognition of errors and it can be removed or right in correct time so that there is no error in financial statements and other data.

5 All legal application and formalities are performed correctly and timely and it helps the company to timely filling of its legal dues and return.

Disadvantages

1. It reduces the independence of auditor and he will not be able to give true and fair view and for this company have to pay a very high cost for this. For example auditor helps the management for hiding frauds.

2. Audit report issued by auditor is biased because hecant audit his work.

3 conflict of interest arising.

4 fraud or errors may not be detected which ruin the growth of company