Identify and Explain Two of the Benefits of Having Audited

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Examlex · Accepted Answer

The Answer is Any two of the following:
Access to capital markets: without audits companies are restricted in the access to capital markets. The ASX in Australia requires that listed companies have their financial statements audited.
A lower cost of capital: audited financial statements are considered less risky by creditors who may then be willing to accept a lower rate of return (interest rate) on their investment.
A deterrent to inefficiency and fraud: knowledge of audits can result in fewer errors by staff as they are more careful. They can also reduce the occurrence of employees misappropriating assets as the employee fraud is more likely to be identified than if there were no audit.
Control and operational improvements: based on observations made during an audit of the financial statements, the independent auditor can suggest how controls could be improved and how greater operating efficiencies within the entity's organisation may be achieved.

Identify and Explain Two of the Benefits of Having Audited

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