Audit of Accounts of Partnership Firm
The Indian Partnership Act, 1932 does not require audit of a partnership firm. It is only optional and upto the interests of the partners. Considering the benefits of audit many firms get their accounts audited by a qualified auditor. The scope and conduct of audit and rights and duties of the auditors are determined on the basis of the agreement between the firm and auditor. While conducting audit of partnership firm the auditor must refer to the Deed of partnership.
The following are some of the benefits in auditing the accounts of a partnership firm:
1. Proper Maintenance of Accounts: When accounts are audited, it provides an assurance that the books of accounts are maintained properly and financial statements give a true and fair view of state of affairs of the business.
2. Detection of Errors and Frauds: An audited accounts helps in quick and easy detection of errors and frauds.
3. Easy Settlement of Accounts: Audited accounts ensure easy settlement of accounts and valuation of goodwill on admission retirement, or death of a partner. Audit of accounts is advisable to avoid any financial dispute among the partners.
4. Grant of Easy Loans and Advances: Firm can obtain easy loans and advances from various financial institutions based on audited accounts.
5. Taxation Purpose: The firm can use audited accounts for the purpose of taxation or for improvements in operations.