Disadvantages of Internal Audit

Disadvantages of Internal Audit

The following are the limitations or disadvantages of Internal Audit:

1. High Cost: The cost of establishing and operating an internal audit in an organization is very expensive.

2. Unsuitable for Small Organization: Internal audit due to involvement of high cost is not suitable for small organizations.

3. Unreliable Opinion: Internal auditor’s are employees of the organization and hence the report given by them may not be true and fair. Often, external auditor has reservations about the opinions expressed by the internal auditor.

4. Ineffectiveness: When the records of operations are not checked immediately after they are completed or when there is time lag between two audits, internal audit may become ineffective.

5. Lack of Expertise: Internal audit staff lacks the required skill and expertise as they are not professionally qualified chartered accountant.