Types of Inherent Limitations of Audit

Types of Inherent Limitations of Audit

The audit cannot give you an hundred percent assurance that financial statements are correct and there is no mistake in financial statement. The reason is that audit has many inherent limitation.
The important types of inherent limitation of audit are


Sample Based Audit:- The audit is conducted on the bases of sample . Though systematic procedures are adopted to minimize the sample risk, however, the sampling cannot replace the population in any case. There is fair chance that result based on sample are not representing the population behavior.

Time Bound Job :- The audit is a time bound job .The auditor has to complete the work withing regulatory deadline. The delay in audit report is not an option for the auditor in many situation. The auditor cannot delay the audit report on bases of amount of work to be performed by the auditor. Therefore auditor has to plan the audit in such a way that more critical areas are covered. Therefore some area are less focused .

Auditor is not master :- The auditor have the basic knowledge of auditing and accounting and normal business operation. however, some business area are very complex in nature and therefore difficult to understand. The auditor may not be able to fully understand those process and therefore there may be some shortcoming in designing the appropriate audit procedures


Frauds are planned :- The frauds are more difficult to detect because the frauds are normally well planned . The fraudulent person make sure that fraud are not detected by the ordinary audit procedures . The fraudulent person have detailed knowledge of the operations or process and award of loop whole in the process . The depth study and knowledge of loop hole enables the fraudulent person to hide the fraud from the eyes of auditor.


Limited power of auditor :- The auditor have limited power and moreover the auditor has to maintain a professional decorum while conducting the audit. The auditor in no way considered to be an investigation agency has unlimited power to inquire the matter.

Complex Accounting Framework:-