Question

“Accounting is a necessity to business but auditing is a luxury” Comment on the statement.

Answer 1

In the case of Small Scale and Mid-Size business, accounting is a necessity to business but auditing is a luxury.

Why Auditing is luxury?

Generally, written records are maintained in every businesses to keep track on transactions. Though, the method of accounting has modernized by computers, the process is still the same.

Keeping a track on transactions is a better way to lead a profitable business. However, auditing is a process of tracking the accounts for its consistency or reliability.

For a large business, where people invest in, auditing is a necessary process. But, in small and mid-size, maintaining a department for auditing will eat some money from profit. It's a waste of time, energy and man power. Though auditing can be done occasionally.

Answer 2

The comment on the given scenario is described below.

Explanation:

• Throughout the context of Small Range as well as Mid-Size companies, compliance seems to be a requirement to the company while auditing is a privilege. Commonly, written documents are available in that each enterprise to maintain count with transactions. While the accounting system has been revamped by devices, the mechanism would still be the same.
• Auditing would be a required method for a big company whereby customers respect in it. Nevertheless, in both the small and the mid-size, running an audit function can consume some income cash. It is indeed a waste of money and time, electricity, as well as a person's power. Even though the audit committee could be accomplished now and then.

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