Limitations Of Internal Audit

1.       INCOMPETENT STAFF: The limitation of internal audit is that audit staff may be incompetent. The purpose of internal audit fails to he the management. There may be lack of experience and training on the part of internal audit staff.

2.       STAFF SHORTAGE: The limitation of internal audit is staff shortage. There may be need of reasonable audit staff to examine the record. The shortage of staff is hurdle to get the benefit of internal audit.

3.         TIME LAG: The limitation of internal audit starts when there is time lag between recording and checking entries. The accounting and internal audit must go side by side with minimum time lag.

4.         EXECUTIVE FUNCTION: The limitation of internal audit is that the
internal auditor may be linked with executive function. In this case he cannot examine the accounting books and other records. He cannot find out his own weaknesses. It will be wastage of time and money to conduct internal audit.

5.         ERRORS: The limitation of internal audit is that there may be errors in
books of accounts. It depends upon the expertise of internal audit staff. If audit staff is competent there is less chance of errors. In case of poor audit staff there is no guarantee that audited accounts are free of errors

6.         RESPONSIBILITY: The limitation of internal audit is that the management may not feel their responsibility in completing the audit formalities. The audit staff may give suggestions for proper working of business. The top-level management may not pay attention to suggestions. In this way the audit work cannot help the business.

7.         DUTIES: The limitation of internal audit is that there may not be proper
division of duties. In this case the internal auditor is unable to fix the responsibility for negligence of duties. The management must be aware about the division of duties. The audit work can point out the weakness of business employees, otherwise whole arrangement goes waste.

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