Why Partial Audit is not done by a Limited Company? - QS Study
QS Study

In a partial audit, the work of the auditor as curtailed. The auditor is asked to check a few books, e.g. he may bask to check the payment side of the cash book. A partial audit is not permitted in case of limited companies because according to the Companies Act, the duties of an auditor of a company cannot be curtailed. In this audit, the auditor is not required to examine all the books of accounts. Only a part of the accounts or some transactions as desired by the clients may be scrutinized. Auditor has to state the area covered by the audit. Again in case of a very big proprietary firm, it may not be possible for the proprietor himself to disburse all payments and if he suspects misappropriation of cash, he may appoint an audit or to check only the cash book.

A partial audit has following objectives:

  1. To know whether the capital is fully mobilized or not.
  2. To clarify the doubts where the owner has suspected.
  3. To conduct a final audit in less time and in fewer expenses because a particular area of account is checked in detail.

Disadvantages of Partial Audit

(a) Restricted: The conduct of this type of audit is strictly restricted under the Companies act

(b) Not reflecting the true position: The audit report does not reflect the financial position of the business as a whole.

(c) Variability: It cannot be widely used.

(d) Specific purpose: This type of audit is conducted only for a particular purpose.

Finally, those are following reasons because of those partial audits is not done by a limited company.