Question

Which of following party is/are interested in financial audit?

• A. Trade creditors.
• B. Banks & financial institutions.
• C. Tax authorities.
• D. All of above.

Answer 1

Answer: (D)

All of above.

There are various stakeholders of the business which are interested in knowing the financial position and worthiness of the business. These stakeholders are Trade Creditors, lenders i.e. Bank & financial institutions, tax authorities, existing and prospective investors. Hence, all such stakeholders are also interested in financial audit of the organization.

• Trade Creditors are interested to know the short term financial position of the organization. Creditors are normally looking for the security of their money due from the organization.
  
• Banks & financial institutions are more interested to know the financial wealth and repayment capacity of the firm of their debts.
• Tax Authorities are interested to know about the tax compliance and also would like to ensure that the organization is paying the due tax liabilities.