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Why independent audit may beneficial to direction electric

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Direction Electric Sdn Bhd is a family owned business with over 70 employees. The company is required to have annual audit under the provisions of the Companies Act, 2016. The owner of Direction Electric, Elijah, has bookkeeping knowledge and has personally prepared the company's financial statements. Elijah considers his company a small business and does not understand why their accounts should be examined by an external auditor. Elijah discussed the matter with Louis, a partner of an audit firm, and asked Louis to explain why an audit is considered important.

Problem 1: Assume you are Louis. List and explain to Elijah reasons why an independent audit may be beneficial to Direction Electric Sdn Bhd. For every reason, kindly include relevant examples to support your reason. Your answer should also include possible negative consequences of not being audited by an independent person

Reference no: EM132702894

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