Mẹo về What is the audit started and continued before the end of the financial year called? 2022
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Nội dung chính Show - What is the audit started and continues before the end of the financial year called?When audit is conducted the end of financial year it is known as?Which audit is continuous throughout the year?What is continuous audit and final audit?
Question. : Define and differentiate between Continuous, Final and Interim Audit.
Answer: Continuous Audit:It is desired that the auditor should examine the accounts more frequently, the shareholders may appoint the auditor to conduct continuous audit, and where the auditor examines the accounting records frequent intervals throughout the accounting year, such audit is called as continuous audit.
According to Sir Ronald Irish, “The continuous audit is one in which the auditor attend appropriate intervals during the year, usually monthly or quarterly, and so examines the transactions progressively.”
FINAL AUDIT:Where the auditor examines the accounts of the whole accounting year in one continuous session such audit is termed as final audit. Final audit is generally started after the end of accounting year, however, in order to complete the audit soon after the year end, a final audit may be started before the end of accounting year.
According to Walter W. Bigg, “A final audit is an audit which is not commenced before the end of financial period, and is then carried on until completed.”
INTERIM AUDIT:The purpose of interim audit is to know authenticated interim results of business operations and the financial positions up to a particular date. In case of joint stock company, such need mya arise when the directors want to declare interim dividend. A partnership may need an interim audit the time of admission or retirement of a partner.
According to L. R. Howard, “When an audit is conducted up to a particular date within the accounting period, it is called an interim audit.”
Following is the difference between Continuous, Final and Interim Audit:
Difference
ContinuousAudit
Final Audit
Interim audit
1. Cost of Audit
Continuous audit is costly as the auditors spend greater time and make detailed checking of book of accounts so auditor charges their fees accordingly.
Final Audit is least expensive in terms of cost as the auditor makes test checking and whole work is performed once only.
The interim audit is costly than a final audit but economical than the continuous audit due to the proportion of auditors time spent.
2. Suitability
Continuous audit is suitable for
· Large scale business
· Multi-National Companies
· Companies having long volume of transactions
Final audit is suitable for
· Small scale business
· Medium scale business
· Large scale business
Interim audit is suitable for
· Medium scale business
· Large scale business
3. Sampling
In continuous audit sampling is not used by the auditors. They examine the whole population and majority of transaction.
Auditors make full use of sampling techniques to reduce their workload and to reach sound conclusions without examining each and every transaction.
The auditors are usually able to select large sampling size and they can examine the items on a recurring base.
4. Time of Conduct
Continuous audit is usually conducted on yearly basis and auditors attend office regularly.
Final audit is started the end of financial period or when the books of accounts have been closed.
Financial year is divided into two or three interim financial periods and work of audit is started soon after the end of interim period.
5. Objective
The objective of continuous audit id easy and early rectification of errors and frauds.
The objective of final audit is to determine and show the true and fair view of financial statement.
Interim audit examines the books of accounts and other record up to a particular period.
6. Internal Control System
In a continuous audit, the internal control system of entity is analyzed in great detail and useful recommendations are made for its improvements.
In case of final audit, there must be an effective internal control system in an organization.
In case of interim audit, there must be an effective system of internal control in an organization but not as essential as in case of final audit.
7. Check on Accounting Staff
On account frequent and surprise visits of the auditor, continuous audit imposes greatest amount of psychological pressure on the accounting staff.
Final audit exerts least amount of psychological pressure on accounting staff as the auditor examines books of accounts only after the end of accounting year.
Auditor examines the books of accounts either once or twice during the accounting year or also after the end of accounting year therefore, value of interim audit as a check on accounting staff is less than continuous audit nut it is more than final audit.
8. Seasonal Industries
Continuous audit is not a useful type of audit for seasonal industries.
It is most suitable type of audit for seasonal industries.
It may not be a suitable type of audit for seasonal industries.
9. Alteration in Figures
Accounting staff knows that the entries that have been checked by the auditor will not be checked again during his next visit. Therefore, a dishonest clerk may alter figures in the books of accounts that have already been checked by the auditor his previous visit, and the frauds may be perpetrated.
As the audit is completed in one continuous session, and once the records are delivered to the auditor they are not accessible by the accounting staff, therefore, there is no chance of such manipulation and alteration in figures.
The entries checked during interim audit hare not rechecked the time of final audit, and after interim audit accounting records kept under the custody of accounting staff, therefore, there are chances that the Accounting staff may make alteration in the records.
10. Reporting
As the work is c complete after the accounting works so the auditor is liable to issue his report soon after the end of accounting period.
It usually takes long time for the auditor to complete the audit, resolve his queries and issue the report.
The report is issued relatively earlier than the final audit.
11. Extent of Checking
A continuous audit, audit work continues throughout the year, therefore, the auditor has ample time and he can make detailed checking of the transactions.
The extent of checking is moderate and depends on eth auditor’s’ assessment of risk, materiality and sampling considerations.
The extent of check is lower than continuous audit and more than a final audit.
12. Regular
It is a regular feature of business as it is conducted every year.
It is a regular feature of business as it is conducted every year.
It is a not a regular feature of business as it is conducted occasionally.
13. Detection and Prevention of Errors
Continuous audit is more effective in detection and prevention of errors. As the errors are corrected as they are detected.
Chances of detection of errors and frauds are lesser in final audit due to smaller sample size.
In interim audit, errors and frauds can be detected and prevented more effectively as compared to final audit.
14. Third Party’s Interest
Third parties have some interest in continuous audit as it serves their purpose.
Third parties have some interest in final audit as it serves their purpose.
Third parties have no interest in interim audit as it does not serve their purpose.
What is the audit started and continues before the end of the financial year called?
A continuous audit is an internal process that examines accounting practices, risk controls, compliance, information-technology systems, and business procedures on an ongoing basis. Continuous audits are usually technology-driven and designed to automate error checking and data verification in real time.When audit is conducted the end of financial year it is known as?
Audit done the year end is known as final audit.Which audit is continuous throughout the year?
Periodical audit is conducted after the preparation of final account. It is suitable for Large organization. As this audit is conducted throughout the whole year, it is possible to prepare final accounts i.e. Profit and Loss account and Balance Sheet just the end of the financial year.What is continuous audit and final audit?
Final audit : Final audit is done the end of the year. Continuous audit : Continuous audit remains continue for whole year. 2. Scope :- Final audit : In case of final audit detailed checking is not made as compared to continuous audit. Tải thêm tài liệu liên quan đến nội dung bài viết What is the audit started and continued before the end of the financial year called?