1.
Continuous audit:
The audit,
which continuous throughout the financial year with regular or irregular
intervals is called continuous audit.
Advantages:
a.
Early location of errors:
In
this type of audit the books are checked soon after the entries are made. So
errors are located at early stage.
b.
Check on frauds:
Continuous
checking is very good in controlling the frauds because books are examined
after certain regular or irregular intervals.
c.
Quick rectification:
In continuous
audit the auditor easily located errors and it corrected early stage.
d.
up to date accounts:
Accounts
of business are kept up to date by the staff because they know that auditor may
visit and check the accounts at any time.
e.
Specific attention:
Before
the ending of accounts an auditor has a sufficient time to a pay proper
attention to the checking of accounts and delegation of frauds and errors.
f.
Guidance to clients:
The
auditor touch with the business details, so he also indicates about the
mistakes and gives valuable suggestions to the client to keep the accounts in
proper manner.
g.
Useful for interim dividend:
Continuous
audit is also very useful in preparing the interim dividend without any delay.
At any time directors of the company are willing to pay the interim dividend to
the shareholders they can do so.
h.
Chance of overlooking reduces:
Auditor
has a close contact with the details of the accounts and he has also sufficient
time to check the records. So the chance of overlooking is reduced in this type
of audit.
i.
Quick presentation of accounts:
Continuous
audit is very useful because accounts are maintained regularly. So as the
financial year ends final audited accounts are presented before the
shareholders.
Disadvantages:
a.
Alternation of figures:
Already
checked figures of accounts may be altered by the dishonest staff and frauds
may be committed.
b.
Inconvenience:
A regular checking and frequent visits of an auditor may disturb the
work of clients and is staff.
c.
Expensive:
Continuous
audit is more costly as compared to other kinds of audit such as final and
interim audit. Because the auditor has to devote more time to the audit.
d.
Mechanical work:
The
work of audit becomes too mechanical because it remains continue throughout the
year.
e.
Queries problem:
If the
auditors two visits interval is long then so many queries remain outstanding.
2.
Interim audit:
Interim
audit is the audit which is conducted between the center of financial year for
the purpose of finding the interim dividend. It may be monthly, after three
months, or half yearly. When any partner or owner or director or a businessman
wants to know the reliable result during the financial year, then such type of
audit may be applied.
Advantages:
a.
Publication of interim figures:
In
some cases the publication of interim figures is necessary. So in such cases
interim audit is very helpful.
b.
Easy/quick detection of errors:
By
conducting the interim audit errors and frauds can be easily located in time.
c.
Check on staff:
When
the staff of the client knows that at any time during the year accounts are
checked for the interim period then they will not commit any fraud.
d.
Completion of final audit:
If
interim audit is conducted then final audit can be completed very soon and
easily.
e.
Suggestions implementation:
In
case of interim audit auditors suggestions can be quickly implemented.
f.
Satisfactory work:
Staff of
the client may work with proper attention satisfactory along with the advice of
the auditor.
Disadvantage:
a.
Disturbance:
The
disadvantage of this audit is that it disturbs the office work of the client.
b.
Burden of work increases:
Audit
staff will have also to prepare the audit notes when they will finish the
interim audit. So the burden of work rises in this way.
c.
Additional work:
The
demerit of interim audit is that there is additional work load on audit staff.
It is not a part of final audit. So this audit work is treated as additional
workload.
d. Increases
business expenses:
The
demerit of interim audit is that it results in increased business expenses. Such
audit not compulsory. It is optional for management and so audit fee is an
extra expense for business.
e. Figures
alternation:
The
limitation of interim audit is that the accounting staff can alter figure after
the completion of audit. it create confusion in the minds of audit staff at the
time of final audit.
3.
Final audit:
An audit
which is started at the closure of the books of accounts at the financial year
when financial statements are finalized and it is carried out unit completion
case of Joint Stock Company it is compulsory by law.
Advantages:
a.
Alteration chances limited:
After
the final audit it becomes it is easy for anyone to change the figures of
accounts for his benefit.
b.
Checking of complete record:
In
case of final audit the whole record is supplied to the auditor for checking.
So all the facts about the accounting year are before the auditor.
c.
Advantages for the shareholders:
Final
account is very helpful for the shareholders to know the real position of the
company. Due to final accounts they feel more satisfaction. Because they know
about the financial position of the company during the year.
d.
Advantage for owner:
Sometimes
the business is so large that even one owner does not know the real position
about the business. So he doesn't give full time to every field in the company because
the owner only performs one task on single time. So the final audit provides
him satisfaction about the business position.
e.
Suitable:
Final
audit is very suitable for the auditor and client staff. It servers both the
parties from continuous disturbance.
f.
Saving of time:
The
auditor visits the client’s office once a year and goes on checking until the audit
is completed. In this way time of both parties is saved.
g.
Legal demand:
For Joint
Stock Company audit is necessary. So final audit has an advantage that it
fulfills the requirement of law.
h.
Improves the efficiency:
All the financial year client staff
remains vigilant and efficient due to the fear of final audit.
i.
Submission of report:
Submission of
report is very important because the fairness of accounts and correctness of
accounts the final report is very important for the good will of the company.
Disadvantages:
a.
Audit Report:
The demerit
of final audit is that report is not submitted in time. It may be submitted one
or two months late. The decision is to be made on the basis of audited
accounts.
b.
Delay in report:
When
the work of audit will not be completed in time audit report cannot be shown to
the share holders. So it creates many difficulties for the company’s business
and goodwill.
c.
Complete checking not possible:
It is
very difficult for the auditor to check each and every entry made in the books
of accounts. Sometime He only lightly checks to save the time. So many mistakes
remain unchecked.
d.
May misrepresent:
There
may be a chance that audit report may not represent the correctness of accounts
because each and every transaction is not checked.
e.
No moral influence:
The
auditor comes once in a year so he has no moral effect on the client staff to sustain
the books correctly.
f.
Low moral check:
The drawback
of final audit is that it has less moral pressure on employees of business
concern. The audit staff comes after one year. The employees free to commit
errors and frauds for twelve month.
