Continuous or Running or Detailed Auditing:
Continuous audit refers to an audit that continues throughout the financial year.
A continuous audit, also known as a detailed audit, is a type of audit that comprises a thorough inspection of books of account at regular intervals, such as once a month or three times a year. Throughout the financial year, the auditor visits clients at regular intervals to check each and every transaction. The profit and loss account, as well as the balance sheet, are audited at the end of the year.
A continuous audit is of little benefit to a small business because its finances may be audited at the end of the fiscal year with little delay.
Continuous audit is desirable if the volume of financial transactions is significant and/or the internal control system is determined to be inadequate in specific areas. In large branches, banks undertake continuous auditing, also known as concurrent auditing.
Continuous Auditing Characteristics or Features:
1. The auditor comes to the company on a regular basis.
2. It is carried out at a major corporation.
3. It is held throughout the year.
4. Checking is possible at any time.
5. It is a costly audit.
6. There is no requirement for an audit report.
7. It is employed to conceal the company's flaws.
8. The auditor may also pay a surprise visit.
9. The time can be set by the manager.
What steps should be made to ensure that continuous auditing is effective?
1. After the audit is done, management should ensure that the books are not altered. Any changes can only be made with the auditor's approval if they are essential.
2. During the audit, the auditor should utilise distinctive ticks and marks, and the meaning of each mark should be kept confidential.
3. Audit notes, queries, and remarks should be documented and kept on a date-by-date basis. This will allow for a smooth audit flow.