Final audits are also known as "Balance sheet audits" or "Periodic audits." When the books of accounts are closed at the end of the year, the final audit begins. From the perspective of an auditor, it is the most satisfactory type of audit.
The final audit occurs only after the trading season has ended, when all transactions for the entire year have been fully recorded and balanced, and the Trading and Profit & Loss Account, as well as the Balance Sheet, have been completed. The auditor continues to work on his audit until it is completed.
The auditor obtains the books of accounts, records, vouchers, bills, and any relevant information for the accounting period under consideration.
In an annual audit, the auditor only sees his client once a year, and the audit process is started and finished in one continuous session.
This form of audit is extremely convenient and beneficial for small businesses. Continuous audit is more effective for large companies because the labour needed is extensive, and final accounts cannot be prepared at the end of the fiscal year.
Characteristics of Final Audit or Annual or Periodical Audit
The essentials, qualities or characteristics of the final audit are listed below.
- An auditor only makes one visit per session.
- This form of audit can be carried out on both large and small companies.
- It is completed at the conclusion of the accounting period.
- The auditor can perform test checking during this audit, and an auditor report is required.
- It is carried out in order to provide information to shareholders.
- The audit is done in a timely manner.