Advantages of Continuous Audit
Continuous auditing has numerous advantages. The following are the most significant advantages:
1. Immediate Error and Fraud Detection
The audit visits the clients after a short length of time in the Continuous Audit. As a result, he is in a position to thoroughly examine the facts. It makes it simple to check for errors and frauds. If the audit is performed after the fiscal year has concluded. It is difficult to locate faults or deceptions.
2. Keep an Eye on Frauds
The errors are found sooner in the Continuous Audit. As a result, it aids in the early detection and rectification of errors and frauds because it is located at a time when they may be corrected.
3. Adequate Time
The audit personnel has enough time with continuous audit. Important and unclear issues may necessitate additional time to resolve. There is plenty of time for such things.
4. Take Special Attention
Before the accounts are finalised, an auditor has enough time to thoroughly verify the accounts and uncover frauds and errors.
5. Advising the Client
Because the auditor is familiar with the business details, he may point out errors and offer helpful advice to the client on how to keep the finances in order.
6. Useful for Dividend Declarations
The dividend declaration is further aided by the continual audit. The audit accounts are ready for the dividend declaration since the accounts are checked throughout the year.
7. Accounts that are up to date
The staff keeps the business's accounts up to date since they know the auditor can come in and review the books at any time.
8. There's a Lower Chance of Overlooking
The auditor is in regular contact with the financial information and has ample time to review the documents. As a result, the odds of missing something are lower in this form of audit.
9. No Entries are Missing
Continuous auditing is also beneficial in maintaining the complete record. There are no blank spaces in the record.
10. Up-to-Date Information
The continuous audit is beneficial in maintaining an up-to-date record. Management requires this information in order to borrow capital, pay taxes, and deal with labour unions.
Disadvantages of Continuous Audit
Despite its many benefits, continuous audit has certain disadvantages, which are mentioned below.
1. Figures are changed
The auditor checks the books of accounts multiple times during a continuous audit. The figures could be tampered with, and the client's staff could tamper with the books of accounts after the auditor has verified them on prior days.
2. Workplace disruption for the client
The auditor's frequent visits may be inconvenient for the company's employees, and the office routine may be disrupted.
3. Expensive
Continuous auditing may not be appropriate for small businesses because it requires a significant amount of time, effort, and money.
4. Workplace Unpredictability
The audit task is not completed all at once in continuous auditing. As a result, the auditors may lose track of their job and fail to request clarification on questions raised during the prior visit.
In other words, questions and uncertainties that occur during one auditing session but are not resolved until the next auditing session may be disregarded. He might not be able to resume work where he left it during the prior audit session.
5. Unhealthy Relationship
An unhealthy relationship between the audit and the client's staff is likely to develop if audit staff visits frequently. As a result, the moral check on them may be reduced.
6. Monotony
The auditor's task becomes mechanical under continuous auditing, and the auditor's repeated visits may contribute to monotony in the workplace.