Interim Audit
Interim audits are performed in between yearly audits to determine interim profitability, allowing the corporation to declare an interim dividend. It entails a thorough study of transactions as well as a review of records and accounts up to the date of the interim audit. It's a type of audit that takes place in the middle of two balance sheet audits.
Advantages of Interim Audit
1. Interim Dividend
An interim audit is performed before an interim dividend is declared. The shareholders are pleased with the company's performance.
2. Deduction of Errors and Frauds
Due to interim audit, frauds and errors can be deducted early. Errors and frauds can be detected early on, reducing future losses.
3. Check on Employees
If the client's employees are aware that their accounts are verified for the interim period at any time during the year, they are less likely to conduct fraud.
4. Final Audits
If the interim audit is successfully challenged, the final audit can be done quickly and easily.
5. Implementation of Suggestions
In the event of an interim audit, the auditor's recommendations can be executed promptly.
6. Satisfactory Work
The client's staff may work satisfactorily with sufficient attention while following the auditor's advise.
7. Convenient
Interim audits are particularly convenient for management because the audit personnel is invited when business activity is low.
8. Dividends in Interim
The accounts for the proposed interim dividend can be easily prepared by management. The interim audit is quite helpful in determining whether or not to declare this dividend.
9. Moral Check
During the interim audit, the auditor checks all of the work done by any of the company's employees, providing a moral check.
10. New Partner
Interim audits verify the correct status of assets and liabilities in a corporation when a new partner joins.
11. Death Case
In the event that one of the partners dies, an interim audit can be very useful in determining the assets and liabilities.
12. Case of Retiring
If a partner wishes to quit or retire from the company, an interim audit can quickly determine the correct asset and liability status.
13. Price Fixing
Management sets the prices for goods and services, and the cost is computed by adding the profit. The selling price is set, and an interim audit is recommended for this reason.
14. Promotes Investment
Investors place a greater emphasis on the company's performance as a result of the interim audit. He buys and sells stocks while keeping the audit report in mind.
Disadvantages of Interim Audit
1. Disturbance
The client's office work is disrupted by the interim audit's regular accounting activity. This is a drawback of the audit.
2. Work Burden
When the interim audit is completed, the audit staff will have to prepare the audit notes as well. As a result, the job load grows in this way.
3. Falsification of Figures
A dishonest official may falsify figures in accounts that have already been audited by an auditor. As a result, there is a risk of fraud in such audits. This is a drawback.
4. More Costly
Because this form of audit is not required by law, it just adds to a company's expenses.
5. It Isn't Useful For Third Parties
This audit isn't useful for third parties because it's sole purpose is to improve the accounting system's efficiency and effectiveness.