Continuous Audit
Where it is desired that the auditor check the accounts more regularly, the shareholders may appoint the auditor to perform continuous audit, which is defined as an audit in which the auditor examines the accounting records at numerous intervals during the accounting year.
Interim Audit
An interim audit is used to obtain certified interim outcomes of corporate operations and financial positions as of a specific date. Such a necessity may emerge in the case of a joint stock corporation when the directors desire to declare an interim dividend. When a partner is admitted or retires, the partnership may require an interim audit.
Difference between Continuous Audit and Interim Audit
| Basis | Continuous Audit | Interim Audit |
|---|---|---|
| Cost | Continuous auditing is expensive because auditors spend more time and perform more extensive checks on the books of accounts, hence auditors charge fees correspondingly. | Because of the proportion of auditors' time invested, the intermediate audit is more expensive than a final audit but less expensive than a continuous audit. |
| Suitability | Continuous audit is appropriate for large-scale businesses, multinational corporations, and businesses with a high volume of transactions. | Interim audits are appropriate for small and medium-sized businesses as well as large corporations. |
| Sampling | The auditors do not employ sampling in ongoing audits. They look at the entire population as well as the bulk of transactions. | Auditors are usually able to choose a large sampling size and check the objects on a regular basis. |
| Time | Continuous auditing is normally done once a year, and auditors visit the office on a frequent basis. | The financial year is broken into two or three interim financial periods, with audit work beginning shortly after the interim period ends. |
| Objective | The goal of continuous auditing is to detect and correct errors and frauds quickly. | Interim audits look at the books of accounts and other records up to a certain point in time. |
| Internal Control System | During a continuous audit, the entity's internal control system is thoroughly examined, and helpful recommendations for its improvement are provided. | In the event of an intermediate audit, a strong system of internal control is required, although it is not as critical as it is in the case of a final audit. |
| Check on Accounting Staff | Continuous audit puts the most psychological strain on the accounting staff because of the auditor's frequent and unexpected visits. | The books of accounts are examined by the auditor once or twice during the accounting year, as well as at the end of the accounting year. As a result, the value of interim audit as a check on accounting staff is lower than continuous audit, but higher than final audit. |
| Seasonal Industries | For seasonal sectors, continuous auditing isn't a good idea. | Seasonal businesses may not be a good fit for this type of audit. |
| Reporting | The auditor is obligated to issue his report shortly after the conclusion of the accounting period because the work is completed after the accounting operations. | The report comes out a little before the final audit. |
| Regularity | It is a yearly event that is a regular aspect of company. | It is not a common occurrence in business and is only done on occasion. |