Following are the kinds of audit :1. Continuous Audit.
2. Interim Audit.
3. Final Audit.
CONTINUOUS AUDIT or RUNNING AUDIT :-
The audit which continues throughout the financial year with regular or irregular intervals is called continuous audit.
INTERIM AUDIT :-
Such type of audit takes place between the two annual audits to find out interim dividend is called interim audit.
FINAL AUDIT or COMPLETE AUDIT or BALANCE SHEET AUDIT :-
Definition :- According to W.W.Bigg "Final audit is not commenced until after the end of the financial period and is then carried on until completed."
An audit which is started at the end of financial year when financial statements are finalized and it is carried out until completion. In case of joint stock company it is compulsory by law. It is also known as "Balance Sheet Audit."
ADVANTAGES OF FINAL AUDIT :-
Following are the important advantages of final audit :
1. Alteration Chances Limited :-
After the final audit it becomes very difficult for any one to change the figures of accounts for his benefit.
2. Checking Of Complete Record :-
In case of final audit, whole the record is supplied to the auditor for checking. So all the facts about the financial year's are before the auditor.
3. Advantages For The Shareholders :-
Final account is very useful for the shareholders to know the real position of the company. Due to final accounts they feel more satisfaction.
4. Advantage For The Owner :-
Sometimes the business is so large that even one owner don't know the real position about the business. So final audit throws light on the business position and provides him satisfaction.
5. Suitable :-
Final audit is very suitable for the auditor and client staff. It saves both the parties from continuous disturbance.
6. Saving Of Time :-
The auditor visits the clients office once a year and goes on checking until the audit is completed. In this way time of both the parties is saved.
7. Legal Demands :-
For the joint stock companies audit is compulsory. So final audit has an advantage that it fulfills the requirement of law.
8. Economical :-
As compared to the continuous audit it is less expensive. Because in case of final audit auditor has to spend less time.
9. Improves The Efficiency :-
All the financial year client staff remains vigilant and efficient due to the fear of final audit.
10. Importance Of Goodwill :-
About the fairness and correctness of accounts final report is very important for the goodwill of the company.
11. Seasonal Business :-
In such cases the managers are free in the off season. So in that period they can pay proper attention to the auditors. Final audit is the most suitable for such business.
12. Continuous Process :-
Final audit is continuous process without any break from start to end. It becomes very easy for the auditors and managers.
13. Effective :-
If in control system is strong then chances of fraud are low and final audit is sufficient to carry out at the end of the year.
14. Popular Audit :-
Final audit is very suitable for small and medium scale business. Its cost is very low. It is very popular type of audit.
DISADVANTAGES OF FINAL AUDIT :-
Following are the main disadvantages of final audit :
1. Shortage Of Time :-
The auditor has many clients and their financial year ends on the same date. So it becomes very difficult for the auditor to finish the work in time.
2. Delay In Report :-
When the work of audit will not be controlled in time. Audit report can not be presented to the shareholders. So it creates many problems for the company's business and goodwill.
3. Complete Checking Not Possible :-
It is very difficult for the auditor to check the each and every made in the books of account. He applies only test check to save the time. So many mistakes remain untouched.
4. May Misrepresent :-
There may be also a chance that audit report may not represent the correctness of accounts because each and every transaction is not checked.
5. No Moral Influence :-
The auditor visits once a year so he has no moral influence on the client stay to maintain the books correctly.
6. Record Of Past :-
Final audit relates the past data. If there were frauds and errors these have no concern with the present and future.
7. Time For Fraud :-
If staff is dishonest then it has enough time to plan fraud. Because staff knows that audit will be made at the end of the year.
1 comment:
The balance sheet in which assets are shown classifying them into current and fixed-and liabilities as short term and long term and owner’s equity separately is called classified balance sheet.
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