This article deals with what’s continuous audit, the situation requiring continuous audit and drawback of performing continuous audit: Continuous Audit:
- Is one in which the auditors are engaged throughout the year or at a frequent intervals in the checking of the accounts of the clients.
Situations where continuous audits are preferred:
- Management able to exercise stricter control over the accounts
- The frequent presence/attendance by the audit staff acts as a deterrent for the employees to commit fraud
- Accounting staff of the client is motivated to keep the books of accounts up to date
- Due to frequent contacts with the clients, the auditor will be more familiar with the client’s affairs and have better understanding of the client’s business operation to enable more efficient and effective auditing
Drawbacks of Continuous Audit:
- Due to the frequency of the audits, it can be a costly affair and put additional burden on the company & staff.
- Lot of time is required in this type of audit. The auditor’s staff have to spend more time to make the audit exercise successful
- Due to the different time phases of doing the audit, the audit staff may fail to keep track of things which they had not checked on their previous audit visit
- The books of accounts may be tempered with after the audit.