Distinguish between Continuous and Periodical Audit.
Continuous audit is an audit, which is conducted continuously throughout the year at regular or irregular intervals during the financial year. Periodical audit is an audit, which commences after closing of accounts and preparation of final accounts and is carried out continuously till the conclusion of audit.
- Nature: Book-keeping work and audit work is done simultaneously and after the transactions have been recorded in the books, these are checked together.
- Submission of audit report: Audit report can be submitted quickly after the completion of the final account.
- Detection of errors and frauds: Errors and frauds can be detected quickly and thus corrective action can be taken.
- Suitability: It is suitable for big organization where transactions are too many.
- Nature: Audit worlds taken up only after all book-keeping and accounting work relating to the financial year have been completed.
- Submission of audit report: Audit work takes a long lime to be completed after the preparation of final accounts and so the submission of the audit reports also get delayed.
- Detection of errors and frauds: As detailed examination of accounts is not possible in periodic audit, errors and frauds may remain undetected.
- Suitability: It is suitable for small and medium sized organizations.