Distinguish between continuous audit and balance sheet audit.
Difference between Continuous Audit and Balance Sheet Audit are given below:
Nature: Here the auditor or his staff is, constantly engaged in checking the accounts during the whole period therefore, throughout the financial year.
Thoroughness: It involves detailed and exhaustive checking of accounts while balance sheet audit involves limited review in which all the balance sheet items are verified.
Suitability: It is most suited to big organisations and entities where internal controls are not effect effective.
Verification of assets: Cash and inventory records are verified by the auditor at every visit.
Popularity: However it used widely in India, England and other European countries.
Balance Sheet Audit
Nature: Here the audit takes place only at the end of financial year.
Thoroughness: Tests are applied only on those items of profit and loss account which are directly related to the assets and on income/expenditure attributable to assets/liabilities.
Suitability: On the other hand, balance sheet audit is most suitable for organisations which have an efficient system of internal control.
Verification of assets: Full verification of assets and liabilities is done at the end of the financial year.
Popularity: It is more popular in America.