What does mean by continuous audit?

A continuous audit is one where the auditor or his staff is constantly engaged in checking the accounts during the whole period or where the auditor or his staff attends at regular or irregular intervals during the period.

Features of Continuous Audit.

  • It is carried throughout the year.
  • It is conducted by the audit staff at regular or irregular intervals.
  • The accounts are subjected to scrutiny as and when prepared.
  • Full verification of assets and liabilities is left until the Balance Sheet is
    prepared. However, some assets like cash balances and inventory may be verified at every visit by the auditor.
  • Trial balance, profit and loss account and balance sheet are audited at the end of the year.

Suitability of Continuous Audit:

It is most suited in the following types of business enterprises:

  • Where final accounts are to be presented immediately after the close of the financial year, for example, in case of a bank.
  • Where internal controls and internal check system are not very effective.
  • Where sales volume/number of transactions is very large.
  • Where management is interested in getting statement of accounts audited at regular intervals.

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