What does mean by Interim Audit?
An audit conducted in between two annual audits is called Interim Audit. Whenever, a company wants to declare interim dividend it becomes necessary to get interim audit of the accounts done up to the date at which the company wants to declare the interim dividend. Interim audit involves a complete audit of accounts for a part of the year i.e. from the date of the last Balance Sheet to the date of the interim accounting period. Interim audit can be conducted in the following circumstances:
- When a company intends to declare Interim Dividend.
- In partnership, if the partner retires or dies at the date within the financial year and for settlement of his account.
- In case of transfer of an undertaking, sale of a business occurring within the financial year.
- Where an investigation becomes necessary covering an interim period.
Advantages of Interim Audit.
- With interim audit it becomes easy to complete the annual audit soon.
- Errors and fraud can more quickly be detected.
- Since the interim audit is performed during the course of the year it helps in exercising moral check on the staff of the client.
- This audit is helpful when the publication of interim figures becomes necessary.
- Interim audit is helpful for the purpose of declaration of interim dividend.
Disadvantages of Interim Audit.
- There is an inherent danger of altering figures in accounts already checked.
- Interim audit involves additional work.
- The audit staff becomes engaged in more work and strain as they have to prepare notes after the end of the interim audit.