Question

Distinguish between continuous audit and periodic audit

Answer 1

Answer:

Continuous Audit:

1. The coverage of the period is determined conveniently by both the client and the auditor.

2. The books of account and statements are examined continuously throughout the year.

3. The annual report and accounts can be published quickly.

4. Sufficient time is available for thorough and detailed examination of records.

5. It is an effective means to detect and prevent errors and fraud.  

6. It is suitable for large business houses.

7. Frequent visits of the auditor may cause inconvenience to the client and may develop unfriendly relations with the auditees.

8. It helps an assessment of the current financial conditions of the business at short period intervals.

Periodical Audit:

1. The coverage of the period is usually one com­plete accounting/financial year.  

2. The books of account and statements are ex­amined at the close of the financial year.  

3. The annual report and accounts are difficult to be published quickly.  

4. Thorough and detailed examination of records is not possible due to time constraints at year-end.

5. It is not an effective means in these directions due to time constraints.

6. It is suitable for small business houses.

7. Few visits of the auditor at the year-end are convenient to both the client and the auditor and a friendly relationship exists.

8. It affords an assessment of the financial condi­tions of the business on an annual basis only.

Hope this helps u : )

Answer 2

Difference between continuous audit and periodic audit

Explanation:

Continuous audit- It is a process of auditing the books of accounts on regular basis and hence the auditor visits the firm on regular basis. due to regular audit the staff of the client become more regular in their work and their efficiency increases. every transaction gets verified on a regular basis.

Periodic audit- As the name itself suggests such audit are conducted on periodic basis, generally annual basis. audit are generally conducted after closure of books of accounts. this method is less expensive then regular audit.

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Difference between continuous audit and periodic audit

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