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Interim audit is an audit which is conducted in between two annual audits to find out interim profits to enable the company to declare an interim dividend. It involves complete and detailed examination of transactions and review of records and accounts upto the date of interim audit. It is an audit which is conducted in between two balance sheet audits. It is conducted for a specific period with an object of declaring interim dividend or to determine value of shares at a certain date.
1. It is an audit which is conducted in between two annual audits i.e., audit for a period of six months or half yearly audit.
2. It involves complete and detailed examination of transactions and accounts upto the date of interim audit.
3. It is conducted for a specific period with an object of declaring interim dividend or to determine value of shares at a certain date.
4. The objective of conducting interim audit is to know the reliability and accuracy of financial statements of a business for a part of the year.
1. Quick Detection of Errors and Frauds: Errors and frauds can be detected quickly and easily.
2. Helps in making Improvement: It helps the management to assess the financial position of business for a part of the year. Any deficiency noticed during first part of the year can be rectified during later part of the accounting year.
3. Helps in Publication of Interim Results: Interim audit helps in finalisation of interim results for the purpose of declaring interim dividend.
4. Early Completion of Annual Audit: It helps the auditor to complete the annual audit within a short period and submit the report as early as possible.
5. Review Internal Control System: It enables the external auditor to review the internal control system in detail as to their effectiveness and continuity.
6. Moral Check on Clients Staff: It helps in exercising moral check on the staff of the client.
· Increase in Work load of Audit Staff: Interim audit involves finalisation of accounting statements for some specific period of time which increases the work load of audit staff.
· Possibility of Alteration of Accounts: An inherent danger of interim audit is alteration of figures that are already checked and finalised.
· Erosion of Capital: Wrong assessment of profit may lead to erosion of capital through interim dividend.
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