An interim audit is defined as an audit carried out between two annual audits to determine interim earnings. It is being performed in order to allow the company to declare an interim dividend or for the purpose of assessing the value of the shares at a certain date. This audit includes a thorough review of transactions and a review of records and accounts up to the date of the interim audit. It is an audit that takes place between two audits of the balance sheet.
The auditors typically conduct the interim audit in some of their client’s financial statements for six to nine months. This actually serves as a great advantage to the auditor because at the final audit or by the end of the year, the auditors will have less work to do. They may not, however, need to do so for all audit activities, since this depends on the audit policy of the auditor.
On the other hand, an interim audit is similarly performed as response to the request of the client, requiring their interim financial statements to be reviewed every quarter.
Advantages of Interim Audit:
- Cost-effective. Compared to the continuous audit, interim audit is inexpensive
- Suitable for large businesses. Interim audit suits to large businesses.
- Quick completion of the final audit. The interim audit can help in conducting the final audit abruptly.
- Prompt Detection of Errors and Fraud. Through the help of interim audit, the errors and fraud can be detected more quickly during the final audit and can be corrected in time.
- Useful for the Investors. The interim audit can be the basis of the investors for making investments.
- Moral check on the staff of the client. Each worker has a moral check to complete his record as per the law.
- The accounting record is kept up to date. Since the accounting staff shall complete their work for the interim audit purposes, the accounting record is being kept up to date.
- Easily figuring out of the position of assets and liabilities. The interim audit can help the company to straightforwardly untangle the position of their assets and liabilities.
Disadvantages of Interim Audit:
- Interim Audit as an additional workload. Audit notes shall be prepared right after the completion of the interim audit. It is therefore considered as an additional workload in an organization. Since the final audit shall be conducted as well after the interim audit, it adds to the burden of work.
- Unsuitable for the small businesses. Interim audit is definitely not for the small businesses.
- Possibility of the alteration of accounts. During the conducting of this audit, there is the possibility of the alteration of the accounts which have been already audited. It may bring confusions to the staff during the final audit.
- Trouble for accounting staff. During the completion of the interim audit, the book will be collected by the audit staff which will make the client’s work suffers. They will be unable to make entries during the conducting of the interim audit.
We are here to help
AMCA, with a decade long experience, is a registered with the Ministry of Economy (MOE) to operate as a Licensed Auditor. Our audits are widely accepted in Mainland Authorities (LLC), and all Major Free Zones including DMCC, JAFZA, DAFZA, DWC, DIFC, DSO, Abu Dhabi, Sharjah, RAK, Fujairah, Ajman and Umm Al-Quwain.
With the help of our expertise, we’ll assist your company with the completion of your interim audit, similarly, we’ll help you be at ease in conducting and finalizing your final audit. The client can release his audited financial statements quickly through interim audit. With our assistance in your interim audit, you will be able to engage in other events with more customers.