An interim audit is one when the auditor completes an audit up to the date of a set of interim accounts, for example quarterly or half yearly accounts.G. William
Objectives of Interim Audit:
To know profits or losses of the interim period.
To declare the interim dividend.
To get a loan sanctioned on the basis of interim accounts.
To get information about the financial standing of the interim period.
To take important short term business decisions.
To analyse the business activities of the interim period and check for further improvements, if any.
Advantages of Interim Audit:
Suitable for big firms: Interim audit is suitable for large and dynamic type of business organizations.
Moral check: There is a moral check on the staff of the client as the accounts are checked frequently.
Helpful for final audit: The interim audit is helpful for the early completion of the final audit.
Detection of frauds and errors: There is quick detection of errors as the auditor visits the client regularly and checks the accounts at regular intervals.
Interim dividend: The interim audit is conducted to declare the interim dividend.
Publication of interim figures: In some business concerns, the publication of interim figures is mandatory.
Convenient for the management: The interim audit conducted, provides mid year financial information. This proves helpful for the management to take important business decisions.
Internal control: If the internal control systems prevalent in the organisations are not up to the mark the company must get its accounts audited on an interim basis.
Disadvantages:
Additional work: The interim audit is not the part of the final audit. Final audit must be conducted after the completion of this audit. So, this is an additional workload for the staff.
Unsuitable for small firms: Interim audit is not suitable for small business organisations with less volume of transactions.
Disturbance at work: Interim audit disturbs the working environment in the office. Frequent visits by the auditor may disturb the work of the client.
Expensive: Interim audit prove expensive because it involves additional work on the part of the auditor.
Alterations of figures: Already audited accounting figures may be changed by a dishonest employee.
