The disadvantages of a continuous audit can be avoided if the following precautions are taken:
- During the course of each visit, work should be completed upto a definite stage so as to avoid loose ends.
- At the end of each visit, important balances should be noted down and the same should be compared at the time of the next visit.
- The visits should be at irregular intervals of time so that the client’s staff may not in advance know the exact date when the audit would be resumed and thus may be able to prepare themselves in advance for the same.
- The nominal accounts should be checked only at the time of final closing.
- The client’s staff should be instructed not to alter or correct audited figures. The auditor should also device a special form of ticks for being placed against figures which have been altered and neither its purpose nor significance should be disclosed to the client’s staff.
Thus,
it is clear from the above that final or completed audit approach is
advisable in case size of the entity is very small. On the other hand,
continuous audit may be followed only in case size of the entity is very
large and system of internal control is weak since the great disadvantage of continuous audit is that the cost would be very high and continuous presence of audit staff may impair auditor’s independence. The interim audit conducted on quarterly or half-yearly basis is the most practicable solution.