Syllabus B. Planning And Risk Assessment B6. Audit planning and documentation

Bd/Be/B6f. Difference between Interim and Final audit 4 / 7

Syllabus Bd/Be/B6f)

B6d) Explain the difference between interim and final audit.
B6e) Describe the purpose of an interim audit, and the procedures likely to be adopted at this stage in the audit.
B6f) Describe the impact of the work performed during the interim audit on the final audit.

The interim audit is used to lessen the amount of work at the final audit.

Which testing gets done where needs planning - although some tests such as year end stock take can only be performed at the year end as the interim is performed during the year

This is a matter of timing and the auditor has the following choice:

  1. Interim and Final audits

  2. Final audit only

  3. Continually using CAATs

Interim Audits

Basically before the Year-end, allowing procedures to be more spread out and improve planning of the final audit

The interim audit should improve risk assessment and therefore make the final procedures more efficient

It will help with the levels of materiality and allow the final audit to concentrate on year end valuations and matters of significant subjectivity

  1. The interim audit will normally be used for:

    • Documenting the system

    • Evaluating controls

    • Testing specific transactions (e.g. big NCA purchase)

    • Interim receivables circular

  2. Timings

    • Early enough - so not interfering with Y/E client work

    • Late enough - to give adequate warning of specific problems that will need to be addressed

Final Audit

  • Post year-end, focus on year end valuations and areas of significant subjectivity